Kerry Group
Prince’s Street, Tralee,
Co. Kerry, V92 EH11, Ireland.
T: +353 66 718 2000
www.kerry.com
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Expanding Horizons is the story of
Kerry’s remarkable journey, from
our origins in the dairy pastures of
Southwest Ireland, to the company
we are today, a world leader in
taste and nutrition.
In 2022, as we celebrated our 50th anniversary,
this theme enabled us to reflect on our heritage,
on what we have achieved and to look to the future
with determination and optimism.
We celebrated the people who made Kerry what
it is today and who continue to do so every day,
delivering real impact for our customers, as we
strive to create a world of sustainable nutrition.
CBP010293
Kerry Group
Annual Report 2022
Kerry Group
Prince’s Street, Tralee,
Co. Kerry, V92 EH11, Ireland.
T: +353 66 718 2000
www.kerry.com
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y
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Expanding Horizons is the story of
Kerry’s remarkable journey, from
our origins in the dairy pastures of
Southwest Ireland, to the company
we are today, a world leader in
taste and nutrition.
In 2022, as we celebrated our 50th anniversary,
this theme enabled us to reflect on our heritage,
on what we have achieved and to look to the future
with determination and optimism.
We celebrated the people who made Kerry what
it is today and who continue to do so every day,
delivering real impact for our customers, as we
strive to create a world of sustainable nutrition.
CBP010293
Kerry Group
Annual Report 2022
Courage
Enterprising Spirit
Open-mindedness
Ownership
Inclusiveness
1
50 Years of
Expanding Horizons
In January 1972, Kerry hired its first employee.
Over the next few years, against the odds, a team
of dedicated visionaries sowed the seeds of the
global food, beverage and pharma business we
have today.
50 years on, we celebrated our anniversary at
all our sites across the world, with our teams,
customers and friends of the business, through
events and activities that inspired a renewed sense
of purpose, pride and ambition for the future.
As we celebrated our from-food-for-food
heritage, we took the opportunity to reinforce
our unique culture. Through the commemoration
activities and the inspiring stories and memories
that were shared, it is clear that the core values,
fostered in those earliest days in Listowel, County
Kerry, are very much alive today.
As we reflect on the past five decades and how
far we’ve come, we are proud to share the results
of our 50 years of experience, expertise and
success, as we strive towards our vision of being
our customers’ most valued partner, creating a
world of sustainable nutrition.
2
CONTENTS
Kerry is a world-leading provider of
taste and nutrition solutions for the
food, beverage and pharmaceutical
markets, with our broad range of
ingredients reaching over 1 billion
consumers globally.
Strategic Report
Directors’ Report
Financial Statements
6
8
Our Performance in 2022
108 Board of Directors
172 Independent Auditors’ Report
Our Purpose
111 Report of the Directors
180 Financial Statements
10 Kerry Group at a Glance
12 Chairman’s Statement
14 Chief Executive Officer’s Review
Governance Report
117 Corporate
Governance Report
188 Notes to the
Financial Statements
3
131 Audit Committee
Supplementary Information
255 Financial Definitions
Report
137 Governance,
Nomination and
Sustainability
Committee Report
143 Remuneration
Committee Report
18 Our People
26 Our Business Model
28 Our Technologies
30 Our Markets
32 Our Strategy
34 Strategy & Targets
36 Why Kerry?
38 Key Performance Indicators
40 Financial Review
47 Business Review:
Taste & Nutrition
51 Business Review:
Dairy Ireland
52 Sustainability Review
94 Risk Management Report
4
Strategic Report
Kerry Group Annual Report 2022
STRATEGIC
REPORT
Kerry Group Annual Report 2022
5
Strategic Report
6
8
Our Performance in 2022
Our Purpose
10 Kerry Group at a Glance
12 Chairman’s Statement
14 Chief Executive Officer’s Review
18 Our People
26 Our Business Model
28 Our Technologies
30 Our Markets
32 Our Strategy
34 Strategy & Targets
36 Why Kerry?
38 Key Performance Indicators
40 Financial Review
47 Business Review: Taste & Nutrition
51 Business Review: Dairy Ireland
52 Sustainability Review
94 Risk Management Report
6
Strategic Report Our Performance in 2022
Kerry Group Annual Report 2022
Our Performance in 2022
An outstanding year of growth,
combined with continued financial
development and progress against
our sustainability objectives.
Kerry Group Annual Report 2022
7
FINANCIAL PERFORMANCE MEASURES
Group Revenue
Volume Growth¹
2022
2021
EBITDA1
2022
2021
€8.8 billion
€7.4 billion
2022
2021
6.1%
8.0%
Group EBITDA Margin¹
€1.2 billion
€1.1 billion
2022
2021
13.9% (80bps)
14.7% +30bps
Net Cash from Operating Activities
Free Cash Flow¹ (cash conversion percentage)
2022
2021
€722 million
€654 million
2022
2021
€640 million 82%
€566 million 84%
Basic EPS
2022
2021
Constant Currency Adjusted EPS¹
341.9 cent
(20.6%)
430.6 cent
+37.6%
2022
2021
440.6 cent
+7.3%
380.8 cent
+12.1%
Total Dividend Per Share
Return on Average Capital Employed¹
2022
2021
104.8 cent
+10.1%
95.2 cent
+10.1%
2022
2021
10.3%
10.5%
NON-FINANCIAL PERFORMANCE MEASURES
Consumers Reached with
Positive and Balanced Nutrition Solutions²
Absolute Carbon Reduction²
2022
2021
1.2 billion
1.1 billion
2022
2021
48%
33%
1
2
See Key Performance Indicators section pages 38-39 and the Supplementary Information section page 255 for definitions,
calculations and reconciliations of Alternative Performance Measures
See Sustainability Review pages 52-73 for further information on non-financial metrics
8
Strategic Report Our Purpose
Kerry Group Annual Report 2022
Our Purpose –
Inspiring Food,Nourishing Life
Five years ago, Kerry embarked on
a journey to articulate our company's
purpose. That Purpose, Inspiring
Food, Nourishing Life, truly reflects
our company’s culture, heritage
and evolution and the essence and
ambition of our people.
Inspiring Food is about innovation.
Kerry is committed to co-creating better
tasting, better performing and better-
for-you consumer-led solutions for the
food and beverage industry with our
customers and partners.
Nourishing Life is about the wellbeing
of our employees. We foster a shared
passion and the expertise to deliver
balanced nutrition solutions to the
lives of over one billion people around
the world, without compromising our
planet’s finite resources.
Through workshops, training and
role modelling, our leaders have
thoroughly embedded our purpose
in a meaningful way, right across
the organisation, to ensure every
employee, no matter their region
or role, understands why Kerry
matters in the world.
Sharing our purpose, what it
means and how our employees can
contribute, is central to our culture
and our onboarding programmes in
Kerry. We revisit our purpose at all
major internal meetings and events,
and we start every meeting with a
reminder of our shared goal.
This year, as we celebrated Kerry’s
50th anniversary, remembering our
heritage, reinforcing our culture
and reaffirming the values that
were fostered in those earliest
days in Listowel, Co. Kerry we gave
new life to our purpose.
" Our purpose is an undisputed
decision-making filter, to unlock
value and drive success right
across the business."
+
Our People
Pages 18-25
Sustainability
Review
Pages 52-93
Kerry Group Annual Report 2022
Kerry Group Annual Report 2022
9
9
Connecting Purpose to Strategy
As a global leader in the food industry, Kerry has an important role to play in
the transformational change required to tackle the global food challenges we
all face. Inspiring Food, Nourishing Life addresses these challenges first-hand
and over the last three years, we have put purpose into action to establish
ambitious targets that ensure impact beyond profit.
We’ve demonstrated our purpose through partnerships and commitments that
are making a difference to our people and planet, accelerating our sustainable
nutrition impact, and that of our customers.
Our purpose is an undisputed decision-making filter, to unlock value and drive
success right across the business. Our focus on our strategic priorities of
Taste, Nutrition and Emerging Markets is testament to our purpose. Together,
they inform our innovation and acquisition strategies – driving us to invest in
markets and technologies where we can make the greatest impact towards
our goal of reaching two billion people with sustainable nutrition solutions
by 2030.
Kerry envisions a world of sustainable nutrition, and by working with our
network of customers, suppliers, and partners, we are advancing towards our
sustainability targets and gearing our business to make this vision a reality.
10
Strategic Report Group at a Glance
Kerry Group Annual Report 2022
Kerry Group Annual Report 2022
Kerry Group at a Glance
Kerry is a world-leading provider
of taste and nutrition solutions
for the food, beverage and
pharmaceutical markets, with our
broad range of ingredients reaching
over 1 billion consumers globally.
What We Do
We solve our customers' complex challenges with differentiated solutions.
Our Performance
Our People
Our Business
€8.8bn
Revenue
€1.2bn
EBITDA
23,000+ 1,100+
R&D scientists
Employees
147
Manufacturing
locations
18,000+
Products
Our
Sustainability
Ratings
Kerry Group Annual Report 2022
11
Our Businesses
Taste & Nutrition
Kerry is a world-leading provider of taste and nutrition solutions for the
food, beverage and pharmaceutical markets. We use our broad range of
ingredient solutions to innovate with our customers to create great tasting
products, with improved nutrition and functionality, while ensuring a better
impact for the planet. Our leading consumer insights, 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.
Taste & Nutrition Business Dimensions
Dairy Ireland
Dairy Ireland is a leading Irish provider of value-add dairy ingredients and consumer
products. Our dairy ingredients product portfolio includes functional proteins and
nutritional bases, while our well-loved dairy consumer brands can be found in chilled
cabinets in retailers across Ireland and the UK.
12
Strategic Report Chairman's Statement
Chairman's
Statement
A year of growth,
footprint expansion and
strategic development -
which have been at the
heart of Kerry's success
over the past 50 years.
Tom Moran
Chairman
Overview
In this, my first Chairman's
statement, I am pleased to
report another year of strong
growth against the backdrop
of significant macroeconomic
challenges. This exemplifies the
resilience of the organisation and
our collective drive to deliver long
term sustainable results through
the execution of our strategy.
The growth delivered was further
re-affirmation of our positioning
as a market leader in the industry,
meeting our customers' needs to
enhance the nutrition, wellness
and functionality of their products
in a way that protects people
and the environment around us
without compromising on taste.
50th Anniversary
In 2022, Kerry celebrated its 50th
anniversary. Across the world,
employees engaged in activities
with customers, local communities
and each other to mark this
milestone anniversary with pride.
Through these celebrations, the
Board recognised that Kerry’s
values, energy and passion,
part of our DNA from our earliest
days in 1972, continue to drive
the business today. 50 years
on, the values of courage,
enterprising spirit, inclusiveness,
ownership and open-mindedness
are alive, and the collective
ambition of our employees,
customers and suppliers to do
better for people and the planet
is stronger than ever.
Strategic Update
2022 is the first year of the Group’s
refreshed strategic plan and the
management team has made a
successful start implementing
the growth strategies.
The Group completed four
acquisitions during the year
as Kerry continues to evolve
its portfolio to strengthen our
position as a world-leading
taste and nutrition company.
Since year end the Group
announced the potential sale
of its Sweet Ingredients Portfolio.
This portfolio repositioning is
another important development
in Kerry’s strategic evolution.
The Group will continue to pursue
organic and acquisitive growth
opportunities aligned with the
Group’s strategic priorities and
key growth platforms.
Sustainability
The Group’s 2030 Beyond the
Horizon sustainability strategy
underpins Kerry’s future growth
as we continue to partner
with our customers across the
globe to create a world of
sustainable nutrition.
The Board, through the
Governance, Nomination and
Sustainability Committee,
contributed to, reviewed
and approved the significant
sustainability developments
actioned in 2022 as we help our
customers create healthier, more
nutritious products that taste great
in a way that protects people and
the environment around us. One
of those actions was the launch
of our Evolve Dairy Sustainability
Programme, which supports the
accelerated adoption of science-
based sustainable actions and
best practice on the farms of
our Irish suppliers. Refer to the
Sustainability Review on pages 70
and 73 for further details.
The 2022 Sustainability Report
published alongside the Annual
Report details the Group’s progress
against its sustainability strategy
and targets in reference to Global
Reporting Initiative (GRI) standards.
Details regarding the Group’s
sustainability strategy, targets,
performance, policies and
programmes are outlined in the
Sustainability Review on pages 52-
93 and in the 2022 Sustainability
Report, which is available on
kerry.com.
Corporate Governance
The Board is firmly committed to
maintaining the highest standards
of corporate governance in line
with best practice. During 2022,
the Board reviewed the Company’s
corporate governance policies and
procedures to monitor compliance
with the 2018 UK Corporate
Governance Code and the Irish
Annex and with latest best practice
developments. We also engaged
with our stakeholders during the
Kerry Group Annual Report 2022 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 122-125.
Each year the Board undertakes
a formal evaluation of its
effectiveness and that of its
Committees. In 2022 the evaluation
was externally facilitated and the
outcome of this review is that the
Board and its Committees consider
that they are operating effectively.
Board Changes
Philip Toomey retired as Director
and Chairman of the Board
following the Group’s Annual
General Meeting on 28 April 2022.
On behalf of the Board, I wish
to pay tribute to Philip for his
commitment and dedication to the
success of the Group throughout
his years of service.
Fiona Dawson and Patrick Rohan
joined the Board as non-Executive
Directors on 4 January 2022 and
16 January 2023 respectively. I look
forward to both of them making
significant contributions to the
Board in the years ahead.
Gerard Culligan and Con Murphy
retired from the Board at the
conclusion of the 2022 AGM. On
behalf of the Board, I would like
to thank Gerard and Con for their
strong contribution over their five
years of service.
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 skillsets
required, the Group’s diversity
commitments, as well as enhanced
stakeholder expectations and
regulatory requirements in
relation to Board diversity.
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 2022, the Board has
continued to ensure that
management promotes our
purpose and values to unite
the organisation across diverse
cultures and geographies.
Staying true to our purpose as
the organisation has responded
to the economic challenges arising
from the inflationary environment,
which was exacerbated by the
invasion of Ukraine, 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.
People and Engagement
Central to Kerry Group’s continued
success is the hard work and
commitment of all our employees.
As the cost of living crisis develops,
the Board is overseeing how
the Group is actively supporting
employees, especially those in
lower paid positions, during this
period of significantly higher
inflation. The Board is also proud
of the support provided by the
leadership team and employees
in general to our Ukrainian
colleagues and their families as
they have had to deal with the
consequences of the invasion in
their country.
The Board also recognises
the importance of employee
engagement and continues
to enhance our employee
engagement activities. During
2022, Dr. Karin Dorrepaal, the
newly appointed Workforce
Engagement Director, engaged in
a programme of activities where
she had the opportunity to gauge
the engagement levels of our
people supporting our business,
both in-person within our offices
and sites and remotely. Details of
these activities are outlined in the
Corporate Governance Report on
pages 117-130.
Operational Visits
As restrictions eased in 2022,
the June 2022 Board meeting was
held in the Group’s Technology
and Innovation Centre in Beloit,
USA. The visit afforded Board
members the opportunity to
meet and engage with key
13
leaders and emerging talent
from the region, to visit two
manufacturing sites and observe
their process technology
capabilities in operation and
see first-hand how they have
benefited from significant capital
investment approved by the
Board, and finally to participate in
customer immersion experiences
that showcased the Group’s
capabilities in helping customers
to solve industry challenges with
differentiated solutions.
Dividend
The Board recommends a final
dividend of 73.4 cent per share
(an increase of 10.0% on the 2021
final dividend) payable on 12 May
2023 to shareholders registered
on the record date of 14 April 2023.
Together with the interim
dividend of 31.4 cent per share,
this brings the total dividend for
the year to 104.8 cent, an increase
of 10.1% on 2021.
Prospects
The Board remains confident
that the Group's business model
and strategic priorities 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 2023 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.
Tom Moran
Chairman
15 February 2023
Kerry Group Annual Report 2022 14
Strategic Report Chief Executive Officer’s Review
Kerry Group Annual Report 2022
Chief Executive
Officer’s Review
2022 was a milestone
year for Kerry, where we
achieved record revenue
despite an exceptionally
dynamic operating
environment, testament
to the continued strategic
evolution of our business.
Edmond Scanlon
Chief Executive Officer
Dear fellow shareholders and all stakeholders,
When I reflect on Kerry’s 50th year, I am proud
of the Group’s achievements in 2022, where total
revenue increased to €8.8bn, driven by strong
organic growth of 18.0%.
The year began with industry supply chain constraints, a heightened
level of inflation and challenging economic conditions, which were
amplified by the Russian invasion of Ukraine. These global market
challenges also presented opportunities for Kerry, as our teams
continued to work closely with our customers and supported them
as they navigated through the year. As we managed through this
unprecedented inflationary pricing environment, we were very
pleased with the resilience of our strong volume growth in Taste
& Nutrition and further volume growth in Dairy Ireland.
Overall growth was broad-based across our regions and channels in
our food and beverage markets, thanks to a continued strong level
of innovation activity.
This growth was driven by an excellent performance across our range
of taste technologies, combined with increased demand from our
customers to enhance the nutrition, wellness and functionality of their
products. We continued to engage with our customers on enhancing
the sustainability profile of their offerings through the year, and
we were pleased to see our emerging markets deliver yet another
standout year of double-digit volume growth.
We also continued to make good strategic progress in 2022 with
footprint expansion, the initiation of our Accelerate Operational
Excellence transformation programme, and further evolution of our
portfolio, aligned to our strategic priorities of Taste, Nutrition and
Emerging Markets.
I would like to take this opportunity to recognise the contribution of
our people over the past 50 years of our journey. You have been the
key ingredient to Kerry’s success, as we continue to inspire food and
nourish life.
0
5
1
0
1
5
2
0
6.8%
4.6%
11.4%
Q1
Q2
Q3
Q4
10.3%
8.2%
6.1%
7.2%
17.7%
10.6%
19.0%
11.7%
18.0%
5
10
15
20
Volume
Price
Transaction fx
6.8%
4.6%
11.4%
Q1
Q2
Q3
Q4
10.3%
8.2%
6.1%
7.2%
17.7%
10.6%
19.0%
11.7%
18.0%
5
10
15
20
15
A Year of Record Growth and Strategic Developments
Throughout the year we worked in close collaboration with our customers to
pass through input cost inflation, demonstrating the robustness of Kerry’s pricing
model. The impact from this heightened level of pricing was seen across our
industry, while the limited level of elasticity our volumes experienced highlighted
the importance of Kerry’s solutions to our customers’ finished products.
Excellent Organic Growth
17.7%
19.0%
18.0%
11.4%
7.2%
10.6%
4.6%
6.8%
10.3%
8.2%
Q1
Q2
Q3
11.7%
6.1%
Q4
Volume
Price
Transaction fx
Taste & Nutrition Quarterly Organic Revenue Growth
Strategic Footprint Expansion
Acquisitions aligned to our Strategic Priorities
Taste
Nutrition
Emerging
Markets
Taste & Nutrition delivered strong volume
growth of 7.8% in the year, which was broad-
based across our Food and Beverage end
use markets, with excellent growth across
Snacks, Meat and Dairy.
The foodservice channel continued to deliver
strong double-digit growth and our retail
channel achieved good mid single-digit
volume growth.
In the year we continued to enhance and
expand our global presence and footprint.
The new and expanded facilities in Rome,
Durban and Jeddah were officially opened,
and we made good progress in the
development of our new Taste facility
in Karawang, Indonesia.
We made a number of acquisitions aligned to our
strategic priorities during the year.
In Taste, we acquired Kraft Heinz’s B2B powdered
cheese business. Under Nutrition, the acquisition
of c-LEcta enhanced our biotechnology innovation
capability, while Natreon enhanced our botanical
ingredients portfolio. In Emerging Markets, the
acquisition of Almer expanded our presence in
Southeast Asia.
Since the year end, we announced the potential
sale of our Sweet Ingredients Portfolio, as we
continue to enhance and refine our portfolio
to areas where we can add the most value.
Kerry Group Annual Report 2022 16
Strategic Report Chief Executive Officer’s Review
Kerry Group Annual Report 2022
Our Markets
The overall demand environment remained robust
through the year despite the macroeconomic backdrop.
Consumers continued to seek new taste experiences,
cleaner labels and added functional benefits through
food and beverages. The cost-of-living crisis has resulted
in many consumers looking for relative value options to
meet their purchase preferences, depending on their
available resources.
Customers continued to prioritise the resiliency of their
supply chains through this period of inflationary pressure.
Innovation has become increasingly targeted, as they
seek to meet various consumer preferences at different
price ranges. The industry has evolved significantly in
recent years, as many of our customers reconfigure
aspects of their operations in the face of challenges such
as geopolitical volatility, increased regulations and lack of
labour availability in certain markets.
The macroeconomic developments across the year had
a substantial effect on interest rates and global equity
markets. Share prices and valuations across our sector
were significantly adversely impacted, with the effect most
acute across growth stocks including Kerry. While the
share price performance in the year was disappointing,
we have created significant value over many years. We
remain intensely focused on delivering against our targets
and continuing to strategically evolve our business, which
we believe will deliver long-term shareholder return.
Our Performance
In the year we delivered strong overall growth, with
Group reported revenue increasing by 19.3% to €8.8
billion, driven primarily by volume growth of 6.1% and
pricing of 11.7%. Group EBITDA increased by 12.9% to
€1.2 billion, representing an EBITDA margin of 13.9%.
Adjusted earnings per share increased by 7.3% in constant
currency, while free cash flow increased to €640m.
We also made good progress in 2022 on our Beyond the
Horizon sustainability journey. Under Better for People,
we increased our nutritional reach with positive and
balanced nutrition solutions to 1.2 billion people, as we
continue to work with our customers to improve the
nutritional profile of their products.
Under Better for Society, we made important steps on
our health and safety performance. We also rolled out a
range of programmes to support our Diversity, Inclusion
and Belonging objectives and continued to support
those communities most in need, through our employee
programmes and partnerships with leading NGOs.
Under Better for the Planet, we delivered a 48% reduction
in carbon, as we accelerated our shift towards renewable
electricity. We also made significant progress across a
number of other measures, including reducing food waste
by 32% across our operations. We are pleased with our
progress to date, while recognising the challenges ahead
for our industry and the need to intensify our efforts, as
we continue to create a world of sustainable nutrition.
Kerry Group Annual Report 2022
17
Forward Looking Statement
The Group began its 2022-2026 strategic cycle
with a strong year of growth, good overall financial
performance and continued progress against Kerry's
Beyond the Horizon sustainability commitments.
At the outset of 2023, while market conditions are
currently uncertain, Kerry remains strongly positioned
for growth ahead of its markets. The Group will
continue to manage input cost fluctuations with its
well-established pricing model. Kerry will continue
to invest capital aligned to its strategic priorities and
strategically evolve its portfolio.
Edmond Scanlon
Chief Executive Officer
15 February 2023
Regional Performance
The Americas achieved volume growth of 8.4% in
the year, which was strong across both channels and
particularly in the Beverage, Meat and Bakery end use
markets. Growth in LATAM remained strong across
both Mexico and Brazil.
Europe delivered strong volume growth of 6.2% given the
economic backdrop in the region. Growth was driven by
the Snacks, Dairy and Meals end use markets. This growth
was broad-based across the region, with the exception
of Eastern Europe, where we made the decision to exit
Russia and Belarus post the invasion of Ukraine.
The APMEA region achieved volume growth of 8.1%,
which represented a very strong performance given the
challenging conditions in China through the year. This
growth was led by the Snacks, Meat and Bakery end use
markets. Our performance in the region was particularly
strong across the Middle East and Southeast Asia.
Dairy Ireland delivered strong organic growth in the year,
reflecting a significant level of pricing. Overall volume
growth in the year was modest, given strong prior year
comparatives. Volume growth in dairy ingredients was
partially offset by lower category volumes in consumer
products, as a result of price increases.
18
Strategic Report Our People
Kerry Group Annual Report 2022
Our People
Our Culture
At Kerry, our Purpose Inspiring Food,
Nourishing Life reflects our enduring
culture and further ignites our passion
to build a better future for our people
and planet. Over the last five years, we
have embedded our purpose into all our
people policies, processes and practices,
connecting our 23,000+ people across the
world through a shared vision to be our
customers’ most valued partner, creating
a world of sustainable nutrition.
Our people represent 118 nationalities, and we work
across 200+ locations in more than 50 countries globally.
Throughout 2022, guided by our purpose and our
values, our people continued to demonstrate resilience
and agility, through constantly evolving circumstances.
Against a challenging macro-economic and geopolitical
backdrop, and through continued Covid-19 lockdowns
in key geographies, we leveraged the strength of our
culture, our deep specialist expertise and our industry-
leading taste and nutrition capabilities to continue to
enhance the lives of others, solving our customers’
complex challenges with differentiated solutions.
behaviour in everything we do and continue to reinforce
this through our standards, policies, and practices.
We believe in giving talented, curious people the
opportunity to make a difference and are committed
to nurturing a highly inclusive workplace where all our
people can be at their best, contribute to our success
and excel personally and professionally. Our people
practices reinforce our purpose, vision, and values,
from 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 activities.
We lead with a purpose mindset and engaging and
empowering our teams is fundamental to our group-
wide approach to people leadership. 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 the
diversity of our leadership teams reflects and celebrates
the diversity of the communities in which we live and
work continues to be a key imperative for us. In 2022
we further enhanced the cultural and gender diversity
of our leadership talent pipelines through internal
promotions and strategic hires, and we are encouraged
by the progression of local talent into our regional
leadership teams.
We seek to 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 remain focused on delivering value
to our customers. We hold ourselves accountable for
meeting the highest standards of business and ethical
Expanding Horizons
Throughout 2022, we celebrated our 50th anniversary,
with our people coming together and connecting, many
for the first time, through various events around the
world to mark this significant milestone in our history.
Celebrating together inspired a renewed sense
of team across Kerry and showcased our core
value of inclusiveness in action. Events ranged
from local team building activities, charity
donations and town halls to commemorative
plaques, globally-led Inspiring People awards
anchored around our Kerry values and new
community partnerships, including numerous
opportunities to connect with family,
customers, and former employees.
A common theme across all our celebrations
was the opportunity to feature and enjoy
our innovative Kerry taste and nutrition
solutions from around the world, reinforcing
our purpose to inspire food and nourish life.
Our Values
Our values are inspired by our
purpose. They underpin the
culture we continue to cultivate
and develop to sustain our
success. They unite us across our
diverse cultures and geographies,
providing a guiding framework
for building trust and mutual
respect through the engagement
of our people, our customers and
our communities. They represent
strengths from our heritage as
well as new capabilities, which we
want to collectively embed across
our expanding global footprint.
Our leaders continue to prioritise
how they role model our values in
action, each and every day, across
all areas of Kerry.
Reflecting the essence of our
values, we empower our people
to have the courage to challenge
the status quo when it poses a risk
to progress, and to express their
unique perspectives. We ask our
people to consider the art of the
possible, and to bring new and
innovative ideas to how we do
our work. We encourage all our
people to have the courage
to speak up and integrity is
non-negotiable.
In turn, Kerry commits to
listening. We remain open to
new ways of working and are
always reviewing opportunities
to grow our business, taking the
views of our people, who know
our business best, into account.
At Kerry we have a wealth of
diversity within our workforce,
and we understand and respect
the strength that different
perspectives and backgrounds
can bring to our decisions.
Every voice counts.
We welcome feedback, enabling
two-way communication
between our people and senior
leadership so that we may
improve and fulfil our future
potential together.
We see opportunities where
others see problems, we learn
from each other, we 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 embrace
accountability, and we never
compromise on doing the right
thing for our business, our
people and our customers.
Aligning our whole organisation
behind our purpose and values
is critical to being the first
choice for the best talent. We
are committed to fostering
an environment where our
people are highly engaged
and motivated to invest their
time, commitment and passion
in shaping Kerry’s successful
growth; an environment where
our people feel fulfilled by, and
valued for, their day-to-day
contributions to Kerry’s success.
19
Courage
We’re brave, we
speak up and we
inspire each other to
get the best results.
Enterprising
Spirit
We’re bold, we think
big picture, we add
value and we grow.
Inclusiveness
We’re welcoming,
we are authentic
and we see strength
in diversity.
Open-
mindedness
We’re curious, we
innovate and we
believe in possibility.
Ownership
We’re accountable
and we care about
the business as if
it were our own.
Kerry Group Annual Report 2022 20
Enhancing our
Employee Experience
At Kerry, we are fully committed to
creating an environment where our
people can thrive, be inspired to innovate
and are comfortable bringing their
authentic selves to work every day. We
view the engagement of our people as a
lead indicator of our future sustainable
business growth and performance and
invest our collective energy in nurturing
and enhancing the engagement of all
teams across the globe.
Each year, the needs of our people and our business
change and evolve. To ensure we are providing the right
support and the best employee experience, we regularly
pulse-check our employee engagement and take action
on the feedback we receive from our people. We have
a stated ambition of being a top quartile employer for
employee engagement, and through our continuous
listening strategy and frequent monitoring, we are pleased
with our continued progress against that ambition.
In 2022, we completed our global employee engagement
survey for the fourth year running. We are particularly
proud of our participation rate of 92% across all our
regions and functions. This demonstrates the trust
and willingness of our people to share their voice.
It demonstrates that our people see value in sharing
their feedback, which is used as key input in helping
to make Kerry a better and more successful business
for the future.
This year we aligned our engagement focus areas
under three pillars: ‘Making it Better, Making it Clearer
and Making it Easier’. These three pillars will guide how
we approach our engagement action planning across
Kerry and focus our efforts on improving the working
experience for our people.
During 2022, the role of designated Workforce
Engagement Director transitioned from Mr. Tom Moran
to Dr. Karin Dorrepaal, who participated in numerous
employee engagement activities throughout the year.
This important role ensures the employee’s voice is
considered and represented by the Board when making
decisions impacting our people, ensuring we are
confident that we are making the right decisions for
Kerry overall.
Activities this year included an opportunity to join the
panel for Kerry’s Flagship Pride webinar ‘Together
with Pride – A Womxn’s Perspective’ and a number of
manufacturing plant visits to engage with our teams
in Europe and North America. Dr. Dorrepaal continues
to champion and help us shape Kerry’s engagement
strategy, ensuring we are bringing industry-best
practices and giving due consideration to the external
environment within which Kerry operates. For further
details on key activities supported during 2022, please
see our Corporate Governance section on page 117.
PILLAR 1
MAKING IT BETTER
PILLAR 2
MAKING IT CLEARER
PILLAR 3
MAKING IT EASIER
Making it Better encompasses
the actions that impact the
working life of everyone at Kerry.
Learning and development
opportunities, our Diversity,
Inclusion and Belonging
agenda, wellbeing and reward
and recognition initiatives all
fall under this pillar. Through
the survey feedback in 2022,
our people shared that they
have experienced positive
developments in all these areas.
Further details on actions we
have taken in these areas are
covered in our later sections
focused on Diversity, Inclusion
and Belonging, Leadership
and Talent and Rewards
and Recognition.
Making it Clearer covers aspects
relating to Kerry’s vision, brand
and strategy. Following our
strategy refresh in 2021, Kerry’s
senior leadership team invested
considerable time and effort
throughout 2022 in ensuring
that every individual at Kerry
understands our strategic
objectives and how their role
contributes to Kerry’s long-
term goals. The refresh of
Kerry.com was a major milestone
in our 2022 brand agenda. This
resource is available for all Kerry
stakeholders, including Kerry
employees, to better understand
the vast scope of products
and services we provide to
our valued customers.
Making it Easier is a hugely
important pillar for Kerry.
Our relentless drive to work
smarter is core to the culture at
Kerry. Through our Accelerate
Operational Excellence
Transformation programme,
we are continuing to realise
ongoing benefits, with specific
focus on performance and
delivery across our plant
network. In addition, we are
further enhancing the portfolio
and scope of our Global
Business Services organisation,
making it easier for our people
to access the support they
need, when they need it
in the most efficient and
effective way.
Kerry Group Annual Report 2022Strategic Report Our People Highlights based on feedback from our employee engagement survey in 2022 include:
21
Engagement
of our plant
colleague
community
Engagement
of our people
leader population
Inclusion Index
Last year, we commenced our Accelerate Operational Excellence
transformation programme, helping us to build and sustain consistent
excellence across all plants. Through the survey feedback in 2022, we
have seen this focused effort lead to markedly increased engagement
across all plant leaders who have been through the programme. Their
plant teams also had, on average, improved engagement scores, as
compared to the previous year's survey. This shows that the investment
in our plant population is being felt, and the programme is making it
better, clearer and easier to work at Kerry.
We continue to support our leaders to shape our workplace for the
future, listen to their teams, and implement robust action plans for
continuous improvement based on two-way dialogue. We saw continued
improvement in our people’s experience of their people leaders’
effectiveness in our 2022 survey. We have seen that positive engagement
levels of individual people leaders make a significant positive impact on
the engagement of their team and we will continue our priority focus and
investment in our people leaders’ skills and behaviours.
Following the launch of our Inclusion Index as an integral part of
our 2021 employee engagement survey, we were delighted to see
an improvement across all elements of the index in 2022. Our most
positive feedback through the index is centred around 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 and is the basis for all other aspects of the Inclusion
Index: Fair Treatment, Psychological Safety, Integrating Differences
and Belonging. We will bring insights from the Inclusion Index into our
2023 Diversity, Inclusion and Belonging plans, ensuring we continue to
evolve and drive progress in this important space.
Kerry Group Annual Report 2022 22
Strategic Report Our People
Kerry Group Annual Report 2022
Fostering Diversity,
Inclusion and Belonging
We have set out our ambition to
build an inclusive workplace at Kerry.
Our Diversity, Inclusion and Belonging Framework is
aligned to this ambition and is fuelled by our desire to
be the first choice for the best talent. We celebrate and
harness our diversity to drive business performance and
foster a healthy and inclusive environment that enables
our people to be at their best and continue to drive
positive change at a systemic level, both structurally
and behaviourally.
During 2022, we embarked on a detailed planning exercise
with representatives from each region, to agree a strategic
roadmap for each region in pursuit of our shared 2030
goals. Key areas of focus include continuing to build
diverse and inclusive leadership, promoting greater depth
and breadth in our talent pipelines, embedding our agile
working practices, encouraging employee-led initiatives,
engaging with aligned external partners and confirming
Executive Leadership Team sponsorship for and ownership
of our overall Diversity, Inclusion and Belonging ambition.
In 2022, we established our Global Diversity, Inclusion and
Belonging Council, comprising selected members of our
Executive Leadership Team. Together with our regional
committees, dedicated Diversity, Inclusion and Belonging
leads and global taskforce, our Global Diversity, Inclusion
and Belonging Council will help us to further shape our
overall ambition and support our continued progress
through 2023.
Building on positive feedback received in 2021 during
our Inclusive Leadership workshops, we launched an
Inclusive Leader toolkit in 2022. This toolkit equips our
people leaders with the confidence and capabilities to
lead diversity, inclusion and belonging conversations
with their teams, making it easier to work together
to build a more inclusive workplace. Available in 11
languages, it provides practical ideas, templates and
tools aligned to our Inclusion Index. In addition, people
leaders can self-assess their leadership style and
approach across key people processes such as assigning
team members to projects, managing flexible working
requests and selecting a new team member.
Embedding a truly inclusive workplace is made possible
by our global Diversity, Inclusion and Belonging teams
working together with our global employee networks
– PRYSM, supporting LGBTQI+ colleagues and allies
and SEEN, raising awareness and supporting on issues
relating to race and social equity. During 2022, PRYSM has
continued to work to promote LGBTQI+ rights not only
internally, but also in collaboration with Kerry customers
and with the broader international community. This year,
we saw over 70 of our offices and plants coming together
to raise the modern pride flag, in conjunction with
customers to celebrate our 50th anniversary. In 2022, our
SEEN network hosted our first global event dedicated to
race, ethnicity, cultural and social equity. This focused on
raising awareness of topics such as unconscious bias and
the impact of privilege, with external experts educating
colleagues and many Kerry employees sharing their
personal and professional stories and experiences.
We continue to make positive progress on our gender
diversity goals. We set ourselves a goal of achieving
equal gender representation in senior management
roles by 2030, with women representing 35% of
senior leadership roles by 2025. We achieved 36%
representation of women in senior management and
33% in senior leadership roles by the end of 2022, and
we continue to focus on targeted strategies to accelerate
this in 2023. Examples include our new Women in
Leadership programme in Europe this year, which we
aim to roll out globally to all regions, as well as our
Regional Women@Kerry networks, helping to promote
opportunities to improve workplace policies and
practices for women across Kerry.
Kerry Group Annual Report 2022
23
content and unique opportunities to engage with
leading experts on key topics to build leadership
capabilities.
Our functional curriculum supports business growth
through enabling the development and application
of our foundational technologies and fostering a
customer-centric approach. In 2022, the Taste Technical
Excellence Programme and Applied Health and
Nutrition Technical Excellence Programme brought
together subject-matter experts from different areas
in the business to share their expertise and support
our strategic growth pillars. The overall aim of these
programmes has been to further develop expertise
and capability in using our new technologies in
specific applications, maximising value to customers
whilst solidifying foundations for longer term career
development of our people.
In the commercial area, we have been transforming
our approach to capability building, whereby
teams, including leaders, participate in 'just-in-time'
experiential sessions aligned to our commercial
campaigns, ensuring newly developed skills and
behaviours which can be applied immediately in
the role. We continue to enhance our commercial
effectiveness programmes, from the onboarding of
new team members to programmes that build greater
cross-functional collaboration across Kerry.
Kerry’s early careers programme is a core component of
our strategy to strengthen our future pipeline, providing
opportunities to develop skills and experience across
a wide range of core disciplines, enabling longer-term
sustainable leadership for the organisation. We have
recently consolidated our graduate programmes globally
to create one unified approach for 2023. We have also
reviewed our approach this year to apprenticeship
programmes in regions and opportunities to expand our
offerings in this space, especially for functions within
integrated operations in 2023.
We continue to support development of enterprise
initiatives across the group to build capabilities aligned
to our strategic objectives. One such example is our
Sustainability Essentials programme, launched in 2022,
designed to foster a sustainability mindset in all our
people, and which is an integral part of all day-to-day
activities at Kerry.
Finally, we have continued to strengthen the quality
of our leadership talent pipelines through ongoing
strategic talent reviews across our regional businesses
and global functions. This includes ongoing initiatives
to build the quality of our leadership teams, making key
strategic appointments as well as continuing to invest
in building individual future leaders. We also continue
to invest in activities to accelerate succession readiness
of identified talent for executive leadership roles, where
individuals participate in externally benchmarked
assessments, and internally led 360-feedback tools to
better target leadership development plans, including
access to individual coaching, mentoring and businesss
school programmes.
Investing in Learning, Leadership
and Talent to Fuel our Growth
Our aim is to unleash the potential of
our workforce to perform at their best,
while instilling a sentiment of self-growth
and excitement across the organisation
about the future. We continue to build
our learning technologies, to increase
our reach and speed of building
capabilities globally.
During 2022, we focused on building leadership
expertise across our manufacturing facilities, with the
launch of a new, targeted Plant Leader Development
Programme. With a combination of internal and external
expertise, plus peer-to-peer support, this programme
aims to build the plant leader skills and behaviours
needed for current and future success. Over 70% of
the plant leader population are now engaged in the
programme and this will continue into 2023, with a
focus on following up on results and sustaining
behavioural change.
We also continued our focus on the role of the people
leader, recognising the unique role they play in the
ongoing performance and engagement of our people.
Our refreshed Managing People@Kerry Programme in
2022, underpinned by our Kerry Leadership Competency
Framework, is designed to build confidence and
competence across all aspects of the role. All newly
promoted people leaders are now automatically enrolled
into the programme to support the first step in their
leadership career. We have also increased the scope of
our Virtual Leadership Academy which now engages
approximately 1,500 of our people leader population,
giving access to timely and relevant thought-leadership
24
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 striving to be 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 goals. 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 2022, we implemented the next phase of
our Total Rewards roadmap which will continue
into 2023. 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.
Some examples of enhancements made during 2022,
and actions planned for 2023, are as follows:
During 2022, we undertook a detailed review to
design Kerry’s first Global All Employee Share Plan
which will provide employees the opportunity to
become shareholders and allow them to share
in the success of the company. The Board and
Executive Directors believe that share ownership
is a powerful and important way of creating
an ownership culture and mindset and as such
we will be asking Shareholders to approve this
new plan at our 2023 AGM. Further details can
be found in the AGM Notice of Meeting, and we
intend to implement the plan on a phased basis,
commencing in 2023.
We are actively engaged with the UK Living
Wage Foundation, with the objective of being
accredited by them as a UK Living Wage Employer
in Q1 2023. In addition, given the increasing global
focus on living wage and the associated business,
societal and wider economic benefits, we are
exploring how we could expand the Living Wage
commitment across our wider global footprint
from 2023 onwards.
We continued to promote and embed our Global
Recognition Programme, Inspiring People,
which was launched in 2021. Since the plan was
launched almost 10,000 Kudos Awards have been
made across all regions. We held our first global
'Inspiring People' awards in June.
Kerry Group Annual Report 2022Strategic Report Our People 25
In Q2 2022, we launched a new online Long-Term
Incentive Plan (LTIP) platform and application,
EquatePlus. This significantly enhances the LTIP
experience; driving transparency and understanding,
further aligning our participants’ experience with
that of our shareholders, whilst simplifying and
automating how they manage their awards.
Greater flexibility in our pay review process to
target higher increases for lower paid positions and
to give managers greater flexibility to differentiate
where pay levels are materially impacted by inflation.
Where appropriate, more frequent salary increases
were made in countries experiencing hyperinflation.
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. We are committed to gender pay
equity 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.
Promoting Health and Wellbeing
We continue to prioritise the health and wellbeing
of our people and we are particularly cognisant of the
current economic environment and global inflationary
challenges. To support employees through the ongoing
cost of living pressures, a number of targeted actions
have been taken:
Country merit budgets are designed to track
market movement and are informed by
comprehensive market intelligence. Annual
salary budgets this year are greater than or
equal to last year.
Promotion of employee benefit and discount
platforms where available.
Global mental wellbeing and financial wellbeing
seminars available to all employees.
Through our wider Wellbeing Framework and
commitment, we foster a healthy, positive work
environment by providing our people with the physical,
emotional, nutritional and financial resources to
support them through the various life stages. This is
underpinned by a balanced set of programmes, all
enabled by a wellbeing centre and toolkit which provides
a suite of relevant educational material designed to
empower our people to best manage their wellbeing.
We recognise the critical role family plays in our
employees' wellbeing, making sure we have the right
level of policies providing flexibility and time away from
work to cater for the demands of a busy professional
and family life. Every Kerry employee, as well as their
family members, has access to our Global Employee
Assistance Programme (EAP). EAP is a complimentary,
confidential service that is available 24 hours a day,
seven days a week, 365 days a year. EAP is run by
a team of counsellors, psychologists and work-life
consultants who provide expert guidance and specialist
support on any kind of issue - from everyday matters to
more serious wellbeing problems.
Kerry Group Annual Report 2022
26
Strategic Report Our Business Model
Kerry Group Annual Report 2022
Our Business Model
How Our Integrated Business
Model Creates Sustainable Value
What We Depend On
(Inputs)
What We Do
Kerry is a world-leading provider of taste and nutrition
solutions for the food, beverage and pharmaceutical markets,
with our broad range of ingredients reaching over 1 billion
consumers globally.
Financial
Funding available to the Group
Manufacturing
147 manufacturing locations and
global supply chain infrastructure
Intellectual
Consumer insights, technology,
know-how and R&D capabilities
Human
23,000+ talented employees
across 50+ countries
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
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
(PGLE) and the UN World Food Programme
Natural
Responsible consumption and production
with sustainable sourcing, emissions
reduction and waste recovery
What We Depend On
(Inputs)
Financial
Funding available to the Group
Manufacturing
147 manufacturing locations and
global supply chain infrastructure
Intellectual
Consumer insights, technology,
know-how and R&D capabilities
Human
23,000+ talented employees
across 50+ countries
Social and Relationships
Global brand and relationships
with local communities,
regulators and industry bodies
Natural
A global network of >10,000
raw materials suppliers
27
The Value We Create
(Outputs)
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.
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
(PGLE) and the UN World Food Programme
Natural
Responsible consumption and production
with sustainable sourcing, emissions
reduction and waste recovery
Who We Benefit
Customers and
Consumers
How We Contribute
Core SDGs
Linked SDGs
Kerry Group Annual Report 2022 28
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
25
Process
technology
platforms
1,100+
Scientists
33
End use market
Development and
Application Centres
across the globe
Creating Value Through
Integrated Solutions
Value-add
Integrated
Customer
Solution
This enables us to create
integrated technologies
specific to the needs of
our customer and their
end use markets.
L
A
N
T E C HNOLOGIES
F
& I N G R E D IENTS
EXT E R
Embedded in our
Integrated
Technologies
S
E
I
G
O
L
O
N
H
C
E
T
S
S
E
C
O
R
P
ECHNOLOGIES
R
E T
O
R
M
U
L
A
T
I
O
N
E
X
P
E
R
T
I
S
E
CO
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
We combine this core
technology expertise with
our extensive process
technology expertise
including fermentation,
distillation and extrusion.
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
Our broad range of core technologies spans across
both taste and nutrition.
Our extensive taste
technologies include
our range of flavours,
modulation and
natural extracts.
Our nutrition technologies
include our broad
protein range, probiotics,
enzymes, and range of
functional ingredients.
Kerry’s technologies are sold as both single
technologies and integrated solutions.
Kerry Group Annual Report 2022
How We Solve
Our Customers’
Complex Challenges
Each distinct customer challenge presents its
own opportunity to showcase and deploy the
breadth of Kerry’s technology portfolio and
depth of applications expertise, as we strive
to be our customers’ most valued partner.
29
60% salt reduction in snack with no taste compromise
Customer Challenge
Kerry Solution
New World Health
Organisation (WHO) and
HFSS (High Fat, Salt and
Sugar) regulations
Dramatically reduce
salt content
Maintain premium
taste profile
Fermentation, modulation,
application and sensory
Developed two new proprietary keys
Reduced sodium from
>600mg to <250mg
Consumer and customer
preferred taste
Next generation natural preservation solution
Customer Challenge
Kerry Solution
Regulatory challenge –
remove commonly used
preservation ingredient
nitrate from ham
Shelf life and food safety
challenge
Consistent premium taste
Maintain natural
pink colour
No-nitrate natural solution
from vegetable sources
Fermentation-derived
Consumer friendly labelling
Natural flavouring
Consumer and customer
preferred taste and colour
Maintain stability over shelf life
Innovation at pace – de-stress fruit flavoured gummy
Customer Challenge
Kerry Solution
Two day development
target
Stress support claims
GMO-free and clean label
Masking off-notes with
enhanced flavour
Clinically-backed Sensoril®
Tastesense® masking
Applications expertise
Speed to market using
co-manufacturer
Kerry Group Annual Report 2022
30
Strategic Report Our Markets
Kerry Group Annual Report 2022
Our Markets
The food and beverage market is highly
dynamic. Consumer demands and trends are
continually evolving, leading to an increased
need for innovation support. Kerry’s unique
capabilities help to solve our customers’
challenges and meet the demands of today
and tomorrow’s consumer.
Key Market Dynamics
Outsourced
Customer
Innovation
Premiumisation
of Taste
Retail
Channel
Foodservice
Channel
Focus on
Food Waste
Reduction
Sustainability
Personal
Personal
Holistic Health
Affordable
Quality
Within the retail channel, innovation has become far more
collaborative, with an increased demand for outsourced
innovation. Consumers are looking for the latest premium
taste profiles, while removing sugar, sodium and fat.
Improving the sustainability impact of products is an
important focus area for all companies, with food waste
reduction a key enabler. Consumers continue to favour
food and beverage as a means to fulfil their personal
holistic health needs, while the importance of affordability
has risen, but without any compromise on quality.
The foodservice channel continues to move at an even
faster pace than retail, given how that landscape has
evolved over the past number of years. Simplification
and improvement of back-of-house operations is a focus,
given more challenging labour markets. Larger chains
continue to gain market share. Foodservice operators
continue to develop their menu offerings to retain their
existing customer base and entice new customers, with
sustainability, and particularly food waste reduction
increasing in importance.
Kerry Group Annual Report 2022
31
Value-Add Ingredients
and Solutions Market
The size of our market is approximately €80 billion and
continues to expand, as customers continue to strive to meet
the ever-evolving needs of a growing and more demanding
consumer base. We estimate the market has the potential to
expand to between €90-€100 billion in the coming years.
y OOppppppoortu
d u s t r y Opportunity
n
I
Snacks
Beverage
Dairy & Dairy
Alternatives
Kerry’s
€80bn
Market
Meals
Meat & Meat
Alternatives
Bakery,
Cereal &
Confectionery
Pharma
32
Strategic Report Our Strategy
Our Strategy
Kerry focuses on the Food, Beverage and
Pharma markets. Our strategic priorities
of Taste, Nutrition, and Emerging
Markets help ensure capital allocation
decisions are aligned to strategy.
Our strategic framework includes the
key growth platforms of Authentic
Taste, Plant-based, Food Waste and
Health & Bio-Pharma.
A
M
R
A
H
P
+
E
G
A
R
E
V
E
B
+
D
O
O
F
Taste
Nutrition
Emerging
Markets
Dairy Ireland
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%+.
Dairy Ireland is a leading provider of value-add dairy
ingredients and consumer products, with a product
portfolio including functional proteins and nutritional
bases along with our well-loved chilled dairy
consumer brands across Ireland and the UK.
We will continue to grow by leveraging the full
potential of our world class, dairy eco-system across
added value dairy ingredients and our range of
leading consumer foods dairy products.
Kerry Group Annual Report 2022
Kerry Group Annual Report 2022
33
Strategy in Action Key Achievements in 2022
Taste
Very strong growth achieved in Snacks and Meat driven largely
by performance of Kerry’s Taste technologies.
Excellent growth in Kerry’s Tastesense® salt reduction technologies.
Successful launch of plant-based succulence, a nutritionally-
optimised taste solution which mimics the real taste of fat.
Nutrition
Strong growth across our range of science-backed botanical
extracts including the recently acquired Natreon business.
Successful launch of Puremul™ as a label-friendly
non-GMO lecithin replacement.
The acquisition of c-LEcta significantly enhanced Kerry’s
biotechnology innovation capabilities.
Kerry Health & Nutrition Institute® – launched the microbiome
hub comprising leading insights and expert research.
Emerging Markets
Excellent volume growth of 10.4% in emerging markets, driven by
very strong growth in the Middle East, Southeast Asia and LATAM,
partially offset by challenging local conditions in China.
Opened the Kerry Kuala Lumpur and Querétaro Centres, which
host our Global Business Services teams and other key functions.
Enhanced Kerry’s emerging markets capabilities with the
acquisition of Almer and the opening of our Jeddah facility
in Saudi Arabia.
Strong progress in advancement of our foodservice model
and strategy with strong double-digit growth.
Strong organic growth as we passed
through input cost inflation.
Solid growth in dairy ingredients with
category volumes in consumer products
impacted by higher prices.
Expanded plant-based range with launch
of products under ‘Dairy Free Pure’ and
‘Plant Based Dairygold’ brands.
34
Strategic Report Strategy & Targets
Kerry Group Annual Report 2022
Strategy & Targets
Kerry’s targets are aligned to our value
creation framework, which is a combination
of growth, return and sustainability.
Kerry Group Annual Report 2022
35
Our Value Creation Framework
Growth, Return and Sustainability
FINANCIAL PERFORMANCE MEASURES
Volume Growth
4-6%
Average Target
EBITDA Margin
18%+
by 2026
Cash
80%+
Cash Conversion
Return
10-12%
ROACE
Growth
Return
Nutritional
Reach
Reach 2 billion
people with
sustainable
nutrition solutions
Carbon
55% reduction
in Scope 1 & 2
carbon emissions
Food
Waste
50% reduction
in Food Waste
Sustainability
Note 1: Financial Targets are for the period 2022-2026
Note 2: Volume growth target assumes 2% above market growth rates
Note 3: Sustainability targets to be achieved by 2030. Carbon reduction targets include 30% intensity reduction
in Scope 3 emissions by 2030. For more detail on Kerry’s science-based targets, see Sustainability Review
on pages 52-73.
Full definitions can be found on pages 255-259.
+
Financial Review
Pages 40-46
36
Strategic Report Why Kerry?
Kerry Group Annual Report 2022
Why Kerry?
A Global Leader in Taste, Nutrition and Sustainability
1.
2.
Strategically Positioned in
a Highly Attractive Industry
Kerry is a Truly
Unique Business
While the range of ingredient
solutions we offer represents a small
percentage of the final product,
they often deliver the key value-add
component or a driver of repeat
purchase behaviour.
The market we serve is estimated
at €80bn and is continuing to
grow, as customers are looking for
innovation partners to support them
right across all food and beverage
categories from Ideation to Launch,
to Impact.
We have an extensive global
network of over 23,000 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.
3.
Strong Leadership Positions
We have strong leadership
positions1 across all five dimensions
of our business model. In our End
Use Markets, we are a leading
solutions partner for Beverage and
a market leader in Meat and Meat
Alternatives, while Kerry’s Pharma
Solutions are used in 6 of the top
10 Blockbuster Drugs.
We have leadership positions
across our Global, Regional and
Local Customers. Within our
Geographies, we are number one in
Taste & Nutrition in North America,
and have a history of market leading
growth in Emerging Markets. Our
Technology leadership includes
number one global positions in
Authentic Savoury Taste Solutions
for Meat and Snacks, Food
Protection & Preservation, and
Probiotics in ambient food and
beverage applications. Within our
Channels, we are a global leader
in the foodservice channel and
are a leading solutions partner
for CPGs and own-brands.
Kerry Group Annual Report 2022
37
4.
5.
Track Record of Value Creation
Winning Growth Strategies
9.5% CAGR for revenue2
12.6% CAGR for trading profit2
11.9% CAGR for adjusted EPS2
13.7% CAGR on share price2
16.1% CAGR on dividend per share2
48% Absolute carbon reduction3
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. Our key growth platforms are
Authentic Taste, Plant-based, Food Waste
and Health & Bio-Pharma.
1
Leadership positions above are within the value-add ingredients and solutions market we serve.
2 CAGR = Compound Average Growth Rate (1986 - 2022)
3 Scope 1 + 2 reduction versus our 2017 base year.
38
Strategic Report Key Performance Indicators
Key Performance
Indicators
Kerry’s value creation model is a combination of
growth, return and sustainability metrics, which
have helped the Group achieve its strong track
record of long-term shareholder return.
Metric
Performance
Commentary
GROWTH
Volume
Growth
+6.1%
EBITDA
Margin
(80bps)
2022
2022
2021
2021
2020
2020
(2.9%)
(2.9%)
6.1%
6.1%
8.0%
8.0%
2022
2022
2021
2021
2020
2020
€1,216m
€1,216m
13.9%
13.9%
2022
2022
€1,077m
€1,077m
14.7%
14.7%
€998m
€998m
14.4%
14.4%
2021
2021
2020
2020
10.3%
10.3%
10.5%
10.5%
10.4%
10.4%
2022
2022
2021
2021
€640m
€640m
82%
82%
€566m
€566m
84%
84%
2020
2020
€412m
€412m
67%
67%
Group volumes increased by 6.1%, which
represented a strong performance given
the significant level of pricing in the year
and the strong prior year comparatives.
EBITDA growth was strong in the year, increasing from
€1,077m to €1,216m, with EBITDA margin decreasing
by 80bps due to the significant dilutive impact of
passing through input cost inflation in prices.
Strategic Importance /
Link to Remuneration
Volume growth is an important metric as it
is a 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.
EBITDA 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 on a
constant currency basis, which is a metric for the
long-term incentive plan.
Comparable
IFRS measure
Reported revenue growth:
+19.3% (2021: +5.7%).
Operating profit:
(13.6%) (2021: +25.2%).
For more information see the Supplementary Information section – Financial Definitions on pages 255-259.
Return on Average Capital
Employed (ROACE) for the year
was 10.3% reflective of recent
portfolio developments.
Cash Conversion was 82% reflecting
a working capital investment partially
offset by lower net capital expenditure
due to the timing of projects.
ROACE is a key measure of the return
Cash conversion is an important metric
the Group achieves on its investment
as it measures how much of the Group’s
in capital expenditure projects,
acquisitions and other strategic
adjusted earnings is converted into cash.
It is a performance metric for the
investments. It is a performance
short-term incentive plan.
metric for the long-term incentive plan.
There is no IFRS measure
comparable to ROACE.
Net cash from operating activities:
€721.8m (2021: €654.0m).
Metric
Performance
SUSTAINABILITY
Nutritional Reach
1.2 billion
2022
2021
2020
1.2 billion
1.1 billion
1.0 billion
Commentary
Nutritional Reach is a measure of the number of consumers
we impact with positive and balanced nutritional solutions
as we strive to be Better for People.
Strategic Importance /
Link to Remuneration
As consumers seek healthier more sustainable diets,
Kerry is ideally placed to support customers in the
development of products that deliver sustainable nutrition.
This is a sustainability performance metric within the
long-term incentive plan.
Further definitions, calculations and detail for these are set out above and within the Sustainability Review on pages 52-73.
2022
2021
2020
18%
48%
33%
2022
2021
32%
17%
2020
15%
Scope 1 & 2 Carbon Reduction is a
Food waste reduction measures food
measure of progress towards Kerry's
loss and waste across our operations,
environmental targets, as part of its
and aligns with UN SDG 12 and our
Better for Planet ambition.
Better for Planet ambition.
At Kerry, we are addressing our
operational emissions as part of
We are committed to halving food waste
across our operations and supporting
our total carbon footprint and are
our customers in reducing their food
committed to achieving Net Zero
waste with sustainable solutions. This
before 2050. This is a sustainability
is a sustainability performance metric
performance metric within the
within the long-term incentive plan.
long-term incentive plan.
Kerry Group Annual Report 2022 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.
Kerry Group Annual Report 2022
39
RETURN
RETURN
Return on Average
Capital Employed
10.3%
Free Cash Flow
Conversion
82%
OUR VALUE
CREATION
FRAMEWORK
2022
2022
6.1%
6.1%
2022
2022
€1,216m
€1,216m
13.9%
13.9%
2022
2022
10.3%
10.3%
2022
2022
€640m
€640m
82%
82%
2021
2021
8.0%
8.0%
2021
2021
€1,077m
€1,077m
14.7%
14.7%
2021
2021
10.5%
10.5%
2021
2021
€566m
€566m
84%
84%
2020
(2.9%)
2020
(2.9%)
2020
2020
€998m
€998m
14.4%
14.4%
2020
2020
10.4%
10.4%
2020
2020
€412m
€412m
67%
67%
GROWTH
RETURN
Group volumes increased by 6.1%, which
EBITDA growth was strong in the year, increasing from
represented a strong performance given
€1,077m to €1,216m, with EBITDA margin decreasing
the significant level of pricing in the year
by 80bps due to the significant dilutive impact of
and the strong prior year comparatives.
passing through input cost inflation in prices.
Strategic Importance /
Link to Remuneration
Volume growth is an important metric as it
EBITDA margin expansion is a key measure of
is a key driver of organic top-line business
profitability. It is a metric in the short-term incentive
improvement. It is a metric in the short-term
plan and is a key driver of adjusted EPS growth on a
incentive plan and is a key driver of adjusted
constant currency basis, which is a metric for the
EPS growth, which is a metric for the long-
long-term incentive plan.
term incentive plan.
Comparable
IFRS measure
Reported revenue growth:
+19.3% (2021: +5.7%).
Operating profit:
(13.6%) (2021: +25.2%).
Return on Average Capital
Employed (ROACE) for the year
was 10.3% reflective of recent
portfolio developments.
Cash Conversion was 82% reflecting
a working capital investment partially
offset by lower net capital expenditure
due to the timing of projects.
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.
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.
There is no IFRS measure
comparable to ROACE.
Net cash from operating activities:
€721.8m (2021: €654.0m).
SUSTAINABILITY
LONG-TERM
SHAREHOLDER
RETURN
€84
€40
€13
Carbon Reduction
48%
Reduction in Food Waste
32%
2002
2012
2022
Metric
Performance
Commentary
Metric
Performance
2022
2021
2020
1.2 billion
2022
1.1 billion
2021
1.2 billion
1.1 billion
1.0 billion
2020
1.0 billion
2022
2021
2020
18%
33%
48%
2022
2021
2020
48%
33%
2022
2021
32%
17%
2022
2021
17%
18%
2020
15%
2020
15%
2020
Commentary
Nutritional Reach is a measure of the number of consumers
we impact with positive and balanced nutritional solutions
as we strive to be Better for People.
Strategic Importance /
Link to Remuneration
As consumers seek healthier more sustainable diets,
Kerry is ideally placed to support customers in the
development of products that deliver sustainable nutrition.
This is a sustainability performance metric within the
long-term incentive plan.
Scope 1 & 2 Carbon Reduction is a
measure of progress towards Kerry's
environmental targets, as part of its
Better for Planet ambition.
Food waste reduction measures food
loss and waste across our operations,
and aligns with UN SDG 12 and our
Better for Planet ambition.
At Kerry, we are addressing our
operational emissions as part of
our total carbon footprint and are
committed to achieving Net Zero
before 2050. This is a sustainability
performance metric within the
long-term incentive plan.
We are committed to halving food waste
across our operations and supporting
our customers in reducing their food
waste with sustainable solutions. This
is a sustainability performance metric
within the long-term incentive plan.
SHARE PRICE HISTORY
32%
Total shareholder return (TSR)
for the year decreased by 25%, as
global markets and share prices
were impacted by a number of
macroeconomic developments.
Kerry’s TSR has grown at a
compound annual growth rate of
9% and 10% over the past 10 and
20 years respectively.
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.
40
40
Strategic Report Financial Review
Kerry Group Annual Report 2022
9.0
8.5
8.0
7.5
7.0
6.5
Financial Review
We delivered strong
growth through a
year of unprecedented
macroeconomic
challenges.
Marguerite Larkin
Chief Financial Officer
1250
1200
500
1070
1150
The Financial Review provides an overview of the Group’s financial
performance for the year ended 31 December 2022 and the Group’s
financial position at that date.
1050
1050
1030
1100
450
400
1010
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 good,
long-term track record and a disciplined financial approach of targeting continued growth
while meeting return on investment objectives.
850
900
990
800
300
970
350
1000
950
750
250
950
Key Financial Metrics
Growth
Return
Revenue
Volume
Growth
+6.1%
€8.8bn
€7.4bn
EBITDA
Margin %
Adjusted
EPS Growth
(ccy)
ROACE
Free
Cash Flow
Conversion
13.9%
+7.3%
10.3%
82%
€1.2bn
13.9%
€1.1bn
14.7%
441c
10.5%
10.3%
381c
€640m
€566m
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
Further detail is set out within the Key Performance Indicators section on pages 38-39 and within the Supplementary
Information section - Financial Definitions on pages 255-259.
660
640
620
600
580
560
540
520
500
480
460
Kerry Group Annual Report 2022
41
Kerry Group
Kerry Group
Kerry Group
+7.0%
+7.0%
+7.0%
+11.7%
+11.7%
+11.7%
+4.3%
+4.3%
+4.3%
(9.8%)
(9.8%)
(9.8%)
+19.3%
€8,771.9m
+19.3%
+19.3%
€8,771.9m
€8,771.9m
+6.1%
+6.1%
+6.1%
€7,350.6m
€7,350.6m
€7,350.6m
FY 2021
FY 2021
FY 2021
FY 2021
FY 2021
FY 2021
Volume
Volume
Volume
+8.0%
+8.0%
+8.0%
Price
Price
Price
+1.2%
+1.2%
+1.2%
Currency
Acquisitions Disposals
FY 2022
Currency
Currency
(1.8%)
Acquisitions Disposals
Acquisitions Disposals
+1.8%
(3.5%)
(1.8%)
(1.8%)
+1.8%
+1.8%
(3.5%)
(3.5%)
FY 2022
FY 2022
+5.7%
+5.7%
+5.7%
+29.4%
€7,416.6m
+29.4%
+29.4%
€7,416.6m
€7,416.6m
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
+7.8%
+7.8%
+7.8%
€5,729.4m
€5,729.4m
€5,729.4m
+5.6%
+5.6%
+5.6%
(1.1%)
(1.1%)
(1.1%)
+8.4%
+8.4%
+8.4%
+8.7%
+8.7%
+8.7%
FY 2021
FY 2021
FY 2021
FY 2021
FY 2021
FY 2021
Volume
Volume
Volume
+8.7%
+8.7%
+8.7%
Price
Price
Price
+0.9%
+0.9%
+0.9%
Currency
Acquisitions Disposals
FY 2022
Currency
Currency
(2.8%)
Acquisitions Disposals
Acquisitions Disposals
+2.4%
-
(2.8%)
(2.8%)
+2.4%
+2.4%
-
-
Dairy Ireland
Dairy Ireland
Dairy Ireland
€1,777.6m
€1,777.6m
€1,777.6m
+0.1%
+0.1%
+0.1%
+22.8%
+22.8%
+22.8%
+1.3%
+1.3%
+1.3%
(37.6%)
(37.6%)
(37.6%)
FY 2022
FY 2022
+9.2%
+9.2%
+9.2%
(13.4%)
€1,538.9m
(13.4%)
(13.4%)
€1,538.9m
€1,538.9m
Growth
Revenue
We delivered strong revenue growth in
2022 with reported revenue of €8.8bn
up 19.3% from €7.4bn. This was driven
primarily from volume growth of 6.1%
(2021: 8.0%) and significant price increase
of 11.7% (2021: 1.2%) offset by the disposal
of the Meats and Meals business in Q4
2021 and the exit of all Group activities
in Russia and Belarus.
Revenue in the Taste & Nutrition segment
increased by 29.4% from €5.7bn in 2021
to €7.4bn. Volume growth represented
7.8% (2021: 8.7%) and this growth was
broad-based across all three regions.
Price increases of 8.7% (2021: 0.9%) reflect
significant input cost increases across
all three regions including energy,
most notably in Europe.
Dairy Ireland revenue, on a reported basis,
decreased from €1.8bn in 2021 to €1.5bn,
driven by the disposal of the Meats and
Meals business. Revenue growth was
primarily driven by dairy market prices
reflecting 22.8% (2021: 1.8%) of price
increases. Volume growth was modest
at 0.1% (2021: 6.2%).
FY 2021
Volume
FY 2021
FY 2021
FY 2021
FY 2021
FY 2021
Volume
Volume
+6.2%
+6.2%
+6.2%
Price
Price
Price
+1.8%
+1.8%
+1.8%
Currency
Currency
Currency
+1.1%
+1.1%
+1.1%
Disposals
Disposals
Disposals
(13.0%)
(13.0%)
(13.0%)
FY 2022
FY 2022
FY 2022
(3.9%)
(3.9%)
(3.9%)
EBITDA & Margin %
Kerry Group
Taste & Nutrition
Dairy Ireland
13.9%
€1.2bn
€1.2bn
14.7%
€1.1bn
€1.1bn
16.5%
17.7%
€1.2bn
€1.2bn
€1.0bn
€1.0bn
7.7%
€0.14bn
6.3%1
4.6%
€0.07bn
€0.07bn €0.07bn
Group EBITDA increased 12.9% from
€1.1bn to €1.2bn driven primarily by the
strong volume performance in Taste &
Nutrition. Reported EBITDA margin of
13.9% (2021: 14.7%) reflects the pricing
impact on margin of 180bps, offset by
the overall, positive impacts of portfolio
development, operating leverage, mix
and efficiencies.
1 Prior year Pro-Forma EBITDA & Margin
comparative for Dairy Ireland excluding
disposed Meats and Meals business
2021 2022
2021
2022
2021
2021PF
2022
A comprehensive analysis of the revenue and trading performance of the Taste & Nutrition and Dairy Ireland divisions is included
in the Business Reviews on pages 47-51.
42
Strategic Report Financial Review
Growth (continued)
EBITDA & Margin % (continued)
Revenue
EBITDA
EBITDA margin
Depreciation (net)
Computer software amortisation
Finance costs (net)
Share of joint ventures' results after taxation
Adjusted earnings before taxation
Income taxes (excluding non-trading items)
%
change
+19.3%
+12.9%
Adjusted earnings after taxation
+15.8%
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
Computer Software Amortisation
2022
€'m
8,771.9
1,216.1
13.9%
(221.6)
(31.8)
(66.2)
(0.4)
896.1
(114.5)
781.6
(50.9)
(124.2)
606.5
2021
€'m
7,350.6
1,077.0
14.7%
(201.5)
(34.6)
(69.9)
-
771.0
(96.2)
674.8
(46.2)
134.4
763.0
EPS cent
EPS cent
341.9
28.7
70.0
440.6
430.6
26.0
(75.8)
380.8
(20.6%)
+15.7%
(8.4%)
+7.3%
Computer software amortisation decreased by €2.8m to €31.8m (2021: €34.6m) reflecting the completion of the
KerryConnect programme and the disposal of the Meats and Meals business.
Brand Related Intangible Asset Amortisation
Brand related intangible asset amortisation increased to €50.9m (2021: €46.2m) which is reflective of recent
acquisition activity.
Finance Costs (net)
Finance costs (net) for the year decreased by €3.7m to €66.2m (2021: €69.9m) primarily due to deposit interest
earned on cash at bank. The Group's average cost of finance for the year was 2.3% (2021: 2.7%).
Taxation
The tax charge for the year before non-trading items was €114.5m (2021: €96.2m) representing an effective tax rate
of 13.5% (2021: 13.3%) and reflective of the geographical mix of earnings.
Non-Trading Items
During the year, the Group incurred a non-trading charge of €124.2m (2021: €134.4m credit) net of tax. The charge in
the year primarily related to the impairment of the Group’s Russia and Belarus assets and the previously announced
Accelerate Operational Excellence transformation programme, which predominantly reflects consultancy fees, project
management costs and costs of streamlining operations while we work to enhance our continuous improvement in
manufacturing processes and deliver step change manufacturing excellence across the organisation. The credit in
the prior year primarily related to the gain on the disposal of the Meats and Meals business, partially offset by costs
related to acquisition integration.
Foreign Exchange
Group results are impacted by year-on-year fluctuations in exchange rates versus the euro. The primary rates driving
the currency impact in the figures above were USD and GBP which had average rates of 1.05 (2021: 1.19) and 0.85
(2021: 0.86) respectively.
Kerry Group Annual Report 2022 Return
Capital Employed
Total capital employed
Average capital employed
Adjusted profit
Average capital employed
Return on average capital employed
Kerry Group Annual Report 2022
43
2022
€’m
H1 2022
€’m
2021
€’m
H1 2021
€’m
2020
€’m
8,439.3
8,236.5
8,545.0
7,725.3
6,943.7
6,600.6
7,089.9
2022
€'m
847.7
2021
€'m
744.7
8,236.5
7,089.9
10.3%
10.5%
Further detail is set out within the Supplementary Information section - Financial Definitions on pages 255-259.
The movement in ROACE is primarily due to the timing of acquisitions and divestments and the translation impact on
underlying assets.
Free Cash Flow
In 2022, the Group achieved free cash flow of €640.4m (2021: €566.1m) reflecting 82% cash conversion in the year.
Free Cash Flow
EBITDA
Movement in average working capital
Pension contributions paid less pension expense
Finance costs paid (net)
Income taxes paid
Purchase of non-current assets
Sales proceeds on disposal 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.
2022
€’m
1,216.1
(201.4)
(15.7)
(62.0)
(80.0)
2021
€’m
1,077.0
(37.7)
(14.7)
(71.3)
(72.0)
(254.7)
(334.6)
38.1
640.4
82%
19.4
566.1
84%
The average working capital investment is significant, primarily due to the unprecedented levels of inflation and
volume growth. This is further reflected in the overall year on year investment in working capital of €224m from
December 2021 to December 2022. The Group had lower capital expenditure in the year due to timing of projects and
the conclusion of a number of significant investments in 2021 including the rollout of KerryConnect in North America.
Maturity Profile of 2022 Total Net Debt
Total Net Debt = €2,217m
€1,492m
€985m
(€277m)
Within 1 year
€17m
Between 1 and 2 years
Between 2 and 5 years
Over 5 years
The weighted average maturity of net debt in years is 4.6. The weighted average maturity excluding the 2023 Bond
repayable in April 2023 is 5.8 years.
44
Strategic Report Financial Review
Return (continued)
Key Financial Ratios
The Group's balance sheet is in a strong position. With a Net debt to EBITDA ratio of 1.8 times, the Group has
sufficient headroom to support future growth plans.
Net debt EBITDA
EBITDA: Net interest
Total Net Debt
2022
1.8
18.1
2021
2.0
14.9
Total net debt at the end of the year was €2,217.4m (2021: €2,124.1 m). The increase during the year is analysed in
the table below:
Movement in Total Net Debt
Free cash flow
2022
€'m
640.4
2021
€'m
566.1
Acquisitions (net of disposals) including payments relating to previous acquisitions
(391.2)
(344.0)
Purchase of financial asset investments
Difference between average working capital and year end working capital
Share of results from joint ventures
Non-trading items
Dividends paid
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
(10.4)
(22.6)
-
(85.4)
(4.4)
(146.6)
(3.9)
(76.1)
(173.6)
(157.5)
(27.2)
(70.0)
1.4
(29.7)
(98.3)
(0.7)
(167.1)
(0.1)
(19.1)
(186.3)
(2,049.9)
(1,863.6)
(2,148.2)
(2,049.9)
(69.2)
(74.2)
(2,217.4)
(2,124.1)
The exchange translation adjustment of €29.7m results primarily from borrowings denominated in US dollar
translated at a year end rate of $1.07 versus a rate of $1.13 in 2021.
Financing
Undrawn committed facilities at the end of the year were €1,100m (2021: €1,100m) while undrawn standby facilities
were €343.0m (2021: €337.0m).
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, €70.7m (2021:
€100.0m) was on short term deposit under a Sustainable Deposits programme.
Kerry Group Annual Report 2022 45
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 sustainability 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
2022 Performance
In 2022, we made continued, strong progress against both targets, delivering a 48% (2021:33%) reduction in our absolute
Scope 1 & 2 emissions and a 32% (2021:17%) reduction in our food waste volumes, versus a 2017 baseline for both KPIs.
Emissions (CO2e)
2022
20171
Food Waste
Scope 1 & 2 (Tonnes)
486,146
938,001
Tonnes
% change
48%
% change
20171
14,097
2022
9,636
32%
1 The 2017 KPI baseline has been adjusted in accordance with our November 2021 Sustainability-Linked Bond Framework Recalculation
Policy, to take into account structural changes including acquisitions and divestitures.
For more details on our progress in reducing emissions and food waste, see our Sustainability Review on page 52 and
also our 2022 Sustainability Report at kerry.com.
Financial Risk Management
Within the Group risk management framework as described in the Risk Management Report on page 95, 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 94-105 and in note 24 to the Consolidated Financial Statements.
Dividend and Annual General Meeting
During the year, the Group paid an interim dividend of 31.4 cent per A ordinary share, which was an increase of
10.2%. The Board has proposed a final dividend of 73.4 cent per A ordinary share, payable on 12 May 2023 to
shareholders registered on the record date of 14 April 2023. When combined with the interim dividend, the total
dividend for the year amounts to 104.8 cent per share (2021: 95.2 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 16.1%.
Kerry's Annual General Meeting is scheduled to take place on 27 April 2023.
Kerry Group Annual Report 2022 46
Strategic Report Financial Review
Kerry Group Annual Report 2022
10 Year Earnings History
A strong history of positive results
Revenue
EBITDA*
2013
€'m
2014
€'m
2015
€'m
2016
€'m
2017
€'m
2018
€'m
2019
€'m
2020
€'m
2021
€'m
2022
€’m
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 8,771.9
720.3
739.9
823.6
878.8
915.2
939.7 1,094.1
997.9 1,077.0 1,216.1
Depreciation (net)*
(108.9)
(103.5)
(123.5)
(129.2)
(133.9)
(134.1)
(191.4)
(200.7)
(201.5) (221.6)
Computer software amortisation
(11.5)
(13.6)
(18.7)
(23.4)
(24.3)
(25.0)
(26.5)
(28.4)
(34.6)
(31.8)
Finance costs (net)
(67.6)
(52.9)
(69.3)
(70.4)
(65.6)
(67.0)
(81.6)
(72.4)
(69.9)
(66.2)
Share of joint ventures' results after taxation
-
-
-
-
-
-
-
-
-
(0.4)
Adjusted earnings before taxation**
532.3
569.9
612.1
655.8
691.4
713.6
794.6
696.4
771.0
896.1
Income taxes (excluding non-trading items)
(79.1)
(79.6)
(81.1)
(86.7)
(89.5)
(89.2)
(98.6)
(85.1)
(96.2) (114.5)
Adjusted earnings after taxation**
453.2
490.3
531.0
569.1
601.9
624.4
696.0
611.3
674.8
781.6
Brand related intangible asset amortisation
(16.6)
(14.4)
(18.7)
(23.0)
(23.6)
(28.8)
(37.8)
(41.7)
(46.2)
(50.9)
Non-trading items (net of related tax)
(352.2)
4.0
13.1
(13.0)
10.2
(55.1)
(91.7)
(15.5)
134.4 (124.2)
Profit after taxation
84.4
479.9
525.4
533.1
588.5
540.5
566.5
554.1
763.0
606.5
Non-controlling interests
-
-
-
-
-
-
-
-
-
(0.1)
Profit after taxation attributable to
equity holders of the parent
84.4
479.9
525.4
533.1
588.5
540.5
566.5
554.1
763.0
606.4
Adjusted EPS (cent)**
257.9
278.9
301.9
323.4
341.2
353.4
393.7
345.4
380.8
440.6
* Following the adoption of IFRS 16, depreciation on right-of-use assets is recorded for the financial years 2019 to 2022. Comparatives from
prior financial years have not been represented in line with this.
** 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 257.
Kerry Group Annual Report 2022
47
Business Review
TASTE & NUTRITION
Revenue
€7.4bn
Volume Growth
+7.8%
EBITDA
€1.2bn
EBITDA Margin
16.5%
48
Strategic Report Business Review
Kerry Group Annual Report 2022
Taste & Nutrition
Very strong growth across our
Food and Beverage EUMs
Retail channel volume growth
of 5.5% with foodservice growth of 14.0%
Pricing of 8.7% reflected the strong
management of input cost inflation
EBITDA increased by 20.4% to €1.2bn, with
overall margin reduction resulting from the
effect of passing through input cost inflation
Taste & Nutrition reported revenue increased by
29.4% to €7.4 billion in the year.
Very strong volume growth was achieved through
the year across all regions, despite the backdrop
of managing significant price increases and supply
chain constraints. This volume growth was supported
by strong performances in Kerry’s authentic taste
technologies across botanicals, natural extracts and
Tastesense® salt and sugar reduction, while Kerry’s
range of food waste reduction technologies continued
to perform well.
The retail channel delivered strong growth with
customers targeting innovation around new taste
experiences, relative value options, improved
nutrition and food waste reduction. Kerry’s
foodservice channel delivered very strong growth
through seasonal products and limited time offerings,
combined with continued co-development on back-of-
house efficiencies.
Business volumes in emerging markets increased by
10.4% in the year, as very strong growth in the Middle
East, Southeast Asia and LATAM were partially offset
by challenging conditions in China.
Excellent growth across
our end use markets,
regions and channels.
Kerry Group Annual Report 2022
49
Americas
Region
Volume growth of 8.4%
Growth led by Meat, Beverage and Bakery
Very strong growth across both retail
and foodservice channels
LATAM delivered excellent growth
Europe
Region
Volume growth of 6.2%
Snacks, Dairy and Meals
delivered strongest growth
Growth led by foodservice
while retail performed well
Revenue in the region increased by 33.0% to €4.2
billion in the year. This reflected volume growth
of 8.4%, increased pricing of 7.4%, favourable
transaction currency of 0.1% and favourable
translation currency of 12.5%, with a contribution
from acquisitions of 4.6%.
Revenue in the region increased by 25.1% to €1.5
billion in the year. This reflected volume growth
of 6.2%, increased pricing of 13.9%, favourable
transaction currency of 0.2% and translation
currency of 2.1%, with a contribution from
acquisitions net of disposals of 2.7%.
Growth in the year was particularly strong given
the economic backdrop in the region. The Snacks
EUM delivered strong growth through savoury taste
launches and Kerry’s Tastesense® salt reduction
technology portfolio, given increased customer
focus on enhancing product nutritional profiles.
Growth in Dairy was supported by new innovations
in ice-cream and dairy alternative launches in the
foodservice channel, while Meals continued to
achieve good growth through taste systems and
functional solutions. Performance in the foodservice
channel was supported by continued innovation
with quick service restaurants on new menu
development and seasonal products.
Growth across the region was strongest in Central
and Southern Europe, while the UK and Ireland
had a very strong finish to the year. Performance
in Eastern Europe was impacted by the ongoing
war in the region. During the year, the Group
divested its operations in Russia and Belarus, while
further investing in its biotechnology capabilities
with the acquisition of c-LEcta, which is a leading
biotechnology innovation company based in
Leipzig, Germany.
Growth in North America remained strong across
both retail and foodservice channels through the
year. This was led by an excellent performance
in Meat and Meat Alternatives across food
preservation, culinary taste, texture systems and
clean-smoke technologies. Performance in the
Beverage EUM continued to be strong, driven by
new innovations incorporating Kerry’s authentic
natural taste, coffee extract and Tastesense® sugar
reduction technologies. Good performance was
achieved in Bakery through increased demand for
functional solutions and texture systems, while
Snacks continued to deliver strong growth with
category leaders. Growth in foodservice remained
strong due to seasonal and promotional menu
offerings, as well as new launches enhancing back-
of-house efficiency for customers across both food
and beverage applications.
LATAM delivered excellent growth across the year led
by Mexico and Brazil. Volume growth in Mexico was
strong across Beverage and Snacks, supported by
wins in authentic taste, while volumes in Brazil were
driven by performance in Meals and Meat.
Within the global Pharma EUM, volumes in
excipients were lower in the year due to supply
chain constraints.
During the year, the Group acquired the B2B
powdered cheese business and related assets
of the Kraft Heinz Company based in the US,
enhancing Kerry’s scale, manufacturing capability
and customer base in the snacking category.
50
50
Strategic Report Business Review
Strategic Report Business Review
Kerry Group Annual Report 2022
APMEA
Region
Volume growth of 8.1%
Growth led by Snacks,
Meat and Bakery
Middle East and Southeast Asia
achieved excellent growth
Revenue in the region increased by 26.8% to €1.7
billion in the year. This reflected volume growth
of 8.1%, increased pricing of 7.1%, favourable
transaction currency of 0.2% and translation currency
of 4.5%, with a contribution from acquisitions of 6.9%.
Growth in the region was primarily driven by
very strong performances in the Middle East and
Southeast Asia, partially offset by performance in
China, which was impacted by localised COVID-19
related restrictions across the course of the year.
Overall growth was strong across all end use markets
and channels. Snacks achieved very strong growth
driven by local authentic taste innovations with
regional leaders. Growth in Meat was led by savoury
taste and smoke innovations, particularly in the
foodservice channel, while growth in Bakery was
supported by texture solutions and increased demand
for preservation systems.
The Group continued to enhance its local presence
in the region through the acquisition of Almer in
Malaysia and its continued footprint expansion in
the Middle East, which has become an important
contributor to growth in the region.
Kerry Group Annual Report 2022
51
Business Review
Business Review
DAIRY IRELAND
DAIRY IRELAND
Revenue
€1.5bn
Volume Growth
+0.2%¹
EBITDA
€71m
EBITDA Margin
4.6%
Overall volume growth of 0.2%¹ against
very strong prior year comparatives
Pricing of 36.0%¹ reflected significant increases
in dairy prices and other input costs
EBITDA margin reduction resulting from the
effect of passing through input cost inflation
Dairy Ireland reported revenue in the year was €1.5 billion,
which represented an increase of 37.1% on a pro-forma
basis, driven primarily by increased pricing. Overall reported
revenue decreased by 13.4%, as increased pricing was more
than offset by the impact of the Meats and Meals business
disposal in the prior year.
Overall volumes in Dairy Ireland were similar to the prior year,
with the heightened inflationary cost environment resulting in
significant price increases across the business.
Within Dairy Consumer Products, overall category volumes in
the year were lower, reflective of significant price increases and
strong prior year comparatives. Within the spreads category,
good performance was achieved across Kerry’s customer-
branded ranges, while cheese snacking volumes were impacted
by reduced promotional activity across the year.
Dairy Ingredients delivered volume growth, while prices
remained significantly higher as a result of constrained global
supply dynamics.
1 Pro-forma performance of represented segmental structure excluding the Consumer Foods Meats and Meals business disposal
52
Strategic Report Sustainability Review
Kerry Group Annual Report 2022
Sustainability Review
Beyond the Horizon
The complex challenge of
providing adequate nutrition
for a growing, global population
while reducing negative
environmental and social
impacts is among the most
urgent issues for our industry.
At Kerry, our Beyond the Horizon strategy creates
a framework for addressing this challenge as we
partner with customers to create healthier, great
tasting and more sustainable products for more
than a billion people worldwide.
By focusing on how we impact People, Society and the Planet, our
sustainability commitments guide how we source our materials,
how we innovate and create and how we produce customer
solutions that inspire food and nourish life. Core to this strategy
is our ambition to reach over two billion people with sustainable
nutrition solutions by 2030, creating products and solutions that
maintain good health, while protecting people and the planet.
Sustainable
Nutrition
Better for
People
Better for
Society
Better for
Planet
Our 2030 goal is to reach
over two billion people with
solutions that maintain
good health while protecting
people and the planet.
We co-create products
that deliver better nutrition
for consumers with no
compromise on taste.
We are committed to doing
business with integrity and
seek to enhance the lives
of all those with whom
we engage.
We are reducing our
environmental footprint and
enabling our customers to
lower their product impacts in
areas like carbon and waste.
What Guides Us
Our commitment to sustainability
informs how we run our business.
The Group’s Board of Directors govern
our Beyond the Horizon strategy, which
considers the views of internal and
external stakeholders, emerging
insights on sustainability, and
various frameworks and best practice
approaches through which we create
tangible goals, targets and the pipeline
and processes to achieve these.
Sustainable Development Goals
The United Nations Sustainable
Development Goals (SDGs) provide a
global framework to unite governments,
business and communities on a
common pathway towards more
sustainable development by 2030.
Challenges including a global pandemic,
a changing economic environment and
an increasingly polarised political
landscape have hampered progress,
requiring all stakeholders to intensify
efforts to ensure that this vision is
achieved by 2030.
The food system has a critical role to
play in realising the SDGs and 12 of the
17 goals contain indicators that are
highly relevant to nutrition1. Kerry’s
integrated solutions capabilities,
innovation expertise and sustainability
commitments mean we are best placed
to make the most significant contribution
to goals 2, 3 and 12.
53
Supporting the UN Sustainable Development Goals
Goal 2:
Zero Hunger
Goal 3:
Good Health & Well-being
Goal 12:
Responsible Consumption
and Production
Kerry helps people access sufficient
amounts of the right nutrition in a
cost-effective way while working with
producers to sustainably intensify
production and improve livelihoods.
Kerry supports good health and
well-being and helps reduce the
risk of mortality through the co-
creation of products that improve
consumer diets.
Kerry uses natural resources
responsibly and enables our customers
to consume and produce more
sustainably through our innovation
expertise and technology portfolio.
SDG
Target Area
Kerry’s Role
Impact Examples
Goal 2:
Zero Hunger
2.1
Access to safe,
nutritious and
sufficient food
We create cost effective nutrition
solutions to ensure all consumers
can access products which are safe,
nutritious and 'better-for-you'.
2.2
Ending all forms
of malnutrition
2.4
Sustainable
production
systems
Our portfolio inspires the creation
of healthy foods, beverages and
supplements that address the most
common consumer health needs.
Working with suppliers, we support
the adoption of agricultural practices
that increase resilience, productivity
and help maintain ecosystems.
Goal 3:
Good Health &
Well-being
3.4
Reduce premature
mortality from
non-communicable
diseases
We work with our customers to enhance
the nutritional profile of consumer
products and help them to move along
the sustainable nutrition spectrum.
For more see page 57.
Kerry's PuremulTM is an innovative
solution to replace sunflower
lecithin and overcome sunflower
supply issues and associated cost
challenges.
Over 80% of Kerry’s portfolio
contributes to positive and
balanced nutrition solutions.
Kerry’s Evolve Dairy Programme
incentivises close to 3,000 dairy
farmers to reduce emissions and
adopt more sustainable farm
practices.
Kerry reached 1.2 billion people
with positive and balanced
nutrition solutions in 2022.
Goal 12:
Responsible
Consumption
& Production
12.3
Halve global
food waste
12.5
Reduce waste
generation
We are targeting a 50% reduction in
food waste from operations by 2030 and
our food protection and preservation
ingredients can play a significant role to
address downstream losses.
Our innovation and process expertise
helps to prevent food waste, recovering
by-products for ‘upcycling’ into raw
materials and/or finished products.
Kerry reduced food waste from
operations by 32% and extended
the shelf life of 52 billion meat
servings in 2022.
Kerry has initiated a number of
projects in this area, for example,
working with Upcycled Foods Inc.
to launch a protein crisp developed
using spent brewing grains.
1 Linking nutrition and the SDGs | Scaling Up Nutrition
Kerry Group Annual Report 2022
54
Stakeholder Groups
Shareholders
Listening to our Stakeholders
The systemic nature of the challenges facing
our industry and the scale of transformation
required means that we must continuously evolve
our approach. We believe ongoing and inclusive
stakeholder engagement is the best way to address
this. We are in dialogue with expert partners,
industry bodies, academic institutions and local
groups as well as employees, customers and
consumers, shareholders, suppliers, communities
and government. For more on our identification and
approach to stakeholder engagement, see our 2022
Sustainability Report on kerry.com and the Corporate
Governance Report on pages 122-125.
Identifying Areas of Impact
Given the scale and complexity of challenges relating
to sustainability, it is vital that we identify the most
material impact areas for our business and prioritise
our efforts accordingly. Kerry’s material topics are
defined through a comprehensive review involving
detailed research and broad-based engagement
of our internal and external stakeholders. In our
most recent assessment in late 2021, we integrated
the principle of dynamic materiality within the
assessment process. Our assessment of outward
impact uses the UN SDGs as a guiding framework
and through expert stakeholder input, we defined
key areas where Kerry can have the greatest
environmental and socio-economic influence.
INDUSTRY
RECOGNITION
IN ROME
Kerry’s facility in Rome,
Georgia, USA was
the winner of Food
Engineering magazine’s
2022 Sustainable Project
of the Year. The facility
recently underwent a
$125 million renovation
and expansion while
continuing production
safely and achieving
sustainability goals. The
Rome facility achieved its
100% renewable electricity
goal and utilised an
energy-efficient design
to align with the Group’s
sustainability objectives.
Kerry Group Annual Report 2022Strategic Report Sustainability Review Kerry Group Annual Report 2022
55
The outputs of our materiality assessment are reflected
in the matrix below. In 2022, we kept these topics
under internal review, seeing increasing engagement
on topics such as ‘Transparency & Reporting’, ‘Biodiversity
Protection’ and ‘Global Events & Geopolitical Context’
throughout the year.
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 98-104. For more on
materiality see our 2022 Sustainability Report.
Materiality Matrix
Better for People
Better for Society
Better for Planet
Other
(Scale denotes Kerry's potential impact)
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
Sustainable
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 has maintained the
leading MSCI ESG Rating
of AAA for its performance
on Environmental, Social
and Governance issues in 2022.
Origin Green:
Kerry is proud to be among
the gold members of this world-
leading programme, recognising
companies who are performing
at a high level or excelling in their
sustainability performance.
Assurance:
Many of the metrics in this Sustainability Review, including our progress
towards our Nutritional Reach Goal are independently assured by Jacobs
UK Ltd to AA1000 Assurance Standard. The full assurance statement can
be found at kerry.com/sustainability.
KPI Definitions and Scope:
For details of definition, scope
and calculation methodologies of
sustainability KPIs, see our 2022
Sustainability Report at kerry.com.
56
Strategic Report Sustainability Review
Kerry Group Annual Report 2022
Better for People
Our goal is to provide sustainable nutrition solutions
for over two billion people by 2030.
Healthy and affordable diets are out of reach for more
than one third of the global population. In 2022, the UN
Food and Agriculture Organisation (FAO) reported that
3.1 billion people did not have access to safe, affordable
and nutritious food1. Malnutrition spans a range of
nutritional inadequacies from chronic hunger, protein
and micronutrient deficiencies to obesity.
Good Health and Wellbeing
Consumers are increasingly mindful of the link between diet and health, and
they want to make choices that reflect this. We can help by ensuring healthier
food and beverage options are available. For instance, poor quality diets
high in saturated fat, sodium and sugar (HFSS) can lead to diseases such as
cardiovascular disease and type 2 diabetes, which account for one fifth of
all adult deaths each year2. Many governments worldwide are introducing
legislation to encourage healthier diets, including a ban on marketing of HFSS
foods and the introduction of easy-to-read, front of pack nutrition labelling.
Efforts such as these are influencing the food industry to create healthier
products that still taste great. Helping our customers unlock new formulations
to achieve this is a key way in which we can contribute to achieving the
UN Sustainable Development Goal 3 ‘Good Health and Wellbeing.’
Kerry Group Annual Report 2022
57
CONSUMER
DEMAND FOR
WELLBEING
With the acquisition of botanical
extract company Natreon in 2022, we
added Sensoril® ashwagandha to our
portfolio. The ashwagandha plant was
valued in ancient Ayurvedic medicine
for its wellness benefits. Today, studies
show it can reduce stress and improve
sleep. Sensoril® is unique because it is
made from ashwagandha leaves and
roots, which science suggests offer
optimal health benefits.
Creating a World of Sustainable Nutrition
Kerry defines sustainable nutrition as the ability to
provide positive and balanced nutrition solutions that
help maintain good health while protecting people
and the planet.
Through our innovation expertise, portfolio of
integrated taste and nutrition solutions and sustainability
commitments, we partner with our customers to create
sustainable products for consumers worldwide.
Nutritional concerns for our customers and their
consumers are reflected on Kerry’s Sustainable Nutrition
Spectrum below.
These concerns 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 a key consideration.
We enable our customers to move along the sustainable
nutrition spectrum, co-creating products that deliver
better nutrition for consumers with no compromise on
taste. Our application expertise and delivery systems
allow us to bring authentic tasting, convenient and
familiar food to the consumer, increasing the availability
of nutritious options with positive health benefits. Our
environmental and social commitments also allow for
these better-for-you products to be produced in a more
sustainable way. For examples of how we support our
customers, see page 61.
1 FAO, IFAD, UNICEF, WFP and WHO. 2022. In Brief to The State of Food Security and Nutrition in the World 2022. Repurposing
food and agricultural policies to make healthy diets more affordable. Rome, FAO. https://doi.org/10.4060/cc0640en
2 GBD 2017 Diet Collaborators. Health effects of dietary risks in 195 countries, 1990–2017: a systematic analysis for the Global
Burden of Disease Study 2017. The Lancet, April 3, 2019; DOI: 10.1016/S0140-6736(19)30041-8
58
Changing Consumer
Expectations
Throughout the year we saw
further evidence of increasing
consumer support for sustainable
product choices1. These studies
reinforce Kerry’s proprietary
Sustainability in Motion research,
which involved over 14,000
consumers across 18 countries.
In 2022, we examined the
foodservice channel across Europe
to understand how sustainability
influences consumers’ consumption
choices out of home. We found
that 55% of consumers claim to be
eating more sustainably since the
pandemic and that 71% believe
sustainability is an important
consideration in choosing what
outlets to support. We shared these
insights with customers and industry
thought leaders at a specially
convened foodservice sustainable
nutrition conference in London,
where we examined possible
solutions to these consumer needs.
Health &
Bio-Pharma
Kerry’s Health & Bio-Pharma
platform is focused on
improving the health of people
worldwide. Our proactive health
portfolio of science-backed
branded ingredients are used
across food, beverages and
supplement applications.
These ingredients are clinically
supported to promote
consumer health across a
range of need states, including
immune, digestive, joint,
cognitive and heart as well as
infant and women’s health.
Measuring our Impact
Establishing clear definitions
and metrics to track the impact
of our products is essential.
Our industry-leading nutrition
profiling methodology assesses
the nutritional contribution of
our ingredients portfolio to a
final consumer product. We have
identified that more than 80% of
our Taste & Nutrition portfolio
delivers positive or balanced
nutrition solutions.
Over the next decade, we aim to
increase this positive impact through
innovation and partnerships,
creating sustainable solutions that
will reach more than two billion
people. In 2022, we expanded our
impact and increased our reach2
with positive and balanced nutrition
solutions to 1.2 billion people. This
was driven by the availability of
new nutrition solutions within our
portfolio and our geographical
expansion in developing regions.
For more on our approach see our
white paper on nutritional profiling
at kerry.com/sustainability.
Kerry Health and Nutrition Institute®:
Science for Healthier Food
Kerry Health and
Nutrition Institute
The Kerry Health and Nutrition Institute®
(KHNI) was established to share Kerry’s
scientific expertise and thought leadership
in the science of healthier food with
the wider industry. Supported by an
independent Scientific Advisory Council
made up of recognised leaders in nutrition
science and research, KHNI allows industry
scientists, academics and other experts
to explore challenges and opportunities
shaping the future of food. This digital hub
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, leveraging our global team
of more than 1,100 experts in nutrition, food
science, sustainability, health, taste, sensory and
life sciences. In 2022, content themes included
‘sustainable nutrition’, ‘plant-based’, ‘microbiome
and health’ and ‘food waste’. For information
see khni.kerry.com.
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59
Supporting the Industry
As an industry leader, we
have published a dedicated
methodology for profiling the
nutritional impact of a Business-
to-Business (B2B) portfolio,
making it easier for others to
assess and report their impacts.
In 2022, we built on this expertise
with the launch of the KerryNutri
Guide, which helps companies
subject to Business-to-Consumer
(B2C) profiling to create
nutritionally-optimised products.
The KerryNutri Guide is a digital
tool that helps customers navigate
front-of-pack nutritional labels. It
allows for an instant assessment
of a final product across eleven
recognised labelling systems as
well as national legislation from
Europe, UK, Brazil and Mexico.
By making this information
more accessible, the nutritional
impacts are immediately visible
and our customers are better
able to create healthier food and
beverage products that meet
consumer needs.
CONNECTING TASTE
AND SUSTAINABILITY
Taste is the biggest driver
of food and beverage purchases.
But these preferences change
quickly – from traditional and
nostalgic to novel and exotic.
with. Then it uses artificial
intelligence to predict which
of those emerging tastes are
most likely to have an impact
with consumers.
Social listening is helping our
market research teams tune
into the future of flavour.
Our insights tool Kerry
Trendspotter® tracks social media
posts to see which flavours
influencers are experimenting
We are also regularly
tracking consumer opinions
on sustainability and see
that consumers increasingly
want authentic taste that is
created with ingredients
that are produced in a
sustainable way.
Innova Market Insights: Top 10 Food Trends 2023.
1
2 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.
60
Ensuring Product Safety and Quality
From research and development to manufacturing and
sensory, Kerry’s regulatory, quality and safety team
works vigilantly to create ingredients and products that
customers can trust. Our strategy on food safety has
evolved over the past five years. Led by our Global Food
Safety and Quality Officer, it is based on the underlying
principle of Safety First, Quality Always, leveraging
our control infrastructure and relevant processes and
procedures, and enables us to apply a consistent global
approach that supports employee training and our
preventative due diligence requirements. For further
details see our Sustainability Report.
nutrition and sustainability challenges with solutions
that are healthier and more sustainable by design.
Our capabilities span consumer insights, Research,
Development and Application (RD&A) and food craft,
with experts across a network of global and regional
innovation and development centres.
This year we invested a further €303m in research,
development and application (2021: €297m) to ensure
we remain at the forefront of sustainable nutrition and
continue to lead in Authentic Taste, Plant-based,
Food Waste and Health & Bio-Pharma.
Leading with Sustainable Innovation
Innovation is critical to the transformation of our
food system. We help our customers keep pace with
consumer expectations, solving their most complex
Our approach is validated by the growing demand
among customers for new concepts that deliver healthier
products with lower environmental impacts. In 2022, we
supported customers with market-leading sustainable
nutrition solutions across a range of end use markets.
Kerry’s innovation framework has three pillars:
INNOVATING
FOR EVERYDAY
INNOVATING
FOR THE FUTURE
INNOVATING
TOGETHER
We make disruptive
and innovative applications
using our world-class
expertise and technology
toolkit.
Our innovation teams
create new, differentiated
technologies to meet future
consumer needs in Food,
Beverage and Pharma.
Through open innovation
we collaborate with external
partners in academia, start-ups
and supply chain to future-
proof our technology portfolio
and bring cutting-edge
innovation to our customers.
Kerry Group Annual Report 2022Strategic Report Sustainability Review 61
Sustainable
by Design
Much of the environmental impact
of a product can be influenced
at the design stage. Therefore, in
2022, we enhanced our innovation
process to further embed
sustainability design within new
innovations and development work
across existing product lines. This
process encourages our RD&A
teams to consider impacts at all
stages of a product’s lifecycle and
improve performance in key areas
such as raw material selection,
waste prevention and resource use.
Here are three ways innovation
is inspiring sustainability.
1
2
3
Sodium reduction
Many customers are facing
regulatory and consumer pressures
to reformulate bakery, meat and
snack products to reduce salt intake.
Our Kerry Tastesense® Salt solutions
solve taste challenges when sodium
is low/reduced. It is one of the
tools from our “toolbox” approach
to harmonising and rebalancing
healthier and tastier products.
Liquid probiotic
delivery system
BC30TM, a probiotic with
scientifically supported immune
and digestive benefits, can be
added to applications that do
not typically support traditional
probiotics, increasing the
access to health benefits for
more consumers.
No/low alcohol solutions
No and low-alcohol beverages are
gaining popularity due to societal
changes and the increasingly
health-conscious consumer.
Kerry Tastesense® Sensations
supports beverage manufacturers
by replicating alcohol perception
and, when used with the Simply
NatureTM flavour portfolio,
contributes to the creation
of unique beverages.
PARTNERING TO CREATE HEALTHIER PRODUCTS
For years, people have read
ingredient lists to figure out which
foods are healthy. For example,
in Singapore, Australia, France and
several other countries, the process
is getting easier, due to new front-
of-pack health labels and ratings.
The scores, which are often
displayed as a sum-total ‘grade’
for the nutritional quality of a
product, make it easy to tell,
for instance, which cereals on a
shelf rate as healthiest.
Many countries are also introducing
Many countries are also introducing
legislative restrictions. For example,
the UK is restricting the marketing
of products that qualify as less
healthy when assessed through a
specified nutritional profile model.
These new ratings and regulations,
plus the general shift toward better-
for-you products, are driving brands
to make more nutritious foods
and beverages.
One customer recently asked us
to help them halve the amount
of sodium in a salt and vinegar
potato chip – without losing the
mouthwatering taste. Our RD&A
teams created several variations,
then used our KerryNutri Guide tool
to ensure the new recipes met the
customer’s final product nutrition
target. The winning chip recipe,
which met the brand’s ambitious
goal, reduced the sodium to record
low levels while keeping all the
original flavour intact.
Kerry Group Annual Report 2022 62
Better for Society
We want to contribute to a just society, where people
are treated with dignity and respect and have the
opportunity and the means to flourish.
To achieve this, we are committed to doing business
with integrity and seek to enhance 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.
Because of our global reach, we have a key role to play in promoting human
rights, supporting education and training and creating more resilient and
inclusive communities. In this section, we outline some of the important areas
where Kerry can make a positive contribution to the societies we operate in
(see our materiality matrix on page 55).
Embracing a broader responsibility has also inspired many of our community
projects and programmes. For example, through our partnerships with
NGOs, we offer communities in need both short-term and long-term nutrition
benefits, applying our agricultural expertise by working with local farmers to
help improve yields and contribute to nutrition of school meal programmes.
Kerry Group Annual Report 2022Strategic Report Sustainability Review 63
Upholding the Highest Standards
Kerry Group’s comprehensive Code of Conduct clearly
defines the standards and expectations for all Kerry
colleagues. It serves as a guide for those who work with
and for Kerry, outlining the standards and policies that
must be upheld in important areas including human
rights, business integrity and environmental compliance.
The Code of Conduct is available in 26 languages and
offers insight on how certain workplace situations
should be handled, while providing direction on points
of contact for those who may require additional support.
For example, it describes our zero-tolerance approach
and provides guidance to all employees regarding
potential situations involving bribery and corruption.
The Business Integrity Committee provides oversight on
all areas of ethical compliance across the Group and all
colleagues are required to be familiar and comply with
our Code of Conduct. We have communicated broadly
on these requirements across the organisation since
refreshing the content of our Code in 2021.
We are focused on ensuring that everyone at Kerry
understands the requirements within the Code of
Conduct and their universal application regardless of
role, seniority or location. Our dedicated training and
certification programme helps us to monitor this, and in
2022, over 88% of required colleagues achieved Code of
Conduct certification (2021: >90%).
We encourage anyone with a concern about a breach of
our Code of Conduct to raise this through the available
channels. Our Speak Up Policy provides guidance for
individuals on how to raise a concern, including through
our dedicated Speak Up facility available to colleagues
and external parties who wish to do so anonymously. For
more on our approach to business ethics and reporting
of potential issues, see our 2022 Sustainability Report.
Protecting 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
expectations for our business and supply chain partners.
In 2022, Kerry’s work on human rights continued to
be led by the Social Sustainability Council, chaired by
the Group’s Chief Human Resources Officer. All our
manufacturing facilities are required to complete a
self-assessment which provides visibility of potential
human rights impacts within our business. In addition,
independent reviews by platforms such as EcoVadis
provide an additional evaluation of our approach.
Across our supply chain, our Supplier Code of Conduct
is explicit in setting out our expectations of suppliers,
particularly regarding our most salient human rights
issues. We continue to monitor supplier compliance,
taking a risk-based approach to this evaluation. In 2022,
we adopted a more targeted approach based on risk
at manufacturing locations and 71% of our high-risk
suppliers1 were enrolled on Sedex (Supplier ethical data
exchange) and more than half of these had undergone
a Sedex Members Ethical Trade Audit (SMETA). We
continue to engage the remaining high-risk suppliers,
along with any qualifying new suppliers to our business.
To enhance our approach on human rights, we have
engaged with an expert partner to help review our
current processes and identify opportunities for further
improvement. This project will continue into 2023 and
considers current best practice and proposed legislative
changes, such as the EU Corporate Sustainability
Due Diligence Directive. This work will guide the
further development of our human rights and social
sustainability efforts.
1 As measured by spend
Kerry Group Annual Report 2022 64
Utrecht
In November, our facility
in Utrecht, Netherlands,
celebrated 1,000 days without
a recordable incident and five
years without a lost time injury.
This safety milestone is in line
with our journey towards Safety
First, Quality Always, as we
continuously strive to ensure
the safety of our people. This
was accomplished through
valuable cross-functional
collaboration between
engineering, manufacturing,
procurement, food safety and
quality and health, safety and
environment teams.
Prioritising Workplace Health and Safety
A safe and healthy workplace is a basic principle and right at work.
It is essential to ensuring personal wellbeing, with benefits for
individual employees, society and our business.
We recognise our duty to provide and maintain a safe working
environment for everyone at Kerry, and we are committed
to the ongoing improvement of our safety performance.
We place a Safety First, Quality Always mindset at the core of our
business and our Health and Safety Policy defines consistent ways
of working and establishes standard requirements across our
business. These standards are non-negotiable and are a required
performance expectation of everyone who works at Kerry.
We strive for a culture of zero safety incidents however, we
understand manufacturing processes carry certain risks and that
workplace accidents and work-related illnesses can occur for a
number of reasons. As we work to ensure safety is at the centre of
everything we do, we are pleased to report a further 11% year on
year improvement in our performance for 2022 (2021: 8%).
For more detail on our health and safety performance,
see our 2022 Sustainability Report.
Kerry Group Annual Report 2022Strategic Report Sustainability Review 65
Embracing Diversity, Inclusion and Belonging
Evidence shows that a diverse workforce leads to a range
of better outcomes for organisations1 and new talent is
increasingly seeking out roles in organisations where
differences are celebrated. Around the world, many people
still struggle to access employment and equal opportunities
because of their race, gender, sexual orientation or other
perceived differences. At Kerry, we treat each employee as an
individual. This is reflected in several dedicated policies within
our Code of Conduct, including our Diversity, Inclusion and
Belonging Policy, which requires that employees treat fellow
workers and applicants fairly and never engage in any form
of unlawful discrimination.
Kerry has 118 nationalities represented in our overall workforce,
and we believe our senior leadership and management levels
should reflect this. In 2022, 84% of senior management at our
significant locations were hired from within the local community
(2021: 86%).
We continue to focus on our gender diversity targets, with
female representation at senior management level at 36% in
2022, versus our target of gender parity by 2030 (2021: 36%). We
aim to have 35% of senior leadership positions held by women by
2025, and at year end had reached 33% (2021: 29%). Our efforts to
deliver on this ambition for inclusive leadership include the 2022
launch of a dedicated toolkit to equip our leaders with the skills
required to lead conversations on the topic of diversity, inclusion
and belonging with their teams and to better understand and
eliminate unconscious bias. Available in 11 languages, the toolkit
provides practical guidance, templates and tools in the areas of
Psychological Safety, Inclusion, Belonging, Fair Treatment and
Integrating Difference.
Importantly, in 2022, employee perception of Kerry as an
inclusive organisation increased by two percentage points,
as measured by our Inclusion Index. For more details, see our
People section on page 22 and our 2022 Sustainability Report.
Sustainability
Essentials
Our people are a key enabler
of our Beyond the Horizon
strategy. To support them, we
have launched a dedicated
development programme called
‘Sustainability Essentials.’ This
online training is designed
to elevate company-wide
knowledge, capability and
engagement in this crucial area,
allowing our workforce to speak
the same language as we work
towards our common goals. The
programme includes modules
on Nutrition and Health,
Climate Change, Responsible
Sourcing, Circular Economy and
Social Impact, which are being
launched across the Group on
a phased basis.
1 The Business Case For Diversity is Now Overwhelming.
Here’s Why | World Economic Forum (weforum.org)
Kerry Group Annual Report 2022 66
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Kerry Group Annual Report 2022
Florence and her friends enjoying their UHT milk as
part of the WFP School Meals programme in Gitega,
Burundi. Photo: © WFP/Irenee Nduwayezu
Improving Community Access to Nutrition
We believe that healthy diets should be accessible to
everyone. To support communities that cannot access
products made with our sustainable nutrition solutions,
we partner with leading NGOs to develop self-sustaining
programmes to promote wellbeing amongst some of
the world’s poorest people.
Enhancing School Meals in Burundi
In Burundi, over 70% of people live below the poverty line
and many are malnourished, an issue that is exacerbated
by spiraling food prices and increasing food scarcity.
Agriculture is the backbone of Burundi’s economy,
however, productivity and access to arable land are low
and it remains a net importer of food, leaving it exposed
to rising international food prices. The country is also
extremely vulnerable to the impacts of climate change,
facing the burden of rising global temperatures resulting
in devastating impacts such as drought.
In 2020, Kerry extended its partnership with the
UN World Food Programme (WFP), with the goal of
improving dairy farming and the availability of milk
in school meals in the Gitega province in Burundi
through Project Amata.
In support of this project, we share dairy farming,
processing and nutritional expertise and provide
direct financial support in order to achieve the
following objectives:
Empower small-scale farmers to improve milk
quality and quantity and, therefore, reducing waste
and increasing their income.
Increase access to, and consumption of, milk
in school meals and the wider community.
Raise awareness of the importance of dairy
in our diets.
These objectives continue to assist WFP Burundi
with improving nutrition, food security and building
resilience in the local milk supply chain.
In 2022, Kerry provided a range of equipment to support
the project, including milk testing kits and unique animal
identifiers with the aim of implementing the first animal
registration system on farms involved in phase two of
the project. Kerry’s expert team also visited the Gitega
province to better understand local challenges and
share onsite technical expertise concerning farming,
dairy transportation, quality, safety, processing
and nutrition. From this, Kerry proposed further
improvements to the project.
Improving Food Security in Kenya
During the year, Kerry was proud to announce a new four-year
partnership with Irish humanitarian organisation Concern Worldwide
to improve the lives of 46,000 Kenyans by improving food security,
boosting household income and reducing malnutrition levels in the
Tana River County.
Many Tana River farmers are reliant on livestock farming, but climate
change has led to water insecurity and pasture deterioration, causing
the death of livestock and declining productivity, which has eroded
household income and food security. Concern Worldwide has identified
an opportunity to tackle these challenges.
With financial support from Kerry, the Agricultural Livelihoods Improving
Value Chains and the Environment (ALIVE) project will create a regional
value chain for mango production that benefits female growers and
creates a new income stream for their families.
Mango production is more resilient to the impact of climate change
and harnesses the resources of the Tana River, which is susceptible to
flooding. As the programme progresses, participants will receive training
on post-harvest handling, support for mango processing at a community
level and the introduction of post-harvest processing equipment.
67
Lishe Poa
Utilising our expertise and innovation
in the nutrition space, Kerry was
proud to support Concern Worldwide
on an innovative urban nutrition
project in Kenya. The Lishe Poa
project has developed a healthy
alternative to commonly consumed
snack foods in the informal
settlements of Nairobi. Kerry facilities
in Kenya and South Africa provided
technical support in the product
development and inputs to further
accentuate the product and enhance
its shelf life and nutrient-content.
MyCommunity
Kerry has a proud history of supporting
local communities where we operate.
Our MyCommunity programme offers
colleagues the opportunity to give
back to the causes that matter most to
them. The programme provides direct
financial support for projects nominated
by our sites, and all 23,000+ colleagues
have access to paid volunteer leave
to help them become more directly
involved in supporting these initiatives.
Examples of projects supported in
2022 include providing volunteers and
monetary support to Eat Up, a charity
in Murrarie, Australia, that makes and
delivers lunches directly to schools for
vulnerable children, donating food and
personal hygiene supplies to low-income
children in Panama while encouraging
them to continue their studies, hosting
blood drives at various Kerry locations
including in the Philippines, Mexico and
India, and product donations to various
groups around the world.
Mwanajuma Ghamaharo winnows mung
beans in Makere village in Tana River County.
Photo: Lisa Murray/Concern Worldwide
Kerry Group Annual Report 2022 68
Better for Planet
Given the environmental footprint of food, we must
find ways to transform our industry and work in
greater harmony with nature.
Despite the growing calls for action to address environmental concerns, change
has been slow and there has been an alarming deterioration in the earth’s vital
ecosystems. However, there is an increasing awareness among stakeholders on
the interconnected challenges of climate, pollution and biodiversity.
Kerry’s Beyond the Horizon sustainability strategy sets out our environmental objectives
and outlines how they support the UN Sustainable Development Goals and our vision
for a world of sustainable nutrition. In this section we highlight our efforts on material
environmental topics for the Group (see our materiality matrix on page 55).
Committing to Sustainable Practices
Producing food is resource intensive, and current practices need to be reimagined
to support healthy people and a healthy planet. Kerry touches every stage of food
production, from family farmers to manufacturing and distribution. This holistic
view of the industry makes us uniquely positioned to identify challenges and
innovate solutions at scale, from supporting improved agricultural practices to
developing products that create processing efficiencies and reduce food waste and
environmental impact. The Group’s Environmental Policy outlines our commitment
to carrying out activities in a responsible manner and implementing good
environmental practice that continuously improves our performance.
Kerry Group Annual Report 2022Strategic Report Sustainability Review Taking Action on Climate Change
Despite mounting evidence of the impact of climate change, global
emissions continue to rise. As a society, we have a short window in
which to act to avoid the worst effects of climate change. Urgent and
systemic transformation is needed to deliver the scale of reductions
required to meet the goal of limiting global warming to 1.5⁰C by the
end of the century.
Kerry is committed to achieving Net Zero before 2050 and continues
to lower emissions across our operations and value chain. We have
set a science-based target for emissions reduction by 2030, which
commits us to a 55% absolute reduction in our operational (Scope 1
and 2) emissions and a 30% reduction in intensity of other emissions
within our value chain (Scope 3).
In 2022, we made strong progress towards this target, driven by
our shift to renewable energy. 100% of our purchased electricity
across the Group now comes from renewable sources or is backed
by renewable energy certificates and the associated reduction in our
Scope 2 emissions has made a significant contribution to our overall
carbon performance. By year end, we achieved a 48% reduction in
Scope 1 and 2 emissions over our 2017 baseline (2021: 33%).
We also continue to focus on Scope 1 emissions through improving
energy efficiency and switching to cleaner fuels, however, many of
these initiatives will take longer to implement and the scale and speed
of reduction in any given year may vary.
Kerry Group Annual Report 2022
69
CDP
In 2022, Kerry once again achieved
a CDP score of A-, placing us at
leadership level for our action and
reporting on climate change.
SBTi
Kerry’s Scope 1, 2 and 3
carbon targets are approved by
the Science Based Targets initiative
(SBTi). Our Scope 1 and 2 targets are
aligned with a 1.5⁰C pathway and
we continue to engage with SBTi
on changes to Scope 3, considering
their recent guidance on emissions
relating to Forest, Land and
Agriculture (FLAG), which is
applicable for our business.
DELIVERING A CLEANER
SMOKE TASTE
Some of the most authentic and
distinct tastes come from cooking
food over fire. The smoke from
hickory wood – common to North
American barbecue – imparts a
flavour quite different from the
searing hot coals used in South
African braai.
Unfortunately, cooking with
fire and consuming foods that
have been traditionally smoked
comes with health concerns
and environmental risks. Kerry
Red Arrow® condensed natural
smoke helps brands bring
more consistent, efficient,
and sustainable products to
the market.
We make our Kerry Red Arrow®
smoke range by capturing
and condensing real smoke
from various types of wood,
utilising byproduct from the
timber industry. We then filter
and decant the smoke making
it better for the consumer and
the environment. In defining
smoke flavours, the European
Commission noted that
smoke flavours are a healthier
alternative to conventional
smoking. In addition, compared
to conventional smoking, the use
of smoke flavours has proven to
reduce CO2 emissions by 83%,
water consumption by 92%,
wastewater by 83% and cleaning
detergents consumption by 68%1.
1 Best Available Techniques (BAT) Reference Document for the Food, Drink and Milk Industries (europa.eu)
100
150
200
250
300
100
200
300
400
500
600
700
800
900
100
150
200
250
300
200
300
KgCO2e tonne
400
500
600
700
Baseline
800
Scope 1
Scope 2
Baseline
150
200
250
100
300
500
700
900
2021
2020
2019
300
900
100
150
200
250
300
100
300
500
700
900
KgCO2e tonne
Baseline
Scope 1
Scope 2
Baseline
2021
2020
2019
100
100
2021
2020
2019
70
Carbon Performance (Scope 1 & 2)
100
150
200
250
300
100
250
400
550
700
850
1000
Carbon Intensity
2022
2021
2020
2022
2021
2020
100
150
200
250
300
100
250
400
550
700
850
1000
kgCO2e/tonne
2017 Baseline
Scope 1
Scope 2
2017 Baseline
100
150
200
250
300
100
250
400
550
700
850
1000
Tonnes of CO2e (000's)
2022
2021
2020
100
150
200
250
300
100
250
400
550
700
850
1000
kgCO2e/tonne
2017 Baseline
Scope 1
Scope 2
2017 Baseline
2021
2020
2019
2022
2021
2020
Our Value Chain
The most significant part of our carbon footprint
comes from indirect Scope 3 emissions, most notably
our supply chain. Within this, dairy is the single largest
contributor and a focus area for engagement with our
supply base.
Our Evolve Dairy Sustainability Programme, which
launched in 2022, incentivises farmers to implement
science-based measures that lower carbon emissions,
protect nature and improve the resilience of their
operations. By supporting close to 3,000 farmers in
south-west Ireland, this programme also offers a
template for engagement with other dairy ingredient
suppliers to our business. Uptake of the programme has
been strong in its first year, particularly in the area of
lower emissions fertiliser, which will contribute to a lower
footprint across this supply base. For more on Evolve
see page 73.
Category-wide, our total Scope 3 intensity has reduced
by 4% in 2022 compared to our 2017 baseline (2021:
0%). Reductions in 2022 have been driven, in part,
by lower emissions from dairy and changes in our
portfolio mix. For more details on Scope 3 see our
2022 Sustainability Report.
Tackling Plastic Waste
We fully support a more circular approach to plastics
and have committed to making all our plastic packaging
reusable, recyclable or compostable by 2025. We work
to reduce the volume of virgin plastic and increase
recycled content, while evaluating alternative packaging
formats that can maintain product integrity. Examples
include incorporating recycled plastic content in DaVinci
Gourmet bottles used within the foodservice channel
and the use of 100% recyclable packaging for our
Dairygold brand. In 2022, 74% of the plastic packaging
used across our business was reusable, recyclable or
compostable (2021: 57%).
Halving Food Loss and Waste
Given the environmental impacts of food production,
tackling food loss and waste represents a way to
address climate change as well as a significant
business opportunity.
Our portfolio of clean label and conventional food
protection and preservation technologies significantly
impact food waste in the value chain, particularly
downstream. This is a growth platform for our business
with a key focus on the bakery and meat end use
markets. These markets represent the most significant
categories where food is lost or wasted by volume and
value, respectively. The opportunity for impact is clear
when we consider that in 2022, Kerry products were
used to extend the shelf life of over 52 billion servings
of meat.
To help our customers understand the impact of food
loss and waste on their business and the environment,
we developed and launched the KerryFood Waste
Estimator in 2022.
Kerry Group Annual Report 2022Strategic Report Sustainability Review This tool provides a quick and easy way for customers and
consumers to model the potential benefits of food waste reduction
through shelf-life extension and is available on kerry.com.
To tackle food waste within our own organisation, we are
committed to a 50% reduction across our operations by 2030,
aligning with the food waste target under UN Sustainable
Development Goal 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. For example, some waste streams can be
recovered as an input to other processes, others can be turned
into biofertilisers or animal feed, and some finished products
can be distributed to local charities and food banks. In 2022,
we continued to make progress against this goal with a 32%
reduction compared to our 2017 baseline (2021: 17%).
Adopting a More Circular Approach
To lower our environmental impact, we are targeting a more
circular approach to resource use within our business. This keeps
materials in productive use for longer and captures additional
value from what were previously considered waste streams.
Within our operations, we seek to ensure our own waste streams
are put to productive uses, with 93% going towards recycling or
recovery and 95% of all waste volumes diverted from landfill
(2021: 94%).
Kerry Group Annual Report 2022
71
Upcycling
Ingredients
Given our innovation and process
capabilities, Kerry is ideally
positioned to support customers
in their use of ‘upcycled’
ingredients. For example, cheese
waste occurs across the industry
due to manufacturing constraints,
spoilage and supply chain
limitations. Our cheese powders
facility in Denmark is unique
because it upcycles this material
into high quality and shelf stable
cheese powders that deliver an
authentic cheese taste. In doing
so, we maximise the potential of
the food source and the resources
used to produce it, whilst
simultaneously minimising food
waste. A detailed carbon footprint
study undertaken in 2022 shows
these products are on average,
45% lower in carbon emissions
than conventional alternatives.
2022 Waste Recovery
2022 Waste by Destination
5%
5%
5%
95%
95%
95%
Diverted Waste
Landfill
Diverted Waste
Diverted Waste
Landfill
Landfill
5%
2%
5%
2%
93%
93%
Recycling/Recovery
Landfill
Recycling/Recovery
Incineration (energy recovery)
Landfill
Incineration (energy recovery)
Landfill volumes include waste sent for incineration without energy recovery
2021
2020
2019
72
Protecting Water Resources
Water is vital for our business. It is a shared resource,
and we have a responsibility to use it carefully,
minimising our withdrawals, protecting water sources
and ensuring adequate access for other water users.
Across our operations we are targeting a 15% reduction
in water intensity by 2025. We initiated several projects
in 2022 that will contribute to this goal. For example, we
are investing approximately two million euro to improve
water efficiency at our site in Plant City, Florida, USA.
This will significantly reduce the water intake at this
facility upon completion in 2023. In Anneyron, France,
we updated our cooling systems, leading to a reduction
of over 25% in water use. The Group’s water efficiency
has already improved by 5% compared to our 2017 base
(2021: 3%) with an expected acceleration in future years
on the completion of several planned projects.
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 2022 Sustainability Report.
2.5
3
3.5
2017 Baseline
Water Risk
m3/tonne
Using the World Resources Institute’s Aqueduct Tool,
we identified nine priority manufacturing facilities that
may be more vulnerable to water risk. Average water
intensity across these sites exceeds that for the Group
and was 12% lower in 2022 versus our 2017 base year
(2021: 9%). We maintain a focus on water at these
locations and in 2022 we undertook a programme of
metering, monitoring and targeting to help drive ongoing
improvements. The outcomes of this programme will
inform water reduction activities across these sites.
Protecting Biodiversity
Amid the alarming rate of species and habitat loss,
the preservation of biodiversity is an increasingly
material topic for our business. Kerry has potential to
impact biodiversity directly through our operations and
indirectly through the raw materials we source. Our
most significant impacts are linked to our supply chain
and we are working towards the preservation of tropical
forests and the rich biodiversity they contain.
We are committed to eliminating deforestation across
targeted supply chains by 2025, focusing on those that are
the leading drivers of forest loss, including cocoa, coffee,
soy, palm oil and paper packaging. We are members of
several multi-stakeholder initiatives focused on this area
including the Roundtable on Sustainable Palm Oil (RSPO),
SAI Platform (including their deforestation workstream
within the Sustainable Dairy Partnership) and others. For
more on our evolving approach to preserving biodiversity,
see our 2022 Sustainability Report.
Responsible Sourcing
Given our from-food-for-food heritage, the greatest
impacts associated with our products often lie with
agricultural production. While it can present social and
environmental challenges, agriculture can help reduce
poverty, raise incomes and improve food security for
80% of the world’s poor1.
4
As part of our vision to create a world of sustainable
nutrition, we are engaging our suppliers to drive more
sustainable practices, ensuring that 100% of priority raw
materials are responsibly sourced by 2030. In 2022, we
set out and communicated our requirements for suppliers
across categories linked to deforestation and we continue
to work directly with supply partners and other third
parties on programmes deployed at farm level.
3.0
3.5
2.5
2022 Water Withdrawal by Source (Megalitres)
Water Intensity at Higher Risk Sites
41%
19%
21,551
Total Water
Withdrawals
Surface Water
Ground Water
Municipal Water
2022
2021
2020
40%
m3/tonne
2017 Baseline
2.5
3.0
3.5
Notes:
Our target for water is a relative measure of metres cubed (m3)
divided by tonnes of finished product produced.
Our data reflects water use across our manufacturing facilities
and is a like for like performance versus our base year.
Kerry Group Annual Report 2022Strategic Report Sustainability Review 73
This past year, with a shared goal of helping the planet
and improving the livelihoods of our farmers, we
launched the Evolve Dairy Sustainability Programme.
Farm by farm, we share techniques to help reduce
carbon and ammonia production and improve water
quality. These include better grazing and water
management practices, innovations in animal health and
welfare and insights into the benefits of biodiversity.
One of the more visible benefits is the addition of trees
to farmland around Ireland. As part of the programme,
we are committed to plant 200,000 new trees by 2025.
For more details see our 2022 Sustainability Report.
Palm Oil
In 2022, we updated our Palm Oil Policy and
requirements for suppliers. Alongside verification,
certification remains an important element of our
sourcing approach for palm oil and 39% of our volume
is RSPO certified (20% Mass Balance; 19% Segregated
or Identity Preserved). We continue to map our supply
chain and seek traceability to both mill and plantation
with our leading suppliers. For more, see our palm
progress report on kerry.com.
Coffee
Our approach to this category was outlined as we
developed and communicated our Coffee Policy in
2022, supported by a requirements guide, which
clearly outlines our expectations of suppliers. Through
direct engagement we have made progress in mapping
our supply to country of origin for more than 90% of
our volumes. Given the fragmentation in this supply
chain, certification will play a key role in achieving
our category target.
Non-Financial Reporting Statement
We comply with regulations on non-financial reporting
and provide information on required topics across
this report and within our 2022 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 94-105.
We prioritise categories linked to our commitments
on carbon reduction and no deforestation and
continue to engage these suppliers on traceability of
the volumes supplied to Kerry Group. For more detail
on our responsible sourcing categories see our 2022
Sustainability Report.
Dairy
We maintained 100% certification of our Irish milk
volumes under the Sustainable Dairy Assurance Scheme.
This programme, operated independently through Bord
Bia (the Irish Food Board), means all farmers are audited
every 18 months and this allows for carbon footprinting
of all individual farms. We work directly with farmers to
support them on measures that improve the sustainability
of their enterprise and reduce their carbon footprint.
For the dairy ingredients we purchase, our goal is for
80% of volumes to be at Sustainable Dairy Partnership
(SDP) level 3 or higher by 2025. Currently, 15% of our
volumes come from suppliers who are members of the
SDP and we continue to engage our suppliers on this
new platform and our requirements.
Evolve Dairy Sustainability Programme
We still work with many of the Irish dairy farming
families that helped us launch our business 50 years
ago. While their natural, grass-based approach to
farming has not changed, on-farm practices continue
to evolve and there is growing pressure for more
sustainable agriculture.
Reporting Requirements
Our Policies
Environmental Matters
Environmental Policy
Page Reference
Page 68
Social and Employee Matters
Health and Safety Policy; Group Code of Conduct;
Diversity, Inclusion and Belonging Policy; Speak Up Policy
Pages 18-25,
63-65 and 120
Respect for Human Rights
Human Rights Policy
Anti-Bribery and Corruption
Anti-Bribery Policy;
Group Code of Conduct
Business Model
Non-financial KPIs
1
Agriculture Overview: Development news, research, data | World Bank
Page 63
Page 63
Pages 26-27
Pages 38-39
and 52-73
Kerry Group Annual Report 2022 74
74
Strategic Report Sustainability Review
Strategic Report Sustainability Review
Kerry Group Annual Report 2022
Kerry Group Annual Report 2022
Climate-Related Risk
and Opportunity
Climate change represents one of the most significant
global challenges and its impacts have implications for
governments, economies and civil society across the world.
It is a challenge that requires all parts of society to come
together and address in a collaborative and increasingly
urgent way. Kerry is committed to playing its part through
the achievement of its Beyond the Horizon commitments
and the integration of climate as a key consideration for
all aspects of our business.
The following statement sets out the progress we are making and is consistent
with the recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD) and the expectations set out in the UK Financial Conduct
Authority's Listing Rule 9.8.6R(8).
Governance
To deliver on our Purpose, Inspiring Food, Nourishing Life, we have a comprehensive
strategy that puts sustainable nutrition at the core of what we do every day. The
Group’s Board has overseen the continued evolution of our business to fulfil this
purpose, including the review and approval of the Group’s Beyond the Horizon
sustainability strategy and commitments. These commitments encompass a clear
focus on climate action and the Board has ongoing oversight of performance and
strategies to deliver on these. The Board and its Committees also assess how the
Group is responding to climate-related risks and opportunities, as part of the
overall risk management process.
Kerry Group Annual Report 2022
75
The Governance, Nomination and Sustainability
Committee (GNS) was established in 2021 and is led by
the Group’s Chairman. This Committee takes a lead role
in Board guidance and oversight of the Group’s actions
on climate change, as part of its role in governing
Kerry’s broader sustainability strategy. Membership
of this Committee includes Board members with deep
experience across food and beverage, as well as other
sectors heavily impacted by climate change, including
energy and agriculture. Further details of Board
members experience can be found on pages 108-110.
Board Oversight of Climate Change Impact
The Board and/or its relevant Committees received five
dedicated updates from senior executives including the
Group Head of Sustainability, the Chief Corporate Affairs
and Brand Officer and the Sustainability Reporting team
on matters including the Group’s performance on its
climate goals and strategy, climate-related risks and
opportunities and our climate-related disclosures. In
addition, details relating to climate change are provided
by other leaders as part of their functional updates,
ensuring that it is increasingly integrated into the
broader strategic decision-making process.
In 2022, the potential climate impacts were considered
by the Board across a range of areas including decisions
on major capital expenditure and business acquisitions.
The Board also considered climate-related metrics as
part of the Group’s financial and business planning cycle,
with climate-related metrics incorporated within the
budget review process, alongside indicators on growth,
financial performance and returns.
The Audit Committee engaged with Executive
Management on climate-related risks and assessed
how these have been reviewed and accounted for as
part of the overall risk management process in 2022.
The Audit Committee also reviewed and approved the
Group’s climate-related disclosures for this period.
In addition, following their introduction in 2021, the
Remuneration Committee continued to incorporate
climate-related metrics and targets into the reward
structure for Executive Directors and senior leaders.
The Board is supported by the Global Sustainability
Council, which is led by the CEO and comprises
executive and functional leadership from across
the Group. This Council is the key forum at which
climate-related risks and opportunities impacting the
organisation are addressed with senior management,
and the Council has ultimate responsibility for the
assessment and management of these issues as part
of its broader sustainability remit.
Given the interdependent nature of climate-related
risks and opportunities, additional governance
councils are in place at functional and regional levels
across the organisation to support the work of the
Global Sustainability Council. These include dedicated
fora related to our operations, product portfolio
and responsible sourcing. Led by a relevant senior
executive, each Council meets at least quarterly and
provides a platform for addressing various elements
of the risks and opportunities facing our business.
Board Level
Governance
Board of Directors
Remuneration
Committee
Audit
Committee
GNS
Committee
Executive
Level
Governance
Functional
and Regional
Execution
Global Sustainability Council
Climate
Council
Portfolio
Council
Responsible
Sourcing
Council
Commercial
Council
ESG
Council
Implementation Teams
76
For example, the Environmental Council is led by
the Chief Operating Officer (COO) and meets on a
bi-monthly basis to review the Group’s performance
versus our operational targets, identify specific
challenges or opportunities across our regions, including
process improvements, potential capital requirements
and reviewing the implementation of approved projects.
These projects are implemented by cross-functional
teams, working collaboratively to ensure we maximise
the sustainability impact with no disruption to our
business. Each functional Council provides an update on
progress for their area and escalates issues as required
to the Global Sustainability Council throughout the year.
Plant-based offerings, which provide lower carbon
food and beverage alternatives. Kerry has a portfolio
that supports our customers in their innovation
journey across all end use markets
Food Waste solutions, such as food protection
and preservation, which help our customers and
consumers lessen their impact in this critical area,
and
Health & Bio-Pharma, which supports our
customers in delivering better nutrition and
wellbeing for consumers at all life stages.
Linking Climate and Remuneration
Kerry’s remuneration philosophy ensures that executive
remuneration is aligned to the Group’s purpose, culture
and values, supports strategy and promotes the long-
term success of the company. The Long-Term Incentive
Plan (LTIP) for Executive Directors and senior leaders
reflects this through the three key areas of growth,
return and sustainability.
The incentive plan considers core sustainability metrics
linked to our Beyond the Horizon sustainability strategy.
The metrics used include food waste and carbon
reduction, specifically the progress towards our science-
based targets on Scope 1 and 2 emissions. More details
on this can be found in the Remuneration Committee
Report on pages 151-152.
For further details on Group Governance, see our
Corporate Governance Report on pages 117-130.
Strategy
Kerry’s Vision is to be our customers’ most valued
partner, creating a world of sustainable nutrition. Our
business strategy is aligned to fulfilling this ambition and
Kerry’s Beyond the Horizon sustainability strategy helps
us to accelerate our actions and integrate sustainability
within our business. The two critical elements of this
programme are:
the focus on commitments that will support
the transformation of our business into a more
sustainable enterprise;
our innovation capability enabling customers to
create more sustainable products, supported by
our technology portfolio.
We keep our climate commitments under ongoing
review, aligning with a science-based approach and
responding to evolving best practice. The importance of
our role as an enabler of sustainable nutrition for our
customers is clearly reflected in our medium-term plan,
which was presented at the end of 2021 with a focus on
growth platforms that support a transition to healthier,
lower impact diets. These include:
Authentic Taste, which recognises that taste
is a critical driver of purchase behaviour and a
fundamental requirement for any sustainable food
and beverage innovation
We recognise the role that climate change can play in
influencing the delivery of our business strategy. Physical
impacts will arise as global average temperatures increase
and socio-economic changes are inevitable as part of
the transition to a low carbon economy. As we prepare
for these changes, we continue to assess the potential
risks and opportunities for our business, ensuring that
we maintain a focus on reducing our emissions while
adapting to these changing external conditions.
We are also embedding our Beyond the Horizon
commitments into our financing strategy. In 2021, Kerry
issued a €750 million, ten-year Sustainability-Linked
Bond (SLB) which could result in an interest coupon
step-up if certain sustainability performance indicators,
including our Scope 1 and 2 climate targets, are not met.
Identifying Climate-Related Risks and Opportunities
To establish the climate-related impacts that are most
material for the organisation, we convened a dedicated
working group to evolve our existing climate risk
assessment and conducted a detailed qualitative and
quantitative assessment of potential climate-related risks
and opportunities. Over the last two years, this work has
been guided by an Executive-led steering committee and
through a process of stakeholder engagement, regulatory
guidance, risk management and expert judgement, we
have defined an extensive list of potential climate impacts
for our business. This longlist was subsequently refined
based on an appraisal of risk severity and likelihood,
a method aligned with our overall risk management
framework, and this has provided us with a focused set
of risks and opportunities for more detailed analysis.
Assessing Climate-Related Risk
Modelling the potential impacts of climate-related
risk 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. We typically consider business risk over a
period of up to five years. In doing so, we consider how
climate-related impacts may contribute to other key risk
areas in that timeframe, however, the physical impacts of
climate risk require a longer-term view. As a result, our
approach to assessing climate as a discrete risk uses an
extended time horizon. To account for the more gradual
impacts of certain physical climate-related events, we
have chosen to examine the potential impact of climate
change on our business using 2030 (medium-term)
and 2050 (long-term) as our reference timeframes. For
more on how we integrate climate-related risks into our
broader risk management framework, see page 82-83.
Kerry Group Annual Report 2022Strategic Report Sustainability Review 77
Climate Risk Risk Type
No. Description
Timeframe
Physical
Acute
Chronic
Transition
Policy
Technology
Market
1
2
3
4
5
6
7
8
Impact of extreme weather events on key operational sites.
Medium – Long-term
Impact of extreme weather on transport network.
Impact of rising sea levels on key operational sites.
Medium – Long-term
Impact of water stress on key operational sites.
Impact of weather pattern variability on raw material supply.
Impact of emissions pricing on operational costs.
Short – Medium-term
Impact of decarbonisation on operational costs.
Short – Medium-term
Impact of shifting consumer demand for low-carbon
alternatives.
Short – Medium-term
Reputation
9 Damage to brand and/or stakeholder relationships
Short – Medium – Long-term
due to action on climate.
Physical Risk
We began a detailed assessment of physical climate
risk in 2021 and with the help of external partners we
have now deepened our analysis. Our assessment will
continue to evolve as scientific understanding improves
and as we build our internal knowledge and expertise.
In line with TCFD guidance we consider two types of
physical 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 lead to impacts such
as sea level rise or chronic heat waves.
As part of our assessment, we first identified a range of
physical climate risks that could potentially impact on
our business. These hazards include forest fire, flooding,
drought, extreme wind, and sea level rise. We screened
our global manufacturing footprint for exposure to
these specific climate hazards and through this exercise,
prioritised a smaller number of locations for more
detailed review. This deep dive focused on a longer time
horizon and identified five locations across Europe, North
America and our APMEA region with a higher exposure,
driven primarily by an increased risk of flooding.
Our distribution network, which brings in raw materials
to our sites and delivers product to our customers, is
also subject to potential risk from these climate hazards,
primarily extreme weather events impacting the transport
of goods by sea, road and rail. The assessment of our
supply chain shows good resilience, albeit there is some
concentration of risk in key locations. The assessment was
completed at a national scale and while this provides a
high-level estimate of potential risk, we continue to refine
the approach and enhance this quantification.
We also examined how future physical climate changes
may impact on raw material availability, selecting a
basket of seven important agricultural inputs in use
across our business, including dairy, wheat and maize.
Using the land suitability index1, we assessed changes
in land considered commercially viable for producing
crops under rainfed conditions for different temperature
scenarios. The assessment indicated the potential
for some impact to agricultural output, with impacts
varying by commodity and geography, however, overall
land suitability for the selected raw materials does not
indicate a significant risk for the commodities in scope
over the period examined. When we look at additional
variables, including the projected demand for these
raw materials and climate related price impacts, we see
upward price pressure on these commodities over the
medium to longer-term.
Transition Risk
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.
The risk of current and emerging regulation is a key
climate consideration for the Group. This includes
forthcoming disclosure requirements linked to non-
financial reporting. Given its global footprint, Kerry
will be subject to different requirements in a number
of jurisdictions and the scope, scale and speed of
implementation will pose challenges for all organisations.
Among the most prominent policy risks for our business
is the expansion of carbon pricing by Governments
as they seek to curtail emissions and meet their
commitments under the Paris Agreement. Three of our
manufacturing facilities are currently subject to the EU
and UK emissions trading schemes and the broadening
of their scope, or the introduction of similar pricing
mechanisms in other jurisdictions, could result in a
significant cost to our business. In our risk assessment,
we have modelled carbon price increases to 2030 and
considered how direct costs may be impacted if all
manufacturing sites were subject to a carbon price by
this date.
1
International Institute for Applied Systems Analysis (IIASA) and the Food and Agriculture Organization of the United Nations (FAO)
GlobalAgro-Ecological Zoning version 4 (GAEZ v4) databases for the period range 1990 –2050
Kerry Group Annual Report 2022 78
Our assessment of technology risk focuses on the
transition to clean energy and decarbonisation of
our operations. As industry shifts towards the use of
cleaner technology, it is important that we invest to
avoid additional costs or reputational impacts that
could affect the Group’s competitiveness. As part of
our roadmap towards Net Zero, we have identified key
levers that will provide us with a pathway to our 2030
targets and longer-term Net Zero ambition. In our risk
assessment, we examined the potential costs associated
with a targeted energy mix and the expected level of
investment required to achieve this.
Finally, for market-based risk, we looked at how
consumer sentiment may drive a shift towards lower
carbon alternatives across food and beverage. From
our own proprietary research, Sustainability in Motion,
we understand that consumers are seeking out healthier
products that have a lower, environmental impact.
Using external data sources1 and demographic insights,
we have looked at how this consumer sentiment may
shift over time and the potential implications for our
product portfolio.
We realise that climate change also represents a
significant reputational risk for organisations. Kerry
works with the world’s leading food and beverage
brands, many of whom have made their own
commitments on climate change. They increasingly seek
out partners that are aligned with their own objectives
and who can support them in achieving their targets.
This presents an opportunity for Kerry as we deliver on
our Beyond the Horizon commitments. Conversely, failure
to take adequate action on climate change could mean
a loss of reputation and damage to commercial and
other important stakeholder relationships. Given the
difficulty in quantifying reputational risk, we have not
modelled a quantitative assessment of impact.
Climate-Related Opportunities
While climate change poses potentially significant risks
for our industry it also presents potential opportunities
for Kerry Group, particularly as customers seek to
transition to a lower-carbon economy. The climate-
related opportunities outlined in the table below
represent key areas where we see potential benefits for
our business, while supporting our customers in their
transition efforts.
Opportunity
No. Description
Time horizon
Potential impact
Resource
Efficiency
1
Impact of energy
efficiency on
operational costs.
Short - Medium A key lever in the achievement of our 2030 targets
is an ongoing focus on energy efficiency. As energy
price volatility continues, this increase in efficiency
provides an opportunity for reduced energy costs and
lower emissions, which helps reduce our exposure to
carbon pricing.
Energy Source
2
Impact of
decarbonisation
on operational costs.
Medium - Long As we transition to renewable energy sources we can
potentially benefit from lower energy costs as fossil fuel
prices rise due to increased carbon taxes and
non-fossil based energy scales and unit costs reduce.
Markets
3
Impact from
growth of lower-
carbon alternatives.
Short - Medium Kerry’s technology portfolio can also support our
customers as they look for alternatives to higher carbon
inputs. For example, our food waste technologies,
liquid smoke flavours and plant-based portfolio offer
emissions reduction opportunities across a range of
food and beverage end use markets.
Scenario Analysis
Methodology
We recognise the future consequences of rising
emissions and the impact this could have on the
Group. As a result, we have examined our business
under a range of future scenarios, modelling different
climate pathways to test the nature and magnitude of
potential risks and opportunities.
We assess the most material physical and transition risks
identified for Kerry Group under two climate pathways.
The first pathway looks at changes which may occur if
global average temperature increases are kept below
two degrees Celsius by 21002. The second assumes that
emissions continue to increase so that global average
temperature increases exceed four degrees Celsius by
the end of the century3.
1
2
3
GreenPrint Business of Sustainability Index
Aligns with Representative Concentration Pathway (RCP) 2.6
Aligns with Representative Concentration Pathway (RCP) 8.5
Kerry Group Annual Report 2022Strategic Report Sustainability Review 79
Our analysis of physical and transition risk is carried
out in partnership with an expert third-party, drawing
on proprietary risk models along with our own risk
assessment process to understand the implications of
different climate scenarios for our business. For physical
risks, we have employed a global climate risk analysis tool
to help assess the potential impact of site damage and
business interruption across our operations and transport
routes. For transition risks, we use a global economic
model, which incorporates an assessment of the carbon
emissions associated with economic activities and the
impact of constraining these.
Inputs &
Assumptions
Climate
Scenarios
Potential
Impacts
<2⁰ Celsius (RCP 2.6)
>4⁰ Celsius (RCP 8.5)
In this scenario, planned
intervention limits global
average temperature
increase to below 2⁰
Celsius by 2100, which
heightens transition
risk and opportunity.
In this scenario global
average temperatures
increase to over 4⁰ Celsius
by 2100, representing a
‘worst case’ outcome
and a higher degree
of physical risk.
Summary of Modelling Approach
Physical
Risk
Extreme Weather
Water Stress
Sea Level Rise
Raw Material Supply
Transition
Risk and
Opportunities
Carbon pricing
Energy Transition
Lower carbon
alternatives
Impact of Climate-Related Issues on Financial
Performance
Potential Future Impact of Climate-Related Risks
and Opportunities
While there have been some climate-related impacts
on supply chains and operations in 2022, these did not
have a significant impact on revenue or costs in the
year. As noted above, three of our manufacturing sites
are subject to EU and UK emissions trading schemes,
which have experienced an increasing cost of carbon.
We continue to focus on reducing emissions at these
locations as part of our broader decarbonisation
strategy. Extreme weather events in 2022 have had an
impact on some raw material prices, however, the direct
impact of this is difficult to separate from other cost
drivers, which include the current geopolitical landscape
and continuing supply chain disruptions.
We see the potential for growth within lower carbon
alternative products as these continue to offer
opportunities. Customers are increasingly seeking to
understand the climate impact of their products and
how this can be lowered in response to both consumer
demand and their public commitments relating to
emissions reduction. Energy price increases have also
made capital projects relating to efficiency and the use
of cleaner fuels more financially attractive, which will
support our ongoing plans for emissions reduction
across the Group.
Through the use of scenario analysis, we have modelled
potential future financial impacts for our business.
While these are helpful in exploring areas of risk, there
are limitations to the methodology and the number
of variables with the potential to impact on future
outcomes creates uncertainty. To overcome this and
the gaps in available data, we have made certain
assumptions about the future of our business and the
context in which it will operate. Where we have done so,
we have sought to base these assumptions on credible
third-party data and expert judgement.
While climate modelling is available to support the
assessment of potential physical risks, the pathway
to achieving a lower-carbon economy is highly variable,
as governments, consumers and industry pursue
a variety of approaches over differing timeframes.
As a result, the modelling of transition pathways is
particularly challenging, given the lack of certainty
on the level and timing of any interventions. These
uncertainties increase over time, making longer
term modelling especially difficult and while we have
examined key transition risks to our business beyond
2030, these are not included here, given the theoretical
nature of these assessments. The following table
outlines the potential financial impact associated
with our key climate-related risks and opportunities.
The ranges used to indicate the level of impact are
cumulative and have been determined with reference
to the approach used in assessing the significance of
financial impact on our income statement and assets.
Kerry Group Annual Report 2022 80
Strategic Report Sustainability Review
Kerry Group Annual Report 2022
Inputs and Assumptions
Growth
It is assumed that Kerry will achieve its medium-term growth targets and a global
average growth rate is used thereafter.
Manufacturing Footprint
It is assumed that the current footprint remains static until 2050 with no additional
mitigation measures adopted to minimise climate-related risk.
Emissions
Climate Data
Carbon Price
It is assumed that the Group will achieve its 2030 emissions reduction targets and
reach Net Zero before 2050.
We use climate and economic data provided by expert third parties to model
potential physical and transition impacts.
Assumed changes in carbon price broadly align with International Energy Agency
(IEA) and Intergovernmental Panel on Climate Change (IPCC) projections to 2030.
Low or no further policy intervention is assumed under a >4C scenario.
Physical Risks
Risks
Risk Drivers
Physical –
Acute
The potential
impact of acute
climate hazards
such as extreme
wind, flooding, etc.
on manufacturing
sites and
distribution
channels.
Physical -
Chronic
The potential
impact of chronic
climate hazards
such as sea
level rise and
water stress on
manufacturing
sites.
Impact
Area
Cumulative
Impact
to 2030
Cumulative
Impact
to 2050
Details
<2⁰C
>4⁰C
<2⁰C
>4⁰C
Assets
Low
Low
Low
Low
Revenue
Low
Low
Low
Low
Assets
Medium Medium Low
Low
Revenue
Low
Low
Low
Low
Physical –
Chronic
The potential
impact of chronic
climate hazards on
the availability of
key raw materials.
Cost
Low
Low
N/A
N/A
Our assessment has highlighted a very
small number of sites globally which have
higher levels of physical risk, specifically
flooding. Similarly, our distribution
network also has some exposure to
acute hazards. A conservative approach
has been adopted to model risk to this
network and a more detailed analysis is
expected to evolve the assessment and
improve the quantification. While financial
impact is estimated to be low, the level
of risks does increase with time and is
greater under a >4⁰C scenario.
Our assessment of water stress shows
limited levels of risk across our operations
for both temperature trajectories. The
sites identified are within the Group’s
priority locations for water risk with efforts
already underway to manage water use
at these sites. Two locations globally were
identified that could be at increased risk
of flooding given projected sea-level rise.
The potential financial impact to our assets
is estimated to be medium to 2030 and
low to 2050 given the thresholds for this
extended period, albeit the level of risk
increases over time and under the higher
temperature scenario.
Our assessment shows that while there
may be impacts to yields, overall land
suitability for selected raw material does
not present a significant challenge by
2050. However, the projected demand for
these commodities coupled with climate-
related impacts is anticipated to result in
upward price pressure over this period.
The availability of data inhibits us in
making a consistent assessment over the
period from 2030 to 2050.
It should be noted that this is not a forecast. Scenario analysis is subject to limitations and based on several assumptions.
The information above should be viewed accordingly.
Transition Risks and Opportunities
Risk /
Opportunity
Risk Drivers
Impact
Area
Cumulative Impact
to 2030
Details
Kerry Group Annual Report 2022
81
<2⁰C
>4⁰C
Cost
Low
N/A
Policy
Introduction of
carbon pricing
to constrain
emissions
intensive activities.
Technology
Adoption of
new technology
to support our
transition to a low
carbon business.
Cost
Medium Medium
Market
The opportunity
presented by
shifting consumer
demand.
Revenue
Growth
High
High
The increased use of carbon pricing by
regulators has the potential to significantly
increase operational costs. We modelled a
carbon price of €130 per tonne taking effect
across all our operations by 2030 under the
<2⁰C scenario (assuming no such intervention
in a >4⁰C world). The impact of this cost is
modest compared to the potential for much
greater cost increases in the event that a
higher carbon price is subsequently required
to achieve Net Zero by 2050.
Increased regulatory and stakeholder
pressure creates widespread adoption of
clean energy technology. The achievement of
Kerry’s 2030 Scope 1 & 2 targets adequately
meets these stakeholder demands, with deep
decarbonisation of sites commencing after this
date and capital expenditure requirements rising
accordingly. The model assumes a falling cost of
renewables while prices increase for fossil-based
energy. The rates for this fossil energy rise more
substantially under a <2⁰C scenario.
Increased consumer awareness and changing
demographics leads to a sustained shift
towards environmentally-friendly food and
beverage choices. This leads to reduced
demand in some markets for carbon intensive
products such as meat, but provides significant
opportunity for lower carbon alternatives
and solutions that help to lower product
footprints. This trend is assumed to grow over
time and become more significant under a
<2⁰C scenario. For the quantification of this
opportunity, we have modelled a limited
number of proven lower-carbon solutions
aligned with our growth platforms.
It should be noted that this is not a forecast. Scenario analysis is subject to limitations and based on several assumptions.
The information above should be viewed accordingly.
The Impact of Climate Change on Our
Financial Statements
We considered the potential impacts of climate change
risks when preparing our Consolidated Financial
Statements and have determined that there is no
material impact on the financial reporting judgements
and estimates and as a result there is no impact on the
valuations of the Group’s assets and liabilities from these
risks as at 31 December 2022.
In the impairment testing of goodwill and indefinite
life intangible assets, the impact of some of the
climate related scenarios have been considered. The
Group performed a number of sensitivity scenarios
to incorporate climate-related risks and opportunities
including impacts on revenue and profitability, future
capital expenditure and investments as well as
volatility associated with other risks identified.
The useful lives of assets 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.
Resilience of Kerry Group’s Strategy
When we review our strategy, taking into consideration
different climate-related scenarios, including a 2°C or
lower scenario, we see a strong level of resilience.
Our physical risk assessment has provided valuable
insight into the longer-term risks across our operations
and supply chain and while it identifies areas for further
focus, it also highlights how our diverse geographic
spread of manufacturing facilities and strategy of co-
location in proximity to our customers, helps to limit
Kerry’s operational exposure to climate risk in any one
82
specific region or geography. To ensure continued
resilience, we have looked at ways of improving the
integration of specific climate-related risks within
business continuity planning for higher risk sites and
are examining public policy and action in areas where
adaptation requires a broader based response.
In addition, we have accelerated our response to climate
change with a 48% reduction in operational emissions
since our 2017 base year and while water risk is deemed
low impact, we continue to drive efficiencies across
our operations. We also place a specific focus on sites
in areas of water stress and look at additional ways to
reduce water withdrawals at these locations. For more
see page 72 of our Sustainability Review.
For our raw materials, our global sourcing strategy and
responsible sourcing commitments will be important to
help manage potential future risks to availability of key
commodities as regional climatic impacts take effect.
While overall land suitability for production is expected
to be maintained, we do acknowledge the potential
for extreme events that could impact on availability. As
part of our responsible sourcing programme, we will
continue to work with our suppliers, helping to ensure
that carbon reduction plans are in place alongside
programmes that can help improve the overall resilience
of farmers and their communities.
Further down the value chain, the breadth and depth
of our portfolio, our diverse customer base and range
of channels helps to reduce the risk associated with
any specific category or market segment and provides
an opportunity for innovation across multiple end use
markets. Our Research, Development and Application
strategy is focused on growth platforms that are
aligned with a low carbon transition and we work as
a trusted partner with our customers, co-creating
products to meet changing consumer preferences.
Our investment in innovation reflects the importance
of climate action across our customers’ brands and our
technical capability and extensive portfolio of solutions
strengthens our position as a partner of choice.
Carbon pricing and technology shifts will continue to
be important considerations for the Group in delivering
on our strategy. Our climate transition plan is critical
to managing this potential area of risk and delivering
on the decarbonisation of our operations in line with
Kerry’s 2030 targets, longer-term Net Zero ambition
and stated climate policy across jurisdictions where we
operate. Focused on key areas of impact, this transition
plan will continue to evolve for both our operations and
supply chain as we make progress on target initiatives
and gain additional insight on low-carbon approaches,
particularly across our value chain.
Risk Management
The identification, assessment and management
of climate-related risks follow the Group’s existing
risk management framework, however, the time
horizons have been extended to allow for the longer-
term impacts of climate change. This work has been
supported by an Executive-led steering committee,
which has helped to define a focused set of risks for
detailed analysis, as outlined on page 77.
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 our Internal
Audit function and overseen by the Risk Oversight
Committee. For more on our principal risks and the risk
assessment process see our Risk Management Report
on pages 94-105.
Within our risk management framework, we adopt
an integrated approach to assessing and managing
climate-related risks across our business and wider
value chain, which involves a dual approach as follows:
i) We include ‘Climate Change and Environmental’
risk as a standalone principal risk for our business,
considering the longer-term systemic nature of the
risk and the requirements for shorter-term action to
mitigate and plan for this.
ii) We also consider how discrete climate-related
impacts can affect other risk areas and integrate
climate considerations within additional principal
risks, for example, the potential impacts of extreme
weather on raw material availability.
As part of the Group’s enterprise risk management
framework, we have defined parameters under which
we quantify potential impact. The significance of
this risk is determined using a standard risk scoring
methodology to ensure consistency in reporting and
evaluation of risks.
The Group's risk appetite is agreed annually with the
Board and as a result we seek to minimise climate-
related risks while ensuring the ongoing success of our
business. The management of these climate-related
risks is undertaken within the function where the risk
may occur, for example, raw material risks are managed
by procurement. Any actions taken must be sufficient
to bring climate risks within the agreed appetite for the
Group and the Chief Operating Officer has executive
responsibility for these mitigations on climate change.
He is supported in this work by the Council structure
outlined on page 75.
In 2022, climate considerations, particularly our key
climate risks, were also a critical area of focus during
dedicated risk reviews with the business. This allowed
us to explore how climate-related issues can impact
on strategies within regions and key functional teams
and further assess the controls which are in place.
Prioritisation of any additional action is based on
materiality and defined by potential severity and
likelihood of the impact.
Kerry Group Annual Report 2022Strategic Report Sustainability Review Climate Change Integration across our Principal Risks
83
14
1
13
2
12
11
10
1 Portfolio Management
2 Geopolitical, Emerging Markets
and Macroeconomic Environment
3 Business Acquisition and Divestiture
4 Climate Change and Environment
5 Business Ethics and Social Responsibility
6 People
7
Food Safety, Quality and Regulatory
8 Health and Safety
9 Margin Management
3
5
4
9
8
7
6
11 Operational and Supply Chain Continuity
10 Information Systems and Cybersecurity
12 Intellectual Property
13 Taxation
14 Treasury
Denotes where climate-related issues have
been considered within the risk assessment.
Denotes where climate-related issues have
been considered within the risk assessment.
We also continue to plan for emerging non-financial
reporting regulations across multiple jurisdictions.
The divergence in approaches, scope and timelines
across different frameworks pose a risk for businesses
and we have engagement with our Board, executive
management and functional teams to ensure they
understand these forthcoming requirements and that
the business can respond appropriately.
Metrics and Targets
Our Beyond the Horizon sustainability strategy sets
out several important target areas related to climate
action. Key among these, is our science-based target
for emissions reduction across all scopes by 2030 and
our ambition to achieve Net Zero before 2050. As part
of our transition plan, we have made strong progress
against this goal with a 48% reduction in absolute
Scope 1 and 2 emissions in 2022 and the achievement
of our 100% renewable electricity objective three years
ahead of our initial target timeframe.
We continue to examine how best to enhance
disclosures relating to our decarbonisation roadmap
and progress towards our Net Zero ambition. We report
on climate metrics to multiple platforms, including
CDP and in 2022 maintained our leadership score.
We have completed further work in 2022 to help
identify and quantify our Scope 3 emissions and we
have ongoing engagement with our value chain and
expert partners on improving both the accuracy and
transparency of our data.
In line with TCFD Guidance, we disclose the following
climate-related metrics which are relevant for our
business, outlining how these relate to specific areas of
climate-related risk and opportunity which have been
identified. For more information on our metrics and
targets, including Scope 3 breakdown, boundaries and
calculation approach see our 2022 Sustainability Report
on kerry.com.
Kerry Group Annual Report 2022 84
Impact Area
Units
2022
2021
Key Target Areas
Change
vs 2017
Base Year
Scope 1
Scope 2
Tonnes of
CO2e
Tonnes of
CO2e
460,731
482,055
-10%
25,415
149,362
-94%
Scope 1 & 2
Tonnes of
CO2e
486,146
631,417
-48%
Scope 3
Tonnes of
CO2e
9,971,498
10,534,013
0%
Renewable
Electricity
%
100%
61%
N/A
Total
Energy
Consumed
Energy
Intensity
Total
Renewable
Energy
MWh
3,276,271
3,321,922
-2%
MWh/
0.95
0.95
-5%
tonnes
product
MWh
921,736
578,097
1388%
Water
Withdrawals
Megalitres
(ML)
Water
Intensity
ML / tonne
product
21,551
22,509
-1%
6.28
6.45
-5%
Megalitres
3.07
3.15
-12%
Water
Intensity in
High-Risk
Areas
We have set a science-based goal
for emissions reduction, targeting
a 55% absolute reduction in Scope
1 and 2 emissions and a 30%
reduction in Scope 3 intensity
by 2030, versus our 2017 base
year. We are also committed to
achieving Net Zero before 2050. We
continue to make progress across
all scopes in line with our targets.
These reductions will ensure we
play our part in mitigating the key
contributor to the risks which have
been identified for our business.
For more on our efforts to reduce
emissions see pages 69-70.
We have an ongoing focus on
energy efficiency and increasing
the proportion of renewables within
our energy mix. We are members
of RE100 under which we set a
target for 100% of our electricity
to come from renewable sources
by year end 2025. This shift to
cleaner sources of energy supports
our decarbonisation pathway and
helps mitigate potential impacts
associated with carbon prices
and the shift towards cleaner
technology. For more details on
our progress towards clean energy
see our 2022 Sustainability Report.
We are focused on increasing water
efficiency across our business and
are targeting a 15% improvement in
water intensity by 2025, versus our
2017 baseline. We take account of
water context in our target setting
process and have identified priority
water sites for specific action.
Our focus on water management
across these sites helps us to better
prepare for potential water risks at
these locations. While we do not
have a separate target across these
sites, our average water intensity
at these locations was 12% lower
versus our 2017 baseline. For more
on water use across our operations,
see our 2022 Sustainability Report.
Area of Risk /
Opportunity
Physical and
Transition
Risks (1-7, 9)
Transition Risk
(6-7)
Physical Risk
(4)
Kerry Group Annual Report 2022Strategic Report Sustainability Review Responsible
Sourcing:
Dairy
(Liquid Milk)
Certified
Volumes
100%
100%
N/A
%
29.4%
9.2%
N/A
Taste &
Nutrition
Revenue
Growth
Remuneration %
20%
20%
N/A
85
Physical and
Transition (5,
8, 9)
Transition
Opportunity (3)
Physical and
Transition Risk
(1-6)
In addition to certification and
independent carbon footprinting
across all Irish milk volumes, we have
launched the Evolve programme to
incentivise carbon reductions at farm
level and improve the resilience of
farm enterprises. Targeting a 30%
reduction in carbon intensity by
2030, Evolve helps to address risk
in the region where it is deployed,
provides an industry-leading
template for supplier engagement
in other regions and delivers less
carbon intensive inputs that can
meet consumer demand for more
sustainable products.
Our Taste & Nutrition revenue has
grown by 29.4% in 2022, supported
by our growth platforms, which
include a range of lower-carbon
solutions within our portfolio.
20% of executive variable
remuneration is tied to the
achievement of core sustainability
objectives, including the
achievement of the Group’s climate-
related targets.
In addition to the above specific target areas, we are
exploring carbon price mechanisms to aid decision
making within the organisation.
Further details in relation to our climate-related targets
can be found in the Group’s 2022 Sustainability Review
on page 69.
Table of Concordance
Pillar
TCFD Recommendation
Conclusion
These climate-related disclosures are intended to
assist readers in understanding the potential impacts
of climate change on our business over the short,
medium and long-term.
Kerry
Disclosure
(page ref)
74-75
75-76
77-78
78-81
81-82
Governance
Describe the Board’s oversight of climate-related risks and opportunities
Describe management’s role in assessing and managing climate-related risks and
opportunities
Strategy
Describe the climate-related risks and opportunities the organisation has identified over
the short, medium, and long-term
Describe the impact of climate-related risks and opportunities on the organisation’s
businesses, strategy, and financial planning
Describe the resilience of the organisation’s strategy, taking into consideration different
climate-related scenarios, including a 2°C or lower scenario
Risk
Describe the organisation’s processes for identifying and assessing climate-related risks
76, 82
Describe the organisation’s processes for managing climate-related risks
Describe how processes for identifying, assessing, and managing climate-related risks are
integrated into the organisation’s overall risk management
Metrics and
Targets
Disclose the metrics used by the organisation to assess climate-related risks and
opportunities in line with its strategy and risk management process
82
82-83
83-85
Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions,
and the related risks
84
Describe the targets used by the organisation to manage climate-related risks and
opportunities and performance against targets
84-85
Kerry Group Annual Report 2022 86
Strategic Report Sustainability Review
Kerry Group Annual Report 2022
EU Taxonomy
Background
To meet the EU’s climate and energy targets for 2030 and reach the objectives of
the European Green Deal, the European Commission established an action plan to
direct investments towards sustainable projects and activities. Under this action
plan the EU has defined a taxonomy of sustainable activities.
The EU Taxonomy (Regulation (EU) 2020/852, the ‘Taxonomy Regulation’) and the
supplementary Delegated Regulation C(2021) 4987 was introduced to increase
the level of transparency on environmental information through a common
classification system for environmentally sustainable economic activities.
At present, the EU Taxonomy does not cover all industries and its sustainable
classification criteria is not yet applicable to Kerry’s ongoing core business activities.
In the following section, the Group has outlined the extent to which some limited
activities are eligible and aligned under the first two environmental objectives;
climate change mitigation and climate change adaptation as set out in Commission
Delegated Regulation (EU) 2021/2139 (Climate Delegated Act) and Commission
Delegated Regulation (EU) 2022/1214 (Complementary Climate Delegated Act).
For the 2022 financial year, only these two environmental objectives are in scope
for reporting.
An expansion in the scope of the EU Taxonomy is expected in 2023, as the remaining
four environmental objectives come into scope (sustainable use and protection of
water and marine resources, transition to a circular economy, pollution prevention
and control, protection and restoration of biodiversity and ecosystems). We are
preparing for expanded disclosures as the regulation takes effect.
Kerry Group Annual Report 2022
87
EU Taxonomy
6
Protection and
restoration of
biodiversity
and ecosystems
1
Climate
change
mitigation
5
Pollution
prevention
and control
Six
Environmental
Objectives
2
Climate
change
adaptation
Applicable for 2022
1 Climate change mitigation
2 Climate change adaptation
4
Transition
to a circular
economy
3
Sustainable use
and protection
of water
and marine
resources
Economic Activities
The disclosure requirements cover Kerry’s global
activities. Our core business involves the manufacture
of food and beverage products, which is not currently
in scope of the EU Taxonomy.
In 2022, we assessed our activities for eligibility to see
whether the Group’s turnover, Operating Expenditure
(OpEx) or Capital Expenditure (CapEx) correspond to
an economic activity that is described in the Climate
Delegated Act. Our assessment determined that our
Taxonomy-eligible activities were all classified under
climate change mitigation, reflecting activities being
taken in line with our Beyond the Horizon strategy.
As we allocated our business activities to only one
environmental objective, we avoided double counting
in the two environmental objectives that are in scope.
Once we determined the eligible activities, we assessed
each activity for alignment. For each activity, we
considered the technical screening criteria as described
in the Climate Delegated Act. We determined the
activities that made a substantial contribution to at least
one environmental objective and that did no significant
harm to any of the other environmental objectives
along with compliance with minimum safeguards. The
assessment of compliance against minimum safeguards
leverages policies such as our Group Code of Conduct
and established processes across the Group.
Using the EU Taxonomy Compass, we assessed all our
Taxonomy-eligible projects against specific Taxonomy-
alignment criteria for each activity. For example, for the
activity installation, maintenance and repair of energy
efficiency equipment, under substantial contribution
criteria for climate mitigation, we assessed against the
energy efficiency criteria. For do no significant harm
1 Commission Delegated Regulation (EU) 2021/2139
for climate adaptation, we assessed against the criteria
outlined in Appendix A to the Annex1 including the
physical climate risk assessment of our sites. For do no
significant harm for pollution prevention, we assessed
against the criteria in Appendix C to the Annex1, as these
were the requirements for this activity.
The evaluation of eligibility and alignment was
conducted by a cross functional working group,
including the Sustainability Reporting Team, Engineering
and Research, Development & Application (RD&A) teams.
The evaluation process allocated projects to distinct
categories to avoid double counting in the numerator
across economic activities in the turnover, OpEx and
CapEx Key Performance Indicators (KPIs).
The KPIs calculated and disclosed in the tables below
indicate the proportion of turnover, OpEx and CapEx
in the following categories:
Taxonomy-aligned: Activity that is described in the
Climate Delegated Act and meets all of the Technical
Screening Criteria (substantial contribution and
do no significant harm) as well as complying with
minimum safeguards
Taxonomy-eligible but not Taxonomy-aligned: Activity
that is described in the Climate Delegated Act and
does not meet the Technical Screening Criteria or
does not comply with minimum safeguards
Taxonomy-non-eligible: An activity that is not
described in the Climate Delegated Act
We also assessed activities against the Complementary
Climate Delegated Act and have not completed
templates 1 to 5 as none of the activities listed in
this Act are applicable to Kerry.
88
Accounting Policies
Turnover
The denominator used for the turnover KPI is based on
the total revenue recognised pursuant to International
Accounting Standard (IAS) 1, paragraph 82 (a) as
reported in the Consolidated Income Statement on page
180. For further details on Kerry's revenue accounting
policy, see Note 1 of the Financial Statements. In
determining the KPIs for turnover, the share that is
Taxonomy-aligned (numerator) and Taxonomy-eligible
but not Taxonomy-aligned (numerator) is each divided
by the denominator.
The manufacture of food and beverage products was
deemed non-eligible as these activities are currently
not in scope under the EU Taxonomy. We conducted
a deeper review of our turnover with cross functional
support and input from the Group’s Chief Science and
Technology Officer against the economic activities
included in the EU Taxonomy Regulation. This
assessment showed no eligible turnover (numerator)
and therefore we established the Taxonomy-eligible
turnover to be 0% in 2022 (0% in 2021).
As no activities were deemed Taxonomy-eligible,
there is no requirement to assess alignment.
Proportion of turnover from products or services associated with Taxonomy-aligned economic activities
EU Taxonomy -
Turnover
Reference
to Financial Statements
Revenue
Turnover denominator
Consolidated
Income Statement
2022
€m
8,771.9
8,771.9
89
Substantial contribution criteria
C
o
d
e
s
(
2
)
t
u
r
n
o
v
e
r
(
3
)
A
b
s
o
u
t
e
l
t
u
r
n
o
v
e
r
(
4
)
P
r
o
p
o
r
t
i
o
n
o
f
m
i
t
i
g
a
t
i
o
n
(
5
)
C
l
i
m
a
t
e
c
h
a
n
g
e
a
d
a
p
t
a
t
i
o
n
(
6
)
C
l
i
m
a
t
e
c
h
a
n
g
e
r
e
s
o
u
r
c
e
s
(
7
)
W
a
t
e
r
a
n
d
m
a
r
i
n
e
l
C
i
r
c
u
a
r
e
c
o
n
o
m
y
(
8
)
P
o
l
l
u
t
i
o
n
(
9
)
e
c
o
s
y
s
t
e
m
s
(
1
0
)
i
B
o
d
i
v
e
r
s
i
t
y
a
n
d
DNSH criteria
(‘Does Not Significantly Harm’)
m
i
t
i
g
a
t
i
o
n
(
1
1
)
C
l
i
m
a
t
e
c
h
a
n
g
e
a
d
a
p
t
a
t
i
o
n
(
1
2
)
C
l
i
m
a
t
e
c
h
a
n
g
e
r
e
s
o
u
r
c
e
s
(
1
3
)
W
a
t
e
r
a
n
d
m
a
r
i
n
e
e
c
o
n
o
m
y
(
1
4
)
C
i
r
c
u
a
r
l
P
o
l
l
u
t
i
o
n
(
1
5
)
e
c
o
s
y
s
m
e
t
s
(
1
6
)
i
B
o
d
i
v
e
r
s
i
t
y
a
n
d
s
a
f
e
g
u
a
r
d
s
(
1
7
)
i
i
M
n
m
u
m
Taxonomy-
aligned
proportion
of turnover,
year N (18)
Taxonomy-
aligned
proportion
of turnover,
year
N-1(19)
Category
(enabling
activity or)
(20)
Category
(transitional
activity)
(21)
€'m
%
%
%
%
% %
%
Y/N
Y/N
Y/N
Y/N Y/N Y/N Y/N
Percent
Percent
E
T
-
-
-
-
-
0.0%
0.0%
0%
0%
0%
0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Economic Activities (1)
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities
(Taxonomy-aligned)
Activity 1
Turnover of environmentally sustainable activities
(Taxonomy aligned) (A.1)
A.2 Taxonomy-Eligible but not environmentally
sustainable activities (not Taxonomy-aligned
activities)
Activity 1
Turnover of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
Total (A.1 + A.2)
TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy-non-eligible activities (B)
8,771.9
100.0%
Total (A+B)
8,771.9
100.0%
Kerry Group Annual Report 2022Kerry Group Annual Report 2022Strategic Report Sustainability Review
90
Operating Expenditure
The denominator for OpEx consists of direct non-
capitalised costs that relate to research and development
(as recognised as an expense in our consolidated
income statement as stated in Note 3 to the Financial
Statements), building renovation measures, short-
term leases, maintenance and repair and other direct
expenditures relating to the day-to-day servicing of
assets of property, plant and equipment which includes
internal and external people cost for our engineering
teams who maintain buildings and equipment (as
included in other general overheads and staff costs
in Note 3 to the Financial Statements).
We conducted a review of our OpEx against the
Taxonomy requirements with our Integrated Operations
and Engineering teams. We determined that, as the
majority of our costs related to turnover, the eligibility
of activities for OpEx would be low.
For those activities which were identified as being eligible,
OpEx was then assessed for alignment against the
technical screening criteria and minimum safeguards.
The Taxonomy-aligned and Taxonomy-eligible but
not Taxonomy-aligned numerator included OpEx
related to Taxonomy activities1 as set out in the
OpEx KPI Table including:
6.5 transport by motorbikes, passenger
cars and light commercial vehicles
7.3 installation, maintenance and repair
of energy efficiency equipment
The Taxonomy-aligned numerator all relates to
costs captured within maintenance and repairs
in the denominator.
Taking the Taxonomy-aligned and Taxonomy-
eligible but not Taxonomy-aligned numerator over
the denominator, we assessed Taxonomy-aligned
activities at 0% and Taxonomy-eligible but not
Taxonomy-aligned activities as 1%.
EU Taxonomy - Operating Expenditure
Research & development costs
Short-term leases
Maintenance and repairs
Other direct expenditures
Operating Expenditure denominator
91
2022
€m
303.2
3.7
170.3
170.0
647.2
Proportion of operating expenditure from products or services associated with Taxonomy-aligned economic activities
Economic Activities (1)
Substantial contribution criteria
C
o
d
e
s
(
2
)
O
p
E
x
(
3
)
A
b
s
o
u
t
e
l
O
p
E
x
(
4
)
P
r
o
p
o
r
t
i
o
n
o
f
m
i
t
i
g
a
t
i
o
n
(
5
)
C
l
i
m
a
t
e
c
h
a
n
g
e
a
d
a
p
t
a
t
i
o
n
(
6
)
C
l
i
m
a
t
e
c
h
a
n
g
e
r
e
s
o
u
r
c
e
s
(
7
)
W
a
t
e
r
a
n
d
m
a
r
i
n
e
l
C
i
r
c
u
a
r
e
c
o
n
o
m
y
(
8
)
P
o
l
l
u
t
i
o
n
(
9
)
e
c
o
s
y
s
t
e
m
s
(
1
0
)
i
B
o
d
i
v
e
r
s
i
t
y
a
n
d
DNSH criteria
(‘Does Not Significantly Harm’)
m
i
t
i
g
a
t
i
o
n
(
1
1
)
C
l
i
m
a
t
e
c
h
a
n
g
e
a
d
a
p
t
a
t
i
o
n
(
1
2
)
C
l
i
m
a
t
e
c
h
a
n
g
e
r
e
s
o
u
r
c
e
s
(
1
3
)
W
a
t
e
r
a
n
d
m
a
r
i
n
e
e
c
o
n
o
m
y
(
1
4
)
C
i
r
c
u
a
r
l
P
o
l
l
u
t
i
o
n
(
1
5
)
e
c
o
s
y
s
m
e
t
s
(
1
6
)
i
B
o
d
i
v
e
r
s
i
t
y
a
n
d
s
a
f
e
g
u
a
r
d
s
(
1
7
)
Taxonomy-
aligned
proportion
of OpEx,
year N (18)
Taxonomy-
aligned
proportion
of OpEx,
year
N-1(19)
Category
(enabling
activity or)
(20)
Category
(transitional
activity)
(21)
i
i
M
n
m
u
m
€'m
%
%
%
%
% %
%
Y/N
Y/N
Y/N
Y/N Y/N Y/N Y/N
Percent
Percent
E
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities
(Taxonomy-aligned)
7.3 Installation, maintenance and repair
of energy efficiency equipment
OpEx of environmentally sustainable activities
(Taxonomy aligned) (A.1)
A.2 Taxonomy-Eligible but not environmentally
sustainable activities (not Taxonomy-aligned
activities)
6.5 Transport by motorbikes, passenger cars and
light commercial vehicles
7.3 Installation, maintenance and repair of
energy efficiency equipment
OpEx of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
7.3
6.5
7.3
0.4
0.4
1.0
7.1
8.1
0.1%
100%
0.1%
100%
0%
0%
Y
-
-
Y
-
Y
0.1%
0.1%
E
0.1%
0.2%
1.1%
1.3%
Total (A.1 + A.2)
8.5
1.4%
0.1%
0.1%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
OpEx of Taxonomy-non-eligible activities (B)
Total (A+B)
638.7
98.6%
647.2
100.0%
T
-
1 Commission Delegated Regulation (EU) 2021/2139
Kerry Group Annual Report 2022Kerry Group Annual Report 2022Strategic Report Sustainability Review
92
Capital Expenditure
The denominator used for the CapEx KPIs in 2022 is
calculated as additions and businesses acquired for
property, plant and machinery (IAS 16), leases (IFRS 16)
and intangible assets (IAS 38) as reported in Notes to
the Financial Statements 11 (i), 11 (ii) and 12 on pages
205-212. As defined in the taxonomy, Goodwill is not
included in the CapEx KPI.
The Taxonomy-aligned and Taxonomy-eligible but
not Taxonomy-aligned numerator includes CapEx
related to Taxonomy activities1 as set out in the
CapEx KPI table including:
6.5 transport by motorbikes, passenger cars
and light commercial vehicles
7.1 construction of new buildings
7.2 renovation of existing buildings to improve
existing manufacturing facilities
7.3 installation, maintenance and repair of
energy efficiency equipment
7.4 installation, maintenance and repair of
charging stations for electric vehicles in buildings
and parking spaces attached to buildings
7.5 installation, maintenance and repair of instruments
and devices for measuring, regulation and controlling
energy performance of buildings, and
7.7 acquisition and ownership of buildings
The Taxonomy-aligned CapEx numerator only consists
of property, plant and equipment additions, right of
use asset additions and intangible asset additions.
Comparing the Taxonomy-aligned and Taxonomy-
eligible but not Taxonomy-aligned capital additions
(numerator) to our additions and businesses acquired
of property, plant and equipment, right of use assets
and intangible assets (denominator), the proportion
of Taxonomy-aligned activities is 3%, Taxonomy-
eligible but not Taxonomy-aligned is 22% in 2022.
(Taxonomy-eligible CapEx of 24% was reported in
2021 which excludes businesses acquired; 15%
including businesses acquired).
Proportion of capital expenditure from products or services associated with Taxonomy-aligned economic activities
EU Taxonomy -
Capital Expenditure
Property, plant and
equipment - Additions
Property, plant and
equipment - Businesses acquired
Reference
to Financial
Statements
Note 11 i
Note 11 i
Right of use assets - Additions
Note 11 ii
Right of use assets -
Businesses acquired
Note 11 ii
Intangible assets - Additions
Note 12
93
2022
€m
213.8
46.1
43.0
0.3
12.2
Intangible assets -
Businesses acquired -
Brand related intangibles
Intangible assets -
Businesses acquired -
Computer software
Capital Expenditure denominator
Note 12
122.8
Note 12
0.5
438.7
Substantial contribution criteria
C
o
d
e
s
(
2
)
C
a
p
E
x
(
3
)
A
b
s
o
u
t
e
l
C
a
p
E
x
(
4
)
P
r
o
p
o
r
t
i
o
n
o
f
m
i
t
i
g
a
t
i
o
n
(
5
)
C
l
i
m
a
t
e
c
h
a
n
g
e
a
d
a
p
t
a
t
i
o
n
(
6
)
C
l
i
m
a
t
e
c
h
a
n
g
e
r
e
s
o
u
r
c
e
s
(
7
)
W
a
t
e
r
a
n
d
m
a
r
i
n
e
l
C
i
r
c
u
a
r
e
c
o
n
o
m
y
(
8
)
P
o
l
l
u
t
i
o
n
(
9
)
e
c
o
s
y
s
t
e
m
s
(
1
0
)
i
B
o
d
i
v
e
r
s
i
t
y
a
n
d
DNSH criteria
(‘Does Not Significantly Harm’)
m
i
t
i
g
a
t
i
o
n
(
1
1
)
C
l
i
m
a
t
e
c
h
a
n
g
e
a
d
a
p
t
a
t
i
o
n
(
1
2
)
C
l
i
m
a
t
e
c
h
a
n
g
e
r
e
s
o
u
r
c
e
s
(
1
3
)
W
a
t
e
r
a
n
d
m
a
r
i
n
e
e
c
o
n
o
m
y
(
1
4
)
C
i
r
c
u
a
r
l
P
o
l
l
u
t
i
o
n
(
1
5
)
e
c
o
s
y
s
m
e
t
s
(
1
6
)
i
B
o
d
i
v
e
r
s
i
t
y
a
n
d
s
a
f
e
g
u
a
r
d
s
(
1
7
)
i
i
M
n
m
u
m
Taxonomy-
aligned
proportion
of CapEx,
year N (18)
Taxonomy-
aligned
proportion
of CapEx,
year
N-1(19)
Category
(enabling
activity or)
(20)
Category
(transitional
activity)
(21)
€'m
%
%
%
%
% %
%
Y/N
Y/N
Y/N
Y/N Y/N Y/N Y/N
Percent
Percent
E
Economic Activities (1)
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities
(Taxonomy-aligned)
7.2 Renovation of existing buildings
7.3 Installation, maintenance and repair of
energy efficiency equipment
7.4 Installation, maintenance and repair of charging
stations for electric vehicles in buildings (and parking
spaces attached to buildings)
7.5 Installation, maintenance and repair of
instruments and devices for measuring, regulation
and controlling energy performance of buildings
CapEx of environmentally sustainable activities
(Taxonomy aligned) (A.1)
A.2 Taxonomy-Eligible but not environmentally
sustainable activities (not Taxonomy-aligned
activities)
6.5 Transport by motorbikes, passenger cars and
light commercial vehicles
7.1 Construction of new buildings
7.2 Renovation of existing buildings
7.3 Installation, maintenance and repair of energy
efficiency equipment
7.7 Acquisition and ownership of buildings
CapEx of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
Y
Y
Y
Y
Y
-
-
-
Y
-
-
-
Y
Y
-
-
-
-
-
-
Y
Y
Y
Y
0.4%
2.3%
0.0%
0.0%
2.7%
7.2
7.3
7.4
1.5
10.1
0.4%
2.3%
100%
100%
0.0
0.0%
100%
0%
0%
0%
7.5
0.1
0.0%
100%
0%
11.7
2.7%
100%
0%
6.5
7.1
7.2
7.3
7.7
3.5
0.8%
12.5
6.5
19.5
54.4
96.4
2.9%
1.5%
4.4%
12.4%
22.0%
T
T
-
-
-
-
E
E
E
2.3%
0.4%
Total (A.1 + A.2)
108.1
24.7%
2.7%
2.3%
0.4%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
CapEx of Taxonomy-non-eligible activities (B)
Total (A+B)
330.6
75.3%
438.7
100.0%
1
Commission Delegated Regulation (EU) 2021/2139
Kerry Group Annual Report 2022Kerry Group Annual Report 2022Strategic Report Sustainability Review
94
94
Strategic Report Risk Management Report
Kerry Group Annual Report 2022
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 increased geopolitical uncertainty triggered by
the invasion of Ukraine and a turbulent macroeconomic
environment, 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 aligning with management on 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 95.
Kerry Group Annual Report 2022Strategic Report Sustainability Review
95
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 strategic
objectives are in place. The Board also ensures 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.
Audit Committee
Responsibility has been delegated to the Audit Committee by the Board to provide structured and systematic
oversight of the Group’s risk management and internal control systems. It reviews and monitors 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 131-136 for a
description of the risk management activities conducted by the Audit Committee in 2022.
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
Executive management is responsible for the effective operation of internal controls, designed to manage
and mitigate the Group’s principal risks and uncertainties. The 3LOD model ensures accountability for risk
management is embedded into global processes and procedures. Key management committees support risk
management including the Group Finance Committee, the ICT Security Steering Committee, the Business
Integrity Committee, the Global Sustainability Council, and the Quality, Safety, Health and Environment
Leadership Team.
1st LINE OF DEFENCE:
2nd LINE OF DEFENCE:
3rd 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.
Group functional teams ensure
the first line is operating as
designed, manage performance
reviews, internal control
verifications and facilitate risk
assessments. This includes
the Quality, Health & Safety,
Information & Cyber Security,
Legal and Financial Control
functions.
Group Internal Audit function
along with other external
assurance providers perform
reviews which provide
independent assurance over
the operation of the internal
control framework, risk
management systems and
governance processes.
Kerry Group Annual Report 2022 96
Strategic Report Risk Management Report
Enterprise Risk Management (ERM) Process
Our ERM 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.
During the year the ROC and the Board considered the
Group’s principal risks in the context of our risk appetite.
Whilst our appetite for risk will vary over time, in general
we maintain a balanced approach to risk, considering
our risk appetite across five categories varying from
risk averse to risk seeking. 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 a world-leading provider of taste and nutrition solutions
for the food, beverage and pharmaceutical markets, the
integrity of our business is critical and cannot be put at
risk. Consequently, we have a zero tolerance for risks that
could harm our people, impact food safety or result in
non-compliance with laws and regulations. Conversely,
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.
Identify
& Assess
Risk
Appetite
Monitor
& Report
Manage /
Mitigate
The annual Board and Audit Committee agendas include
a series of updates from executive risk owners in relation
to the Group’s principal risks. These deep dive 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 perceived or potential
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 associated risk appetites and have
confirmed in the Corporate Governance Report on page
130 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.
Principal and Emerging Risks
The table on pages 98-104 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 our
Value Creation Framework as outlined in the Strategic
Report on pages 32-35. These risks form the basis
of Board and Audit Committee communications and
discussions.
Kerry Group Annual Report 2022
97
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.
Whilst the worst effects of the COVID-19 pandemic
have subsided, the Group continued to see the impacts
in some markets, particularly China, where localised
restrictions during the year resulted in some disruption
to supply chains and impacted customer demand.
As in previous years, we prioritised protecting the safety
and wellbeing of our people at all times and worked with
our customers to support them as they navigated the
disruption caused by the restrictions.
The global inflationary environment has been amplified
by the geopolitical volatility caused by the invasion of
Ukraine. This has resulted in macroeconomic uncertainty
in some of the markets in which we operate, and inflation
has adversely impacted energy pricing, commodity
costs and supply chains. As a result, we have extended
the scope of Geopolitical/Emerging Markets risk to
incorporate Macroeconomic Environment risk. Our
management teams are closely monitoring the situation
and continue to demonstrate agility and an ability to take
appropriate mitigating actions to secure raw materials,
maintain production and provide a reliable supply to our
customers. We have worked closely with our customers
to manage the significant inflationary environment and
continue to support them in developing their offerings to
meet the rapidly evolving marketplace.
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. Due to
the inherent nature of such risks, they can be difficult to
quantify given the lack of data or longer time horizons. A
summary of emerging risks which are identified through
this process is presented to the Audit Committee and
the Board for assessment and these risks continue to
be monitored as part of our ongoing risk management
processes. Emerging risks we are monitoring include
key material and energy availability, endemic COVID-19,
ESG regulatory changes, labour model disruption and
technology innovation and disruption.
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 an increased
level of geopolitical and macroeconomic uncertainty,
the ongoing impact of the COVID-19 pandemic in some
markets, 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 recognises the significant risks posed by
climate change and in line with the Task Force on
Climate-related Financial Disclosures (TCFD) reporting
requirements, the Group has considered climate-related
impacts over a number of time horizons and different
temperature pathways as outlined on pages 80-81.
Over the last two years a significant programme of work
has been completed, guided by an Executive-led steering
committee, to assess the impact of climate risk for the
Group. This assessment focused on both physical risks,
associated with either acute or chronic climate driven
events, and transition risks associated with the shift to a
lower carbon economy. Given the nature of these risks
they were considered from a short-term (five years),
medium-term (c. 2030) and longer-term (up to 2050)
perspective. The approach is integrated with the overall
Group ERM process and risks were assessed on the basis
of likelihood, impact and velocity.
The focus in 2022 has been to evolve our understanding
and quantification of climate-related risks and
opportunities. An expert external partner was engaged
who, in partnership with senior executives, used various
models and scenario analysis to identify the potential
financial impacts to our business. Further detail with
regard to the process and scenarios examined as part
of the assessment are outlined in the TCFD section on
pages 74-85.
The Governance, Nomination and Sustainability (GNS)
Committee plays a lead role in both supporting and
overseeing the Group’s actions in response to climate
change. The Audit Committee also plays a role in
assessing how climate-related risks have been reviewed
and accounted for as part of the risk management and
financial reporting process in addition to reviewing and
approving the Group’s climate-related disclosures.
Kerry Group Annual Report 2022 98
Strategic Report Risk Management Report
Link to Value Creation Framework
as per the Strategic Report
Risk Trend
2021 Annual Report
Risk Icons
2021 Annual Report
Risk Icons
2019 Annual Report
Risk Icons
2019 Annual Report
Risk Icons
Growth
Return
Sustainability
2021 Annual Report
Risk is unchanged
Risk Icons
Risk has increased
Risk is unchanged
Risk has increased
Risk has decreased
2019 Annual Report
Risk Icons
Risk is unchanged
Risk has increased
Risk has decreased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Principal Risks and Uncertainties - Strategic
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Portfolio Management
Description
Impact
How We Manage the Risk
If the Group does not
make optimal portfolio
management decisions,
then opportunities for
growth and improved
margin could be missed.
2019 Annual Report
Risk Icons
Consumer preferences, tastes,
behaviours and demand for more
sustainable products are changing
at an unprecedented rate.
The Group’s overall growth and
profitability is determined by the
effective management of its
2021 Annual Report
portfolio across technologies,
Risk Icons
end use markets, geographies,
channels and customers to respond
to these consumer-led dynamics.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
– The Group’s strategic planning process
is designed to ensure that investment
decisions consider 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.
– The Group continues to enhance and define
its taste and nutrition portfolio aligned to
the areas where it can add most value.
– 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. This is supported by a
significant investment in market insight
tools that help to translate global trends
into actionable ideas for innovation.
– The Group’s refreshed mid-term plan
published during 2021 outlined key
growth platforms and financial targets
for the period 2022-2026 and is aligned
with the Group’s Beyond the Horizon
sustainability targets.
Geopolitical, Emerging Markets & Macroeconomic Environment
Description
Impact
How We Manage the Risk
Through our substantial global
footprint and acquisitive growth
strategy, the Group is exposed to
global market forces, fluctuations
in national economies, societal
unrest, geopolitical uncertainty and
an increasingly complex legal and
regulatory environment.
2021 Annual Report
Risk Icons
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Failure to monitor and
respond to change and
volatility across the Group’s
markets may have an impact
2019 Annual Report
on the future growth and
Risk Icons
profitability of the Group.
– 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.
– The breadth of the Group’s portfolio and
our geographic reach help to mitigate
exposure to localised risk.
– The Group has appropriate crisis
management and business continuity
plans in place to deal with issues
when they arise.
Kerry Group Annual Report 2022 Principal Risks and Uncertainties - Strategic (continued)
Business Acquisition and Divestiture
Description
Impact
How We Manage the Risk
99
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.
2021 Annual Report
Risk Icons
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
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.
– 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
2019 Annual Report
Risk Icons
evaluated to ensure the Group’s strategic and financial
criteria are met. All transactions are fully reviewed and
approved by the Board.
– Robust integration and divestment processes are in
place and post transaction 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.
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Climate Change and Environmental
Description
Impact
How We Manage the Risk
The Group recognises the
significant environmental
challenges the world faces
due to climate change and
the implications that this can
have for our business and
supply chains.
Physical climate impacts may
disrupt our operations while
2021 Annual Report
transitioning to a low carbon
Risk Icons
economy may influence
costs and/or demand for
our products.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
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.
– An appropriate governance structure is in place with
the Global Sustainability Council charged with the
assessment and management of both climate and broader
sustainability-related risks and opportunities. Regular
updates are provided to the GNS Committee, the Audit
Committee and to the Board. For further detail in relation
to climate risk governance please see page 74-76 of our
TCFD Report.
2019 Annual Report
Risk Icons
– 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, and performance is
monitored through a suite of global KPI’s. In addition,
sustainability and climate-related metrics are included as
part of the Long-Term Incentive Plan (LTIP) for Executive
Directors and senior management.
Taste
Nutrition
Emerging
Markets
Margin
Expansion
– Significant work is being undertaken to improve the
accuracy and transparency of our Scope 3 footprint and
prioritise action areas with our suppliers.
– Independent climate expertise, models and tools are
used to continue to advance the Group’s knowledge and
understanding of climate-related risks and opportunities.
– We continue to enhance our strategic planning and
investment appraisal processes to ensure climate-related
risks and opportunities are appropriately considered.
– Appropriate business continuity and crisis management
plans are in place to deal with events that arise.
Principal Risks and Uncertainties - Strategic
Portfolio Management
Description
Impact
How We Manage the Risk
Consumer preferences, tastes,
If the Group does not
– The Group’s strategic planning process
behaviours and demand for more
make optimal portfolio
sustainable products are changing
management decisions,
at an unprecedented rate.
then opportunities for
growth and improved
is designed to ensure that investment
decisions consider both our financial
ambitions and our Beyond the Horizon
sustainability commitments. A robust
The Group’s overall growth and
margin could be missed.
portfolio management toolkit is in place
profitability is determined by the
effective management of its
portfolio across technologies,
2021 Annual Report
end use markets, geographies,
Risk Icons
channels and customers to respond
to these consumer-led dynamics.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
2019 Annual Report
Risk Icons
to support this process which uses
multiple perspectives and data.
– The Group continues to enhance and define
its taste and nutrition portfolio aligned to
the areas where it can add most value.
– 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. This is supported by a
significant investment in market insight
tools that help to translate global trends
into actionable ideas for innovation.
– The Group’s refreshed mid-term plan
published during 2021 outlined key
growth platforms and financial targets
for the period 2022-2026 and is aligned
with the Group’s Beyond the Horizon
sustainability targets.
Geopolitical, Emerging Markets & Macroeconomic Environment
Description
Impact
How We Manage the Risk
Through our substantial global
footprint and acquisitive growth
Failure to monitor and
respond to change and
– Rigorous due diligence is undertaken
when entering or commencing business
strategy, the Group is exposed to
volatility across the Group’s
activities in new markets.
global market forces, fluctuations
2021 Annual Report
in national economies, societal
Risk Icons
markets may have an impact
on the future growth and
2019 Annual Report
Risk Icons
unrest, geopolitical uncertainty and
profitability of the Group.
– Central and local legal, regulatory and
compliance teams ensure adherence to
applicable laws and regulations.
– The breadth of the Group’s portfolio and
our geographic reach help to mitigate
exposure to localised risk.
– The Group has appropriate crisis
management and business continuity
plans in place to deal with issues
when they arise.
an increasingly complex legal and
regulatory environment.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Kerry Group Annual Report 2022
100
Strategic Report Risk Management Report
Principal Risks and Uncertainties - Operational
People
Description
Impact
How We Manage the Risk
A failure to effectively
manage talent, plan for
leadership succession,
embed our values in
our culture and adapt
to evolving employee
needs may impact on
the Group’s ability to
deliver on its strategic
objectives.
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.
Ongoing geopolitical and
economic uncertainty as
well as intense competition
2021 Annual Report
for talent is impacting both
Risk Icons
the supply and cost of labour
in a number of markets in
which the Group operates.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
– Robust talent management and succession planning
processes are in place which are regularly reviewed
by the Group Executive and overseen by the GNS
Committee and the Board.
– The Group invests in learning and development
programmes to support capability building and
leadership expertise.
– Top quartile employee engagement is a key ambition
of the Group and various initiatives are underway to
support this objective with progress measured through
a combination of ongoing pulse surveys and an annual
employee engagement survey.
2019 Annual Report
Risk Icons
– The Group continues to advance its diversity, inclusion
and belonging agenda with a Global Diversity, Inclusion
and Belonging Council established during 2022.
Progress towards our ambition to build a more diverse
and inclusive culture is monitored through both KPI’s
and an inclusion index which is a component of the
annual employee engagement survey.
– Reward and recognition programmes continue to
be enhanced to ensure they remain competitive and
aligned to delivery of the Group’s strategic objectives.
Business Ethics and Social Responsibility
Description
Impact
How We Manage the Risk
Acting in an ethical and
socially responsible manner,
consistent with our purpose,
the expectations of customers,
consumers and other
stakeholders, is essential
for the protection of the
reputation of the Group.
2021 Annual Report
Risk Icons
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
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
– The Group’s Code of Conduct, which was refreshed in
2021, clearly defines the standards and expectations for
all employees and third parties. This is supplemented
by more detailed policies in some areas such as Human
Rights, Anti-Bribery and Corruption and Diversity,
Inclusion and Belonging.
2019 Annual Report
Risk Icons
– A Supplier Code of Conduct is in place which outlines
the standards we expect from those we do business
with and our responsible sourcing programme
focuses on key impact areas such as deforestation
and human rights.
– The Group continues to strengthen its Ethics and
Compliance programme which in 2022 saw the
establishment of an Executive Business Integrity
Committee.
– Dedicated legal and regulatory teams are in place to
monitor laws and regulations and provide support and
advice where required.
– A mandatory employee training programme is in
place which supports the Group’s culture of doing
business with integrity.
– The Group’s Speak Up programme enables employees
and third parties to raise any potential issues of
concern and is overseen by the Business Integrity
Committee.
Kerry Group Annual Report 2022
Principal Risks and Uncertainties - Operational (continued)
Food Safety, Quality and Regulatory
Description
Impact
How We Manage the Risk
101
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
Risk Icons
obligations in the areas of
food safety, quality, labelling
and the environment.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Health and Safety
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.
– 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.
– Comprehensive food safety training programmes are
in place for all relevant employees.
2019 Annual Report
Risk Icons
– Regular audits of manufacturing sites against
recognised global food safety standards are conducted
by Corporate Quality, Internal Audit, customers and
other independent agencies.
– Stringent controls operate across our supply chain
including due diligence and audits of suppliers
supported by rigorous quality checking of all
high-risk ingredients.
– A dedicated regulatory function closely monitors
the external environment and engages industry
organisations to identify and understand emerging
issues and address increasing compliance
requirements.
Description
Impact
How We Manage the Risk
The nature of the Group’s
operations can expose
employees, sub-contractors,
customers and other
individuals to potential health
and safety risks.
A significant safety
incident could expose
the Group to legal
liability, and/or
significant costs and
damage the Group’s
reputation.
The Group is also subject
2021 Annual Report
to local safety regulations
Risk Icons
in multiple jurisdictions,
compliance with which
is paramount.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
– A strong health and safety culture has been driven
by management and employees at all levels supported
by our Safety First, Quality Always mindset. All
employees are empowered to challenge unsafe work
conditions or practices.
– A robust health and safety management system is in
2019 Annual Report
Risk Icons
place across all sites requiring employees to complete
formal health and safety training (relevant to their role)
at regular intervals. All sites are also subject to regular
health and safety audits by Corporate Health and Safety,
Internal Audit and external assurance providers.
– In facilities which are subject to continued COVID-19
restrictions, appropriate protocols continue to be in
place to protect employees.
– The health and wellbeing of employees is a core
priority for the Group and a global Employee Assistance
Programme (EAP) is in place to support both employees
and their families in this regard. In addition, during 2022
the Group provided multiple supports to employees and
their families impacted by the invasion of Ukraine.
Kerry Group Annual Report 2022
102
Strategic Report Risk Management Report
Principal Risks and Uncertainties - Operational (continued)
Margin Management
Description
Impact
How We Manage the Risk
The Group’s cost base and
margin may be impacted by
fluctuations in commodities,
freight, energy, labour and
other input costs.
Failure to pass on cost
increases to customers
may have a material
impact on the Group’s
margins and ability to
deliver target returns.
– 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
commodity prices are in place with many customers.
2019 Annual Report
Risk Icons
There has been ongoing
significant global cost inflation
during 2022 driven by factors
such as climate change related
weather events, geopolitical
2021 Annual Report
events including the invasion
Risk Icons
of Ukraine, a tight labour
market, in addition to general
market uncertainty.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Cyber and Information Systems Security
Description
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Impact
How We Manage the Risk
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.
The macro risk level continues
to rise with the number of
attacks against high profile
peers becoming more
frequent.
2021 Annual Report
Risk Icons
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
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.
– 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 and Audit Committee
who this year received three formal updates from the
Chief Information Security Officer.
– A specialist ICT Security team is in place who, in
conjunction with selected external technical specialists,
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.
2019 Annual Report
Risk Icons
– During 2022, we continued our ongoing programme
of investment in cybersecurity controls which included
improvements in identity and access controls as well as
enhancements in response and recovery procedures.
– 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.
Kerry Group Annual Report 2022
Principal Risks and Uncertainties - Operational (continued)
Operational and Supply Chain Resilience
Description
Impact
How We Manage the Risk
103
Failure to effectively
respond to a significant
operational or supply
chain disruption could
adversely affect the
Group’s operations and
financial performance.
– 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.
2019 Annual Report
Risk Icons
– Operational, Supply Chain and Procurement leaders
have participated in cross-functional workshops to
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 74-85.
– Experienced customer service teams enable a
responsive and agile operation.
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.
2022 has seen ongoing global
supply chain disruption.
Extreme weather and
geopolitical events have
highlighted the need to
continue to focus on building
2021 Annual Report
a resilient supply chain which
Risk Icons
is responsive to changing
internal and external
pressures.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Intellectual Property
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Description
Impact
How We Manage the Risk
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
Risk Icons
model and supports its
unique and differentiated
position in the marketplace.
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.
– 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.
– The external environment is monitored for potential
IP infringement and appropriate action is taken when
issues are identified.
2019 Annual Report
Risk Icons
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Kerry Group Annual Report 2022
104
Strategic Report Risk Management Report
Principal Risks and Uncertainties - Financial and Compliance
Taxation
Description
Impact
How We Manage the Risk
Given the Group’s global
2021 Annual Report
network, it is exposed to an
Risk Icons
increasingly complex and
evolving international tax
environment.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
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.
– A team of dedicated tax experts responsible for
2019 Annual Report
Risk Icons
ensuring compliance with all taxation matters globally
are employed. A programme of continuous professional
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.
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Treasury
Description
Impact
How We Manage the Risk
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
Failure to manage
these risks could
negatively impact
on the financial
performance of
the Group.
– The Group Finance Committee monitors treasury risk
on an ongoing basis.
– The Group has a strong investment grade credit rating
2019 Annual Report
Risk Icons
and maintains access to global debt markets. Significant
cash balances and long-dated debt facilities are in place
to ensure the Group’s liquidity requirements are met.
– The Treasury function actively manages treasury
risks through cashflow forecasts, monitoring funding
requirements, foreign currency exposure netting and
hedging, interest rate hedging and management of
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.
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 potential impact of climate-related risks on
profitability and liquidity, as described in the Business
Reviews on pages 47-51.
The Group’s 2023 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 40-46 and additionally as
described in note 24 to the financial statements.
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.
Kerry Group Annual Report 2022
105
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 95-104. This included a consideration of 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 40-46.
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
– Climate Change and Environmental
– Business Acquisition and Divestiture
Depressed economic performance,
ongoing inflationary and interest rate
increases, prolonged global supply
chain disruption, political unrest
– Geopolitical, Emerging Markets & Macroeconomic Environment
– Operational and Supply Chain Resilience
– 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
or other climate-related physical or transition risks
– Climate Change and Environmental
– Portfolio Management
– Operational and Supply Chain Resilience
– Margin Management
Scenario 3: One-off Expense
Impact of a catastrophic event
such as a large-scale cyber attack,
significant product contamination
or disruption to operations
– Climate Change and Environmental
– Cyber and Information Systems Security
– Operational and Supply Chain Resilience
– 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 95-104.
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 74-85.
Kerry Group Annual Report 2022
106 Directors’ Report
Kerry Group Annual Report 2022
DIRECTORS’
REPORT
Kerry Group Annual Report 2022
107
Directors’ Report
108 Board of Directors
111 Report of the Directors
Governance Report
117 Corporate Governance Report
131 Audit Committee Report
137 Governance, Nomination and
Sustainability Committee Report
143 Remuneration Committee Report
108 Directors’ Report Board of Directors
Kerry Group Annual Report 2022
Board of Directors
Chairman & Executive Directors
Mr. Tom Moran (67) (M)
Chairman of the Board
Mr. Edmond Scanlon (49) (M)
Executive Director
Ms. Marguerite Larkin (51) (F)
Executive Director
Mr. Gerry Behan (58) (M)
Executive Director
Chief Executive Officer
Chief Financial Officer
President and CEO
Kerry Taste & Nutrition
Experience:
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
Agri-Food 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 trade negotiation
leadership roles.
Tom is currently a Board
member of Bord Bia, the
Irish Food Board, and chairs
its Dairy Subsidiary Board.
He is Vice Chair of the Origin
Green Global Sustainability
Council. He is also Chairman
of the Irish Government Public
Appointments Service. Tom is a
registered Chartered Director.
Tom joined the Board in
September 2015 and was
appointed Chairman of
the Board in April 2022.
He is Chairman of the
Governance, Nomination
and Sustainability Committee
having previously served as
Chairman of the Remuneration
Committee, member of the
Audit Committee and as
the designated Workforce
Engagement Director.
Appointed:
29 September 2015 and as
Chairman 28 April 2022
Committee Membership:
G
Experience:
Edmond is a highly
experienced leader in the
global food and beverage
industry having spent over
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
Experience:
Marguerite brings extensive
financial knowledge and risk
management expertise as well
as being a highly experienced
business leader.
Marguerite has almost 30
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
Experience:
Gerry has over 35 years’
experience in the Group and
has extensive knowledge of
the global food and beverage
industry.
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 since 2008.
Appointed:
13 May 2008
Committee Membership Key
Audit Committee
Governance, Nomination and Sustainability Committee
Remuneration Committee
Indicates Committee Chair
A
G
R
Non-Executive Directors
109
Dr. Hugh Brady (63) (M)
Ms. Fiona Dawson (56) (F)
Dr. Karin Dorrepaal (61) (F)
Ms. Emer Gilvarry (65) (F)
Senior Independent
Non-Executive Director
Independent
Non-Executive Director
Independent
Non-Executive Director
Independent
Non-Executive Director
Experience:
Hugh’s biomedical research
and academic background
brings an invaluable science,
technology and innovation
perspective to the Board
particularly in the areas
of nutrition, health and
wellbeing. He also brings a
broad range of international
and leadership experience.
He is President of Imperial
College London, a role he took
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
and Vice Chancellor of the
University of Bristol in the
UK from 2015 to 2022 and
was President of UCD from
2004 to 2013.
Hugh joined the Board in 2014
and the Audit and Governance,
Nomination and Sustainability
Committees in 2015. He was
appointed Senior Independent
Director in April 2021.
Experience:
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 joined the Board
in January 2022 and
was appointed to the
Remuneration Committee
on 14 February 2022.
Appointed:
24 February 2014
Appointed:
4 January 2022
Committee Membership:
A G
Committee Membership:
R
Experience:
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 both the
Remuneration and
Governance, Nomination and
Sustainability Committees
in 2015 and was appointed
the designated Workforce
Engagement Director on
28 April 2022.
Appointed:
1 January 2015
Committee Membership:
G R
Experience:
Emer is a highly experienced
professional who brings
legal, business, governance
and climate 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 its
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 brings experience on
climate impact through her
patronage of Chapter Zero
Ireland the Irish Chapter
of the Climate Governance
Initiative, developed in
collaboration with the
World Economic Forum.
Emer joined the Audit
Committee in November
2020 and the Remuneration
Committee in June 2021.
Emer was appointed
Chairperson of the
Remuneration Committee
on 28 April 2022.
Appointed:
1 November 2020
Committee Membership:
A R
Kerry Group Annual Report 2022 110 Directors’ Report Board of Directors
Kerry Group Annual Report 2022
Non-Executive Directors
Mr. Michael Kerr (63) (M)
Mr. Christopher Rogers (62) (M)
Mr. Patrick Rohan (48) (M)
Mr. Jinlong Wang (65) (M)
Independent
Non-Executive Director
Independent
Non-Executive Director
Independent
Non-Executive Director
Independent
Non-Executive Director
Experience:
Patrick has considerable
experience in the food
industry, in particular the dairy
and agribusiness sectors. He
has held a number of local
and national roles in a leading
Irish dairy representation
body through which he has
knowledge in dealing with
environmental sustainability
matters relevant to the dairy
sector. He brings insights to
the Board that are reflective
of the Group’s heritage.
Patrick joined the Board on
16 January 2023.
Appointed:
16 January 2023
Experience:
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 in November
2021and was appointed to
the Governance, Nomination
and Sustainability Committee
on 2 August 2022.
Appointed:
3 May 2021
Experience:
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
a non-Executive Director at
Sanderson Design Group plc.
Christopher is a Fellow of
Chartered Accountants
England and Wales.
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 G
Committee Membership:
A
R
Experience:
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 and
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 in May 2021.
Appointed:
5 January 2021
Committee Membership:
A
111
Report of the Directors
Directors and Other Information
Directors
Tom Moran, Chairman
Edmond Scanlon, Chief Executive Officer*
Marguerite Larkin, Chief Financial Officer*
Gerry Behan, President & CEO Kerry Taste & Nutrition*
Hugh Brady
Fiona Dawson
Karin Dorrepaal
Emer Gilvarry
Michael Kerr
Christopher Rogers
Patrick Rohan
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
kerry.com
Kerry Group Annual Report 2022
112
The Directors submit their Annual Report together with
the audited Consolidated Financial Statements for the
year ended 31 December 2022.
Principal Activities
Kerry is a world-leading global provider of taste
and nutrition solutions for the food, beverage and
pharmaceutical markets and a leading Irish provider
of value-add dairy ingredients and consumer products.
At Kerry, we are driven to be our customers’ most valued
partner, creating a world of sustainable nutrition.
Listed on the Euronext Dublin and London Stock
Exchanges, Kerry has an international presence with
147 manufacturing facilities across the world.
Results and Review of the Business
The Directors are pleased to report a year of strong
growth and good performance across our financial
metrics and non-financial measures for 2022. Reported
revenue increased by 19.3% to €8.8bn (2021: €7.4bn),
EBITDA increased 12.9% to €1.2bn (2021:€1.1bn),
reflecting an EBITDA margin of 13.9% (2021: 14.7%).
This resulted in growth in adjusted EPS on a constant
currency basis of 7.3% (2021: 12.1%). The Basic EPS at
341.9c (2021: 430.6c) has decreased year on year as
the Basic EPS in 2021 benefited from the profit earned
on the sale of the Consumer Foods Meats and Meals
business. The free cash flow generated was €640m
(2021: €566m) and from a balance sheet perspective
Shareholders equity increased to €6.2bn (2021: €5.6bn)
and Return on Average Capital Employed (ROACE) was
10.3% (2021: 10.5%). Our main non-financial measures
showed our nutritional reach increased to 1.2bn (2021:
1.1bn). The absolute carbon reduction was 48% (2021:
33%) and the food waste reduction was 32% (2021: 17%).
Further details of the financial results for the year are
set out in the Consolidated Financial Statements and
further details of the non-financial results are set out in
the Sustainability Review on pages 52-93. The Group’s
financial and non-financial key performance indicators
are discussed on pages 38-39.
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
12-51, report on the assets and liabilities and financial
position as well as the performance of the Group’s
business, including M&A activity during the year and on
future developments.
Dividends
On 15 February 2023, the Directors recommended a
final dividend totaling 73.4 cent per share in respect of
the year ended 31 December 2022 (see note 10 to the
financial statements). This final dividend per share is an
increase of 10.0% over the final 2021 dividend per share
paid on 6 May 2022. This dividend is in addition to the
interim dividend paid to shareholders on 11 November
2022, which amounted to 31.4 cent per share.
The payment date for the final dividend is 12 May
2023 to shareholders registered on the record date
14 April 2023.
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 98-104.
Research and Development
The Group is fully committed to ongoing technological
innovation in all sectors of its business, providing
technology and integrated customer focused product
development and application support by leveraging our
global technology capabilities and expertise. To facilitate
this, the Group has invested in leading 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 €303.2m in 2022
(2021: €297.2m).
Sustainability
The Group’s Beyond the Horizon sustainability
strategy, underpins Kerry’s future growth as we
continue to partner with our customers across the
globe to create a world of sustainable nutrition. As
part of our Beyond the Horizon sustainability strategy
Kerry works 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.
The Board, through the Governance, Nomination and
Sustainability Committee, is responsible for governance
and oversight of the Group’s sustainability strategy and
its implementation.
Details regarding the Group’s sustainability strategy,
targets, performance, policies and programmes are
outlined in the Sustainability Review on pages 52-93.
Details of our climate-related risks, opportunities and
other climate-related disclosures relating to the Task
Force on Climate-related Financial Disclosures (TCFD)
are outlined on pages 74-85.
The 2022 Sustainability Report details the Group’s
progress against its sustainability strategy and targets,
in line with Global Reporting Initiative (GRI) standards
and is available for review on kerry.com.
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 176,986,481
shares were in issue at 31 December 2022.
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 2022Directors’ Report Report of the Directors
113
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).
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
Blackrock Investment
Management
Royal Bank of Canada
Amundi Asset Management
20,085,195
11.3%
9,029,003
5.1%
5,380,232
5,368,147
3.0%
3.0%
The Company is not aware of any agreements between
shareholders which may result in restrictions on the
transfer of securities or on voting rights.
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.
The Directors have the authority to issue new shares
in the Company up to a maximum aggregate nominal
value of €2,500,000. This authority will expire on the
earlier of the conclusion of the 2023 Annual General
Meeting (AGM) and close of business on 27 July 2023 and
it is intended to seek shareholder approval to renew the
authority at the AGM to be held on 27 April 2023.
Shareholders approved the authority for the Directors
to allot shares for cash on a non-pro rata basis up to an
aggregate nominal amount of €1,105,313 at the AGM
held on 28 April 2022, representing 5% of the A Ordinary
Shares in issue on 28 February 2022. Shareholders also
approved an authority to allot additional shares up to an
aggregate nominal amount of €1,105,313 (representing
5% of the A Ordinary Shares in issue on 28 February
2022) 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 2023 AGM and close of business on
27 July 2023. It is intended to seek shareholder approval
for their renewal at the 2023 AGM. During 2022, 138,030
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 2022 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 2023 AGM and close of business on 27 July 2023
and it is intended to seek shareholder approval for its
renewal at the 2023 AGM.
Directors
The Board, at the date of this report, consists of a
Chairman, three Executive and eight independent Non
Executive Directors. The names and biographical details
of the Directors are set out on pages 108-110. Following
the individual performance evaluation of all Directors, as
outlined in the Corporate Governance Report on page
129, 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 page 166.
Board and Committee Changes
Ms. Fiona Dawson was appointed to the Board on
4 January 2022 and joined the Remuneration Committee
on 14 February 2022.
Mr. Philip Toomey retired as Chairman and from the
Board at the conclusion of the AGM on 28 April 2022.
Mr. Tom Moran was appointed Chairman of the Board
on 28 April 2022. He stepped down as Chairperson of the
Remuneration Committee and as designated Workforce
Engagement Director on the same date.
Mr. Gerard Culligan and Mr. Con Murphy retired from
the Board following the conclusion of the AGM on
28 April 2022.
Ms. Emer Gilvarry was appointed as Chairperson of the
Remuneration Committee on 28 April 2022.
Dr. Karin Dorrepaal was appointed as the designated
Workforce Engagement Director on 28 April 2022.
Mr. Michael Kerr joined the Governance, Nomination and
Sustainability Committee on 2 August 2022.
Mr. Patrick Rohan was appointed to the Board on
16 January 2023.
Kerry Group Annual Report 2022
114
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 117-130
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 52-93, Our
Business Model on pages 26-27, the Risk Management
Report on pages 94-105. Information on diversity can be
found in the Governance, Nomination and Sustainability
Committee Report on pages 137-142, Our People on
page 22 and the Sustainability Review on page 65.
Going Concern and Long-Term
Viability Statements
The going concern and longer-term viability statements
in the Risk Management Report on pages 104-105 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.
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
kerry.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 2022Directors’ Report Report of the Directors
Each of the Directors, whose names and functions are
listed on page 111, confirms that, to the best of their
knowledge and belief:
– the Consolidated Financial Statements for the year
ended 31 December 2022 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 2022;
– the Financial and Business Reviews on pages 40-
51 include a fair review of the development and
performance of the business for the year ended 31
December 2022 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.
115
Accounting Records
To ensure that proper accounting records are kept
for the Company in accordance with sections 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 114-115 with the responsibilities of the
Company’s external Auditors outlined on pages 178-179.
The Financial Statements on pages 180-254 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 kerry.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.
Kerry Group Annual Report 2022
Cross References
All information cross referenced in this report forms part
of the Report of the Directors.
Signed on behalf of the Board:
Tom Moran
Chairman
15 February 2023
Edmond Scanlon
Chief Executive Officer
15 February 2023
116
Public senior bond notes issued by the Group contain a
provision that may require the Group 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 to 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 73.4 cent per A ordinary share and has
announced the potential sale of its Sweet Ingredients
Portfolio which is expected to close in the first half
of 2023.
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
Rule 6.1.77
Not applicable
Kerry Group Annual Report 2022Directors’ Report Report of the Directors
117
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 improved in recent years.
The Board now has a 33% female
representation and plans to increase
this further in the future.
The Group has committed to
achieving 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 Executive
Management in 2023.
Each year the Board undertakes a
formal evaluation of its effectiveness
and that of its Committees. In
2022, the evaluation was externally
facilitated and the outcome of this
review is that the Board and its
Committees consider that they are
performing effectively. Details of the
process and the resulting actions
from this review are outlined on
page 129.
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.
Tom Moran
Chairman of the Board
GOVERNANCE REPORT
Corporate Governance Report
and decision making. Details of
stakeholder engagement activities
during the year, including the
work of the designated Workforce
Engagement Director, are outlined
on pages 122-126.
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 2022, the Board appointed
me as Chairman and undertook a
formal process to recruit a new non-
Executive Director, who brings skills
and experience that are reflective of
the Group’s dairy heritage. Details
of the Chairman, non-Executive
Director and Committee changes
that occurred during the year,
are set out in the Governance,
Nomination and Sustainability
Committee Report on page 141.
The Board recognises its role
in providing guidance and
strategic oversight in relation
to the implementation of the
Group’s Beyond the Horizon 2030
sustainability strategy. During the
year the Governance, Nomination
and Sustainability Committee
monitored how the implementation
of the 2030 sustainability strategy
was progressing, reviewed
performance achieved versus agreed
sustainability-related commitments
and targets, and considered the
enhanced environmental, social
and governance (ESG) reporting
disclosures included in the 2022
Annual Report and the separate
2022 Sustainability Report available
for review on kerry.com. The
Committee also considered the
increasing stakeholder expectations
and enhanced reporting
requirements relating to ESG
matters that need to be addressed
now and into the future.
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 2022, the
Tom Moran
Chairman of the Board
Dear Shareholder,
I am pleased to
present the Kerry Group
Corporate Governance
Report for the year ended
31 December 2022.
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 Provisions of
the Code other than Provision 38
(alignment of pension contributions)
and Provision 19 (chair tenure). For
further information refer to the
Compliance Statement on page 121.
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 2022,
the 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.
As a Board, we recognise the
benefits of understanding the views
of all our stakeholders and we
ensure that their interests are taken
into account in Board discussions
Kerry Group Annual Report 2022
118 Directors’ Report Corporate Governance Report
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 131)
Governance, Nomination
and Sustainability
Committee
(page 137)
Remuneration
Committee
(page 143)
Finance
Committee
(page 45)
Risk Oversight
Committee
(page 95)
Sustainability
Council
(pages 74-75)
Business Integrity
Committee
(page 63)
Board Role and Operations
The Board currently comprises 12 members; a non-
Executive Chairman, Chief Executive Officer, Chief
Financial Officer, one other Executive Director, and
eight 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 ensuring that the risks that face the organisation
are appropriately managed. It is also responsible for
embedding the Company’s purpose, instilling the
appropriate values and behaviours and monitoring and
assessing culture across the organisation.
The Board oversaw the Group’s management of
the significant inflationary environment which was
exacerbated by the invasion of Ukraine. The Board was
provided with regular updates on progress, in relation
to mitigating actions taken to counteract the impact of
input cost inflation on Group performance and actions
taken to support employees (especially those in lower-
paid positions) through the cost of living crisis. The
Board also requested and received regular updates on
the actions taken to safeguard the health and safety
of our Ukrainian employees and their families during a
time of considerable stress and upheaval in their lives.
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.
Kerry Group Annual Report 2022
Information Flow
The Chairman ensures that all Directors have full
and timely access to the information 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 fulfil their duties as a
Director. All Directors participate in strategy discussion,
trading updates, financial performance, significant risks
and operational activities in addition to discussion on
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 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
In 2021, the Board collaborated with Executive
Management in the development of the Group’s
updated strategy and associated mid-term financial
targets. During 2022, the Board monitored progress
implementing the strategies for volume growth, margin
expansion and return on investment that underpin the
strategic plan.
The Board also oversaw and approved the strategic M&A
transactions during the year including the potential
sale of the Sweet Ingredients portfolio. The Board also
oversaw and approved the decision to exit all Group
activities in Russia and Belarus as a result of Russia’s
invasion of Ukraine.
119
Presentations were received from the Company’s
advisors throughout the year on matters such as the
general economic outlook, the impact of the energy
crisis, the outlook for emerging and developed
markets, Corporate Governance developments, the
general M&A landscape 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 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,
are made in the long-term interest of the Group and
its stakeholders and are aligned with the Group’s
sustainability strategy. 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
34-35.
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
current 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. The
Group’s Values of Ownership, Inclusiveness and Courage
were very much in mind when we made the decision
to exit all Group operations in Russia and Belarus as a
result of Russia’s invasion of Ukraine. Our Purpose of
Nourishing Life guided our actions as we supported our
Ukrainian colleagues and their families in the immediate
aftermath of the invasion and beyond. Further details of
the Group’s purpose and values are outlined on pages 8
and 19.
Kerry Group Annual Report 2022 120 Directors’ Report Corporate Governance Report
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 is satisfied that the
Group’s purpose, values and strategy are aligned to the
Group’s culture.
The Board recognises the importance of its role in
setting the tone for Kerry’s culture and embedding
it across 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 Code of Conduct 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, town halls, the
OurVoice employee engagement survey, the Group’s
Speak Up arrangements and feedback from the
designated Workforce Engagement Director. Arising
from the assessment completed in 2022, the Board
agreed to the establishment of an executive Business
Integrity Committee which will oversee compliance
with the Group’s Code of Conduct. The Board also
determined that the enhanced Speak Up procedures
and functionality, introduced in the previous year,
are operating effectively.
Board Activities
The Board’s activities during the year included the items
set out below:
Strategy
– monitored progress against the Group’s strategic
plan and the mid-term financial targets;
– reviewed and approved the Group’s strategy relating
to mergers, acquisitions and divestitures; and
– monitored the implementation of the Group’s 2030
Beyond the Horizon sustainability strategy.
Operational/Commercial
– received regular updates from the Executive
Directors on the mitigating actions taken to counter
unprecedented input cost inflation;
– received regular updates from the Executive Directors
on how the invasion of Ukraine was impacting the
Group’s operations with a particular focus on employee
safety;
– approved M&A transactions (including the potential
sale of the Sweet Ingredients Portfolio and to exit all
activities in Russia and Belarus) and considered the
learnings from completed acquisitions; and
– approved significant capital expenditure projects,
considering impacts on financial and sustainability
performance criteria.
Financial/Non-Financial
– received reports from the Chief Financial Officer
at each meeting in respect of the Group’s financial
performance including how the Group was navigating
through the significant inflationary environment;
– monitored the progress against the targets included in
the Beyond the Horizon sustainability strategy;
– 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; and
– approved the Group Budget for the 2023 financial year
including both financial and non-financial targets.
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.
Kerry Group Annual Report 2022
Governance and Stakeholders
– received regular reports from the Chairman of
the Governance, Nomination and Sustainability
Committee on its activities;
– approved the appointment of Mr. Tom Moran as
Chairman;
– approved the appointment of Ms. Fiona Dawson, and
Mr. Patrick Rohan as non-Executive Directors as well as
changes to the composition of Board Committees;
– conducted an externally 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 2022;
– received and considered reports from the designated
Workforce Engagement Director on her activities
during the year. Details are outlined in Governance in
Action on page 126;
– received and considered presentations from the Chief
Executive Officer and the Chief Human Resources
Officer on talent and succession planning;
– received regular updates on the actions taken to
support lower paid employees through the cost of
living crisis; 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.
121
The UK Corporate Governance Code
2018 and the Irish Annex –
Compliance Statement
Kerry applied the main Principles of the UK
Corporate Governance Code 2018 and the Irish
Annex (the “Code”) and complied with all its
Provisions throughout FY22, with the exception of:
– Provision 38 (alignment of Executive Directors’
pension contributions with those of the wider
workforce). This Provision has been complied with
from 1 January 2023 when Executive Directors’
pension contributions were aligned with those
available to the wider workforce in Ireland. This
timeline was agreed as part of the overall policy
review completed in 2021 and is a timeline
acceptable to the investment community as well
as proxy advisers; and
– Provision 19 (chair tenure). Mr. Philip Toomey was
appointed as Chair in 2018 after having served
over six years as a non-Executive Director. Philip
retired from the Board at the AGM in April 2022
after having served over ten years. Provision 19
requires the Chair to serve no longer than nine
years and therefore for a period during the year
up to April 2022 Kerry did not comply with this
provision. However the Provision also notes that
to facilitate effective succession planning this
period can be extended, particularly where the
Chair was an existing non-Executive Director on
appointment. Within the 2021 Annual Report Kerry
explained why Philip was to remain on the Board
for longer than nine years and also stated when his
tenure would end. Following the 2022 AGM, Philip
was succeeded by Mr. Tom Moran in line with the
timeline disclosed.
The Board recognises the importance of good
corporate governance in providing confidence in
our ability to deliver our strategic goals and also
in building trust with our key stakeholders both of
which are essential for the long-term sustainable
success of the Group. The table below outlines
the main Principles of the Code and where in the
Annual Report there is further information on the
application of the Principles.
Main Principles
Board leadership and
company purpose
Pages
118-121
Division of responsibilities
108-110 and 127
Composition, succession
and evaluation
128-130 and 137-142
Audit, risk and internal control 130-136
Remuneration
143-169
Kerry Group Annual Report 2022 122 Directors’ Report Corporate Governance Report
Stakeholder Engagement
The Board acknowledges the need to have regard for the interests of all stakeholders in
their discussions and decision making. Enhanced engagement with stakeholders enables
better informed decision making, thereby increasing the likelihood of long-term sustainable
success for the Company. The Board also recognises the need to maintain high standards
of business conduct in its actions and decisions. Details of our stakeholder engagement are
set out below.
Shareholders
Why we Engage
Active engagement with shareholders ensures they are
aware of the Group’s business environment, strategy,
business model, performance and sustainability
commitments. The views of our shareholders help to
inform the strategic decision making of the Board.
Our Actions and their Impacts
Regular updates are provided by the Chief Financial
Officer and Head of Investor Relations 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.
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 2022, meetings were held with approximately
1,000 investors. Kerry’s Investor Relations team and
Executives participated at nineteen investor conferences
and external investor events as well as hosting seven
investor events at Kerry facilities.
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 kerry.com.
Shareholder presentations are made at the time of
release of the Group’s full year, half year 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 from shareholders, both
institutional and private.
Key Outputs from the Engagement
Key topics for shareholders included progress on
the execution of the Group’s strategic plan and
related portfolio developments, Group performance
and outlook, managing the elevated inflationary
environment, the implications of the invasion of Ukraine
on the Group and the actions taken, marketplace
dynamics and industry consolidation, in addition to
sustainability strategy, climate change transition and
ESG disclosures.
During the year our Chairman, Tom Moran consulted
with a number of large institutional shareholders
and with the major proxy advisors. When necessary,
Committee Chairs engage with shareholders on specific
topics. Arising from the matters discussed, feedback is
provided to the Directors to inform decision making.
The 2022 AGM was held in person for the first time
in two years following the lifting of restrictions. All
Committee Chairs attended the AGM. At the meeting
shareholders were able to engage with the Directors
in person, ask questions, provide feedback and raise
matters of interest.
In order to give shareholders a greater understanding of
Kerry’s business model, as well as its unique positioning
within the industry, it was agreed to hold seven tailored
investor events during 2022 at Group facilities in each
of the three geographic regions. The Board participated
in a customer immersion experience in advance of one
such event. Following their participation, Board members
provided feedback and input which informed the content
and approach for the following investor events.
The Board continues to monitor the industry landscape
and the Group’s positioning within the industry. The
Board also monitors the progress made in the execution
of the Group’s strategy. All capital allocation decisions
made by the Board are aligned to strategy and the
Group’s strategic priorities of Taste, Nutrition and
Emerging Markets. Successful delivery of the Group’s
strategy promotes the long-term success of the Group
and will also benefit shareholders, employees and the
communities in which it operates. When approving
the potential sale of the Sweet Ingredients Portfolio,
the Board agreed it would support the Group’s strategy
of focusing on opportunities where Kerry can add the
most value.
Kerry Group Annual Report 2022
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 designated Workforce Engagement Director Dr. Karin
Dorrepaal engaged directly with employees through various
channels, including site visits and attendance at organised
events. Details of these activities are outlined on page 126.
Throughout the year, the Group undertakes regular
two-way listening activities with our 23,000+ employees
including Town Hall meetings and career development
discussions. The Group also has a Speak Up facility to
enable employees and other stakeholders to confidentially
report matters of concern so that timely and appropriate
action can be taken.
Each year the Group runs an employee engagement survey.
This year, 92% of our employees participated in the survey
which was followed by leader-led listening sessions to
discuss strengths, opportunities for continued improvement
and to agree action plans for 2023.
In addition, two interim Leader Pulse Checks were
completed, one targeting our plant leadership and a second
targeting senior leadership across the Group.
In line with our engagement strategy, the Group continued
its focus on building the effectiveness and impact of our
leaders through our Learning and Leadership Academies
and manager effectiveness programmes in 2022. Through
the provision of coaching to leaders and sharing access to
thought leadership content, we have continued to build a
positive and inclusive environment at Kerry.
Our Health and Wellbeing framework is underpinned by a
balanced set of programmes accessible to our employees
across our four wellbeing pillars; Emotional, Physical,
Nutritional and Financial.
In 2022, the Group continued to build improved
communication channels with employees through a
dedicated digital employee communication platform.
Key Outputs from the Engagement
Key topics for employees included Diversity, Inclusion
and Belonging (DI&B), learning and development,
understanding how employees’ roles contribute to
the Group’s success and the simplification of our ways
of working.
123
Our Actions and their Impacts
In appointing Dr. Karin Dorrepaal as the new
designated Workforce Engagement Director, the
Board sought to select a director with a keen interest
in employee matters, particularly in relation to gender
diversity and equality. Karin provided regular feedback
to the Board on employee engagement activities
and general employee sentiment which informed
decisions made.
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
two Leader Pulse Checks.
The Board also received regular updates from the Chief
Executive Officer and Chief Human Resources Officer
on the health, safety and wellbeing of employees. In
line with our Safety First, Quality Always ethos, the
Board ensured that the Group prioritised the safety
and wellbeing of our Ukrainian employees and their
families following the invasion of their country as
well as our Chinese employees as they managed
through the ongoing impact of Covid-19. The Board
also considered the implications for Kerry employees
in Russia and Belarus when deciding to exit all Group
activities in those countries. In approving the potential
sale of the Group’s Sweet Ingredients Portfolio, the
Board considered the implications for the employees
working in the business and ensured that appropriate
actions were taken to mitigate the impact on the
employees involved.
The Board contributed to and participated in many
of the 50th anniversary celebrations that took place
throughout 2022. This was a unique opportunity
to celebrate the Group’s evolution by highlighting
the significant contributions to Kerry’s success by
our employees.
The Board requested and received feedback on how
the Group is supporting employees, in particular those
in lower-paid positions or based in hyperinflationary
countries, through the cost of living crisis and took this
into account when approving the 2023 budget.
The Board continues to prioritise DI&B and in 2022,
the Group established a Global DI&B Council which
includes representatives from our Leadership Team
and confirmed the appointment of a dedicated role in
2023 to build on the momentum created to date and
increase the impact of this agenda going forward –
for our people, our business, our customers and our
communities. The Board also ensured that appropriate
resources were available for training and development,
internal communications and initiatives that help
to simplify the Group’s ways of working. Finally, the
Group’s Inclusion Index is a measure of how employees
feel connected, valued and recognised within the
organisation. In 2022, we saw an overall increase of 2
percentage points reflecting our continued focus on
improving in this area.
Details of employee engagement activities are outlined
in Our People on pages 18-25, the Sustainability Review
on pages 52-93 and the separate Sustainability Report
which can be found on the Group’s website.
Kerry Group Annual Report 2022
124 Directors’ Report Corporate Governance Report
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 our Vision to become
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. Our market research and
consumer insight teams study consumer behaviours and
perceptions and share these insights with our customers.
By way of example, in September 2022, the Group
hosted a foodservice sustainable nutrition conference in
London during which we worked with our customers to
identify how we can help them to develop solutions to
meet evolving consumer needs in relation to nutrition.
This cross-functional and multi-level engagement is
central to how we evolve and maintain holistic innovation
partnerships with our customers.
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
and water shortages and carbon challenges.
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
providing access to those within the sector to scientific
knowledge and nutrition insights from the Group’s
scientists, academics and other experts, as they explore
challenges in the food and beverage industry.
Key Outputs from the Engagement
Rapidly evolving, consumer dynamics and the changing
marketplace set a backdrop for ongoing customer
engagement. Increased demand for innovative,
sustainable nutrition solutions, including those that
enhance health and wellbeing, plant protein options,
and products addressing a diverse range of
environmental and sustainability criteria.
Key topics for customers and consumers included
the management of the elevated inflationary cost
environment, the ongoing impact of global end-to-end
supply chain challenges as well as changing consumer
needs and preferences.
Our customers want innovative sustainable nutrition
solutions that enhance health and wellbeing while
reducing the impact that their production activities
has on the planet and in particular on climate change
and reducing food waste.
Our Actions and their Impacts
Feedback from customer engagement activities was
discussed at each Board meeting as part of the business
updates provided by the Executive Directors and
informed the decisions made by the Board.
The Board approved the Group’s expenditure of
€303m on research and development applications and
technical support. Together with the management
team, the Board 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 and return on investment.
A strategically resourced Kerry R&D team helps
customers to create healthier more nutritious products
that taste great, assists them to navigate through the
current period of significantly heightened inflation
and enables them to produce food products in a more
environmentally-sustainable manner. Arising from this
investment in research and development, during the
year, the Group launched two tools to enable customers
to calculate both the nutritional profile of their products
(KerryNutri Guide) as well as to model the potential
benefits of food waste reduction through shelf-life
extension (KerryFood Waste Estimator), both of which
heighten our customers’ understanding of the financial,
environmental and social impact of their products.
During 2022, the Board approved four acquisitions with
a total cost of €392m and gross capital expenditure of
€255m. The Board also approved the potential sale of
the Group’s Sweet Ingredients Portfolio. All of these
decisions are aligned to the Group’s strategic priorities
and key growth platforms and support the development
of our business to best meet our customer’s needs.
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 ensures that the
Group’s sustainability strategy is appropriately funded,
resourced and integrated into our value proposition.
Further details are outlined in Our Business Model
on pages 26-27, Strategy and Financial Targets on
pages 34-35, the Sustainability Review on pages 52-
93 and the separate 2022 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.
Kerry Group Annual Report 2022
125
Our Actions and their Impacts
The Board ensures that long-term sustainable
relationships are established with key suppliers on
mutually agreed and acceptable terms.
Through the Group’s Beyond the Horizon sustainability
strategy, the Board also 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.
During 2022, the Board approved the funding for the
launch of the Evolve Dairy Sustainability Programme
which supports the accelerated adoption of science-
based, sustainable actions and best practice on the
farms of our suppliers in Ireland. The impact of this
initiative will be to assist our dairy suppliers in Ireland to
achieve a reduction in their Carbon Intensity footprint in
line with targets set by the Irish Government.
Further details on our responsible sourcing strategy are
outlined in the Sustainability Review on pages 52-93 and
the 2022 Sustainability Report on the Group’s website.
During the year the Board also approved the
establishment of an executive Business Integrity
Committee which will oversee compliance with the
Group’s Code of Conduct, thereby further ensuring
sound decision making in line with the highest
ethical standards including in relation to responsible
sourcing. This Committee will also oversee the Group’s
preparation for compliance with the EU Directive
on Corporate Sustainability Due Diligence when it is
transposed into Irish Law.
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. Suppliers can also raise matters of concern
via the Group’s Speak Up whistleblowing service.
The Group takes a risk-based approach to supplier
assessments to ensure ongoing safety, quality and
responsible sourcing.
The Board receives updates from the CEO, Chief
Procurement Officer and the Group Head of Sustainability
in relation to the quality and reliability of the Group’s
supply chain and on matters of interest to suppliers.
Key Outputs from the Engagement
Key topics for suppliers included human rights,
quality and food safety, service levels, business
continuity, capacity, cost, innovation and responsible
sourcing requirements such as aligning with Kerry’s
Scope 3 carbon target.
During 2022, the ability to supply and the cost of
various inputs increased for many suppliers due to
a number of factors including the Russian invasion
of Ukraine, extreme weather events, global shipping
challenges, labour availability and supply and demand
volatility challenges.
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 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 Outputs from the Engagement
Outputs 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 Actions and their Impacts
The Board considers local community engagements as
part of the overall Group sustainability strategy.
As a leader in the food and beverage industry, the Board
ensures 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 in a way
that protects people and the environment around us. The
Board also prioritises the approval of capital expenditure
projects that have a positive environmental impact.
During 2022, the Board approved a new four-year
partnership with Concern Worldwide to improve food
security in Kenya as well as supporting an innovative
urban nutrition project in the same country while
continuing to support the UN World Food Programme in
Burundi. The impact of these initiatives is to enable the
development of self-sustaining programmes to promote
wellbeing amongst some of the worlds’ poorest people.
Further details of these engagements and the Group’s
MyCommunity programme are outlined in the
Sustainability Review on pages 52-93.
Kerry Group Annual Report 2022
126 Directors’ Report Corporate Governance Report
Governance in Action:
Designated Workforce Engagement
Director - Activities in 2022
Dr. Karin Dorrepaal assumed the role of designated
Workforce Engagement Director in April 2022, succeeding
Mr. Tom Moran. When appointing her to the role, the
Board was mindful of Karin’s keen interest in employee-
related matters, including gender diversity and equality.
Due to the timing of this transition, we reduced the
number of pre-planned activities during 2022 to provide
Karin with an opportunity to shape the agenda in
line with her new role and own interests. As a result,
Karin participated in fewer focused engagements in
2022. She will however take part in a broader range
of employee engagement activities in 2023 in order to
assess employee sentiment at various employee levels,
across group-wide locations and in different workplace
contexts. Details of the employee engagement activities
undertaken by Karin during 2022 are outlined below:
– attendance and participation at regional and global
events on the topic of Diversity, Inclusion and
Belonging, including ‘Womxn’s Perspectives’ an event
held in June 2022 highlighting the Group’s commitment
to the womxn that identify as part of our LGBTQI+
community and Kerry’s commitment to equal gender
representation in senior management roles by 2030;
– site visit to Utrecht, the Netherlands as part of
“Engagement through the lens of a Kerry Manufacturing
Plant” where senior site leaders presented on the core
business of the site along with site strategies, employee
engagement and potential improvements;
– participation in briefings on employee engagement
strategies and progress for businesses and functions
across all regions; and
– participation in briefings on employee career
development and succession planning for executives as
part of the Governance, Nomination and Sustainability
Committee agenda.
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 28 April 2022, there were no material
votes cast against any resolutions.
Global Priorities for Employee Engagement
in 2022
This year we aligned our engagement focus areas
under three pillars: ‘Making it Better, Making it Clearer
and Making it Easier’. These three pillars will guide how
we approach our engagement action planning across
Kerry and focus our efforts on improving the working
experience for our people.
– Making it Better encompasses the actions that impact
the working life of everyone at Kerry. Learning and
development opportunities, our Diversity, Inclusion and
Belonging agenda, as well as wellbeing, reward and
recognition initiatives all fall under this pillar. Through
the survey feedback in 2022, our people shared that
they have experienced positive developments in all
these areas.
– Making it Clearer covers aspects relating to Kerry’s
vision, brand and strategy. Following our strategy
refresh in 2021, Kerry’s senior leadership team invested
considerable time and effort throughout 2022 in
ensuring that every individual at Kerry understands our
strategic objectives and how their role contributes to
Kerry’s longer-term goals.
– Making it Easier is a hugely important pillar for Kerry.
Our relentless drive to work smarter is core to the
culture at Kerry. We are realising the benefits of our
continued business transformation activities.
Dr. Karin Dorrepaal held regular meetings with the
Chief Human Resources Officer and the Group Human
Resources Team to provide her feedback from the
engagement activities. Formal updates were provided
by the designated Workforce Engagement Director to
the Board at three Board meetings during the year on
the activities undertaken and the feedback received
from employees. In addition, the Workforce Engagement
Director provided input from the employee perspective
during all Board discussions and when the Board made
key decisions.
Whistleblowing Arrangements
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 2022, 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.
Kerry Group Annual Report 2022
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 bring 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.
127
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 kerry.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 131-169 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 eight meetings were held in 2022. Individual
attendance at the Board and Committee meetings is set
out in the following table.
Kerry Group Annual Report 2022
128 Directors’ Report Corporate Governance Report
Directors
Board
Audit
Committee
Governance, Nomination and
Sustainability Committee
Remuneration
Committee
Tom Moran
Philip Toomey 2
Edmond Scanlon 1
Marguerite Larkin 1
Gerry Behan 1
Hugh Brady 5
Gerard Culligan 3
Fiona Dawson
Karin Dorrepaal
Emer Gilvarry
Michael Kerr
Con Murphy 4
Christopher Rogers
Jinlong Wang
8/8
3/3
8/8
8/8
8/8
8/8
3/3
8/8
8/8
8/8
8/8
3/3
8/8
8/8
5/6
6/6
6/6
6/6
6/6
4/4
2/2
4/4
4/4
1/1
3/3
3/3
5/5
5/5
5/5
1 Executive Directors.
2 Mr.Philip Toomey retired from the Board following the conclusion of the AGM on 28 April 2022.
3 Mr. Gerard Culligan retired from the Board following the conclusion of the AGM on 28 April 2022.
4 Mr. Con Murphy retired from the Board following the conclusion of the AGM on 28 April 2022.
5 Dr. Hugh Brady was unable to attend one committee meeting due to a diary conflict.
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 Ms. Fiona Dawson are outlined in the Governance in Action below.
Governance in Action (Example):
New Director Induction
Ms. Fiona Dawson was appointed to the Board on 4 January 2022. Following her appointment, Ms. Dawson
underwent a formal induction programme which was tailored to her 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 Dairy Ireland businesses to obtain an overview of
each business; and
– meetings with external auditors and other advisors;
Future Induction Activities
– site visits to see first-hand the Group’s operations while engaging with employees and senior management.
Kerry Group Annual Report 2022
Mr. Patrick Rohan who was appointed to the Board with
effect from 16 January 2023, will complete a full formal
induction programme tailored to his requirements over
the coming months.
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.
The ‘off-site’ Board meeting took place during June 2022
in the US at the Group’s Technology and Innovation
Centre in Beloit, Wisconsin. During the visit to the US the
Board had the opportunity to meet and engage with the
North American Leadership team and emerging talent
in both a formal and informal setting. The Board visited
two manufacturing sites, during which Board members
met with the site leadership teams and saw first-hand
the positive impact of the capital investments at both
sites which they had approved. During the visit, the
Board also received presentations on the dynamics and
priorities of the North American market and participated
in a customer immersion experience at the Technology
and Innovation Centre which showcased the Group’s
capabilities in helping customers to solve industry
challenges with differentiated solutions.
As part of their personal development plans,
individual non-Executive Directors are also afforded
the opportunity to visit a number of the Group’s
international facilities and operations. The number of
visits during 2022 continued to be constrained due to
the ongoing impact of COVID-19 related restrictions.
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 2022, the Board engaged Independent Audit Limited
(Independent Audit) to facilitate the performance
evaluation. Independent Audit, based in the UK, is
recognised as a leading firm of board reviewers, and has
no other connections to the Group.
The review, performed during October and November
2022, considered the effectiveness of the Board and its
Committees. The evaluation was carried out through the
use of an online questionnaire tool hosted by
129
Independent Audit and through interviews held
between Independent Audit and the Chair, the Chief
Executive Officer, the Chief Financial Officer, the Senior
Independent Director, a further four Board members
and the Company Secretary. Independent Audit also
reviewed Board papers pertaining to the year and
observed meetings of the Board and Committees. The
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, ESG considerations
and risk management. A thorough discussion followed
a presentation of the findings made to the Board by
Independent Audit at the December Board meeting.
Each committee also considered the observations
specific to their work.
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
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.
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.
During the year, 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.
Overall, the Board concluded that the outcomes of
the evaluation process have been positive and have
confirmed to the Chairman that the Board and its
Committees operate effectively and that each Director
contributes to the overall effectiveness and success
of the Group. The actions identified from the 2022
performance evaluation included recommendations
relating to Board and executive succession planning,
oversight of the transition plan to Net Zero and the
appropriate time allocation between strategic priorities
and other matters at Board meetings.
Progress against recommendations from the previous
internal 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
2022 evaluation report and areas for consideration
arising from the Directors’ appraisal, where identified,
will be considered during 2023.
Kerry Group Annual Report 2022 130 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 131-136.
Full details of the risk management systems are
described in the Risk Management Report on
pages 94-105.
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 98-104. Emerging risks are also identified,
analysed and managed as part of the same process as
the Group’s other principal risks as described on pages
96-97. 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 2022, 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.
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 review of the effectiveness of risk management
and control systems;
– 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 133.
Kerry Group Annual Report 2022
GOVERNANCE REPORT
Audit Committee Report
131
Committee we have overseen
ongoing enhancements in reporting
against the Task Force on Climate-
related Financial Disclosures
(TCFD) recommendations and
the EU Taxonomy on pages 74-
93. The Committee also reviewed
the Group’s risk management
and internal control systems and
oversaw the operation of the
Internal Audit function.
Each regular meeting included
updates on risk and compliance
related activities and further details
with regard to these matters are set
out on page 134.
The Committee focused on
monitoring the integrity of the
Group’s Financial Statements and
announcements relating to the
Group’s financial and non-financial
performance. It reviewed the work
completed by management in
respect of the Going Concern and
Viability Statements, including a
consideration of uncertainty in the
geopolitical and macroeconomic
environment, as well as 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
104-105. The significant issues
that the Committee considered in
relation to the financial statements
and how these issues were
addressed are set out on page 133.
The Committee has satisfied itself,
and advised the Board accordingly,
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 Committee oversaw the
relationship with the external
auditor, including monitoring
all matters associated with their
appointment, remuneration,
performance and independence.
Following a detailed planning
process, PwC conducted a hybrid
working model for the 2022 audit,
working both on site and virtually,
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 135.
As outlined on page 136, 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.
An external review of the Committee
was conducted by Independent
Audit Limited (Independent Audit)
during 2022 and the outcome of
this review was that the Committee
was satisfied that it is operating
effectively. Further details are set
out on page 132.
Looking ahead to 2023, the
Committee’s primary focus will
remain as providing effective
oversight of the Group’s financial
reporting, risk management
and internal control processes.
The Committee will also take a
proactive approach in anticipating
and preparing for upcoming
legislative and regulatory changes,
particularly in the area of climate
change and sustainability.
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
Christopher Rogers
Chairman of the
Audit Committee
“The Committee
plays a key role in the
governance of the Group’s
financial reporting, risk
management, internal
control and external audit
processes. Maintaining
robust internal controls
remained a key focus for
the Committee, particularly
given the volatile external
environment.”
Dear Shareholder,
On behalf of the Audit Committee,
I am pleased to present my report
for the year ended 31 December
2022. The report outlines how
the Committee discharged its
responsibilities during the year in
relation to oversight of financial and
other reporting, internal controls
and the risk management process,
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. This included consideration
of the climate change risk and
together with the Governance,
Nomination and Sustainability
Kerry Group Annual Report 2022
132 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 in the governance section of the Group’s
website kerry.com or upon request.
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
Group, 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.
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.
The Board is also satisfied that together, the members
of the Committee, as set out in their biographical details
on pages 108-110, 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.
Committee Meetings
The Committee met six times during the year and
attendance at these meetings is outlined on page 128.
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 an additional opportunity
for open dialogue and feedback.
Meetings are scheduled to align with the Group’s
reporting cycle and 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 129, Independent Audit,
an external consultancy firm, conducted a review of the
Committee as part of the Board’s external performance
review. The evaluation was carried out through the
use of an online questionnaire and through interviews
held between Independent Audit and the Chair, two
Committee members and the Company Secretary. In
addition, as part of the evaluation process, Independent
Audit observed the October Committee meeting and
corresponding papers. The output of the review was
discussed at the December meeting following which
the Committee concluded that it continued to operate
effectively and efficiently throughout the year and has
the skills and expertise required to perform its role
appropriately. The review also identified a number of
ongoing areas of focus for the 2023 financial year.
Financial Reporting and Significant
Areas of Focus
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 and regulatory
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.
Kerry Group Annual Report 2022 133
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 2021 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 74-85
made in response to the recommendations of the
Task Force on Climate-related Financial Disclosures
and the EU Taxonomy 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 2022.
Significant Areas of Focus
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 €4.9 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 climate change and other external and macroeconomic risks 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 is 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 and longer-term viability, which included reviewing and challenging
management’s assumptions and modelling of projected cash flows and in particular, those
related to 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.
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.
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;
– 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 2022 Annual
Report to ensure that the criteria of fair, balanced and
understandable has been achieved.
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.
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.
Kerry Group Annual Report 2022 134 Directors’ Report Audit Committee Report
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 94-97.
Throughout the year, the Committee:
– reviewed and approved the assessment of the
principal risks and uncertainties, including climate
change and other emerging risks, that could impact
the achievement of the Group’s strategic objectives as
described on pages 98-104;
– 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 from senior executives on
a selection of principal risks, which included two
cybersecurity updates as well as an update on the
Group’s processes to manage sourcing and pricing risk
in a period of record inflation and significant supply
chain disruption;
– 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;
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, updated 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 2022 plan and on the
principal findings from the work of Internal Audit and
management’s actions to remediate issues identified;
– 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;
– received updates from the Group Financial Controller
– ensured that the Head of Internal Audit had access to
on any control weaknesses identified through monthly
financial review meetings;
– received updates from the sustainability team on
ongoing progress related to the assessment of
climate-related risks and disclosures;
– engaged with management on the Group’s response
to the unfolding crisis in the Ukraine both in relation to
supporting employees and their families based there
and managing other risks arising as a result of the
conflict;
– 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 a detailed report from the Head of Internal
Audit outlining 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
incorporating all material financial, operational and
compliance controls; and
– reviewed the report from the external auditor in respect
of significant financial accounting and reporting issues,
together with internal control weakness observations.
In addition to the above, the Board also received an
update 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 102 of the Risk Report.
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, Deloitte were
engaged to conduct an independent external quality
assessment of the Internal Audit function during 2022.
The objectives of this assessment were to independently
assess the effectiveness of the function in line with the
International Standards for the Professional Practice
Framework (IPPF) of the CIIA and to benchmark it
against best practice and peer organisations. The output
from the review was presented by Deloitte to the Audit
Committee at the July meeting.
The assessment concluded that Internal Audit is a
professional function, incorporating expected industry
good practice in line with its peers and conforms with
the vast majority of the CIIA standards. In addition, the
assessment contained a number of recommendations
to be considered to further evolve and strengthen the
function’s effectiveness.
On the basis of the above, the Committee concluded that
for 2022 the Internal Audit function operated effectively
and is satisfied that the quality, experience and expertise
of the function is appropriate for the Group.
Kerry Group Annual Report 2022 135
Effectiveness
Post completion of the 2021 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 they 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 2022 external audit plan,
which would be conducted on a hybrid basis with a
blend of staff working both on site and virtually. 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 2022 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
Following a comprehensive tender process overseen
by the Audit Committee, PwC were appointed as
external auditor in March 2016 and commenced as
statutory auditors for the Group for the financial year
ended 31 December 2016. 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 2023.
The Audit Committee approved the remuneration of the
external auditor, details of which are set out in note 3 to
the Consolidated Financial Statements.
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 is rotated at least once every ten
years. The audit lead engagement partner is rotated
every five years and for the financial year ended 31
December 2022 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 2022, 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.
Kerry Group Annual Report 2022 136 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 2022, 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 126.
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 2022
GOVERNANCE REPORT
Governance, Nomination and Sustainability Committee Report
137
During the year under review,
the Committee continued to lead
the Board refreshment process
ensuring that the composition of
the Board and its Committees has
the appropriate balance of skills,
knowledge, experience, diversity and
independence. To ensure that the
Board has a director that reflects the
Group’s dairy heritage we engaged
with an executive recruitment
consulting firm to conduct a
search for a new independent
non-Executive Director. Potential
candidates were considered by the
Committee and a shortlist were
interviewed after assessing their
qualifications against agreed criteria
and their other time commitments.
This culminated in the appointment
of Patrick Rohan to the Board on 16
January 2023. He brings to the Board
a detailed knowledge of the dairy
and agribusiness industry.
The Committee also recommended
changes to the composition of the
Board Committees as outlined on
page 141.
Dr. Hugh Brady will have served
nine years as a director on 23
February 2023. Over this tenure
his biomedical research and
academic background has brought
an invaluable perspective to the
Board, as the Group has significantly
evolved its science and technology
capabilities over the same period.
The Committee and the Board
have reviewed and considered the
provisions of the Code in relation to
Directors’ tenure and nonetheless
having conducted a rigorous review
of his independence, unanimously
agree that Dr. Brady should, subject
to shareholder approval, remain on
the Board and as SID until the AGM
in April 2024. The Committee and
Board are satisfied that Dr. Brady,
given his personal attributes and
the challenge he continues to bring
to Board discussions, will continue
to apply objective and independent
judgement to act in the best interest
of the Company. The Committee is
actively engaged in the challenging
process to identify and recruit
an experienced and high-calibre
successor with a similar level of
science, technology and innovation
expertise.
The Committee also reviewed
senior management development
and succession plans with regard
to business growth, geographic
expansion and diversity goals below
Board level.
During 2022, the Committee
reviewed the Company’s corporate
governance policy and processes
and monitored developments in
corporate governance best practice.
The Committee also continued to
provide guidance and oversight to
the Group on the implementation of
the Beyond the Horizon sustainability
strategy, including monitoring
progress against agreed targets
and considering the enhanced
reporting requirements and
stakeholder expectations in relation
to sustainability matters.
An externally facilitated review of
the effectiveness of the Board and
its Committees was conducted
during 2022 and the outcome of
this review is that the Board and its
Committees consider that they are
operating effectively.
The Committee’s priorities for
2023 will continue to focus on
Board and Committee refreshment,
senior management development
and succession planning as well
as ongoing oversight of the
implementation of the Group’s
sustainability strategy. In this regard,
the Committee is considering
recommending to the Board, that a
standalone Sustainability Committee
is established, to focus efforts on this
area of significant importance and
fast-evolving change.
Tom Moran
Chairman of the Governance,
Nomination and Sustainability
Committee
Tom Moran
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 2022.
The Committee is responsible
for evaluating the structure, size,
composition and successional needs
of the Board and its Committees
and for 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.
On 28 April 2022 I was appointed
Chairman succeeding Mr. Philip
Toomey who retired from the Board
on the same date. On behalf of the
Board, I wish to pay tribute to Philip
for his commitment and dedication
to the success of the Group
throughout his years of service.
Kerry Group Annual Report 2022 138 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 2022, are set
out in written terms of reference, which are available
from the Group’s website kerry.com or upon request.
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
Chairperson, 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. Michael Kerr and is chaired by Mr. Tom Moran.
Biographical details for the members of the Committee
are outlined on pages 108-110.
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.
During 2022, the Committee continued to work with
Korn Ferry, an 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
their business.
Committee Meetings
The Committee met four times during the year and
attendance at these meetings is outlined on page 128.
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 141-142.
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 2022
Governance in Action (example)
Non-Executive Director Appointment
Mr. Patrick Rohan was appointed to the Board with effect
from 16 January 2023. 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 food industry experience,
particularly in the dairy and agribusiness
sectors and the capabilities to align with the
Group’s purpose, values and culture, while also
representing the Group’s dairy heritage.
3. Search
The Committee, with Korn Ferry’s assistance,
conducted 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 list of candidates
identified as having met the criteria.
5. Interview
A shortlist of potential candidates was
interviewed by Korn Ferry, 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 Mr. Patrick Rohan as a
non-Executive Director. The Board approved
the appointment of Mr. Patrick Rohan noting
that he had a balance of skills, knowledge
and experience that matched the
requirements set. Appointment terms
were drafted and agreed with him.
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.
139
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 23.
Sustainability
During 2022, the Committee continued to provide
guidance and oversight on the implementation of the
Group’s 2030 Beyond the Horizon sustainability strategy.
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.
During the year, the Committee monitored progress
against the enhanced climate and gender diversity
targets and the broader commitments included
in the Beyond the Horizon strategy. In addition, the
Committee also considered and approved the risks
and opportunities and the additional disclosures in
line with the Task Force on Climate-Related Financial
Disclosures (TCFD) and the EU Taxonomy included in the
2022 Annual Report as well as the enhanced disclosures
included in the other sustainability reports which follows
the framework set out by the Global Reporting Initiative
(GRI) standards.
Details of the Group’s sustainability strategy, targets and
performance, policies and programmes are outlined in
the Sustainability Review on pages 52-93 and in the 2022
Sustainability Report that has been published alongside
the Annual Report and available for review on kerry.com.
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.
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 33% female
representation. Diversity at Board level in terms of gender,
nationality and ethnic background have all improved
Kerry Group Annual Report 2022
Non-Executive
75%
Executive
25%
140
Directors’ Report Governance, Nomination and Sustainability Committee Report
Male
67%
in recent years. 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 plans to increase this representation level
further in line with developing best practice and regulatory
requirements. It also has an ambition to increase the
representation of members with diverse backgrounds
such as nationality, ethnicity and other attributes.
Female
33%
Non-Executive
75%
Executive
25%
In reviewing Board composition and agreeing a
job specification for new non-Executive Director
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
and balance of skills, knowledge and experience on the
Board. As part of the identification process executive
recruitment consultants are required to present a list of
potential candidates, who meet the stated specification
and requirements comprising candidates of diverse
backgrounds, for consideration by the Committee.
Female
33%
56-60
17%
Male
67%
Executive
25%
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.
Executive
25%
Male
67%
Non-Executive
75%
Further details of the Group’s approach to Diversity,
Inclusion and Belonging, including our broader
organisational goals focused on building an inclusive
Non-Executive
and diverse workplace are outlined in our Sustainability
75%
Report and in Our People on page 22.
Male
67%
61-68
58%
A summary of the Group’s current position relating
to Board and senior management diversity is
provided below:
Executive /
Non-Executive Directors
Female
33%
40-55
25%
Non-Executive
75%
Board Gender Diversity
Female
33%
Senior Leadership1
Gender Diversity
Male
67%
Female
33%
1
Senior Leadership above aligns to
Senior Management definition per
Corporate Governance Code
56-60
17%
61-68
58%
40-55
25%
Female
25%
0-2
33%
11-15
8%
Male
75%
3-5
26%
6-10
33%
Male
67%
Male
75%
Male
67%
3-5
26%
6-10
33%
61-68
58%
Male
75%
3-5
26%
6-10
33%
Female
33%
Female
25%
Board Tenure
(years)
0-2
33%
Female
33%
11-15
8%
56-60
17%
Male
75%
40-55
25%
Male
67%
Male
67%
61-68
58%
Male
67%
61-68
58%
3-5
26%
Female
25%
6-10
33%
Male
75%
0-2
33%
11-15
8%
3-5
26%
6-10
33%
Executive
25%
Female
33%
Board Age Profile
(years)
56-60
17%
Female
33%
40-55
25%
Female
33%
56-60
17%
40-55
25%
Female
25%
0-2
33%
11-15
8%
Female
25%
0-2
33%
11-15
8%
Kerry Group Annual Report 2022 141
Changes to the composition of the Board and its Committees for the year ended
31 December 2022
Mr. Philip Toomey
Retired from the Board, the Governance, Nomination
and Sustainability Committee and as Chairman of the
Board on 28 April 2022.
Mr. Tom Moran
Appointed Chairman of the Board and Chair of the
Governance, Nomination and Sustainability
Committee on 28 April 2022.
Ms. Fiona Dawson
Appointed to the Board on 4 January 2022 and to the
Remuneration Committee on 14 February 2022.
Mr. Con Murphy
Retired from the Board on 28 April 2022.
Mr. Gerard Culligan
Retired from the Board on 28 April 2022.
Mr. Michael Kerr
Appointed to the Governance, Nomination and
Sustainability Committee on 2 August 2022.
Ms. Emer Gilvarry
Appointed Chair of the Remuneration Committee
on 28 April 2022.
Dr. Karin Dorrepaal
Appointed designated Workforce Engagement
Director on 28 April 2022.
Mr. Patrick Rohan
Appointed to the Board on 16 January 2023.
Key Activities
The key activities of the Committee throughout the year are detailed below:
Subject
Committee Activity
Board Size and
Composition
In 2022, as part of its remit, the Committee considered the size and composition of the Board.
At 31 December 2022, the Board comprised 11 members following the retirements of Mr. Philip
Toomey, Mr. Con Murphy and Mr. Gerard Culligan on 28 April 2022.
The Board size increased to 12 on 16 January 2023 following the appointment of Mr. Patrick Rohan.
The Committee will continue to consider both Board size and composition during 2023.
Chairman
Succession
Mr. Philip Toomey retired from the Board on 28 April 2022.
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 and this was endorsed by the Board at its meeting in February 2022. He assumed
the role of Chairman at the conclusion of the AGM on 28 April 2022 and was independent on
appointment. On appointment, Mr. Tom Moran stepped down as a member and Chair of the
Remuneration Committee and as the designated Workforce Engagement Director.
Board
Refreshment
New non-Executive Directors, Ms. Fiona Dawson and Mr. Patrick Rohan were appointed to the
Board on 4 January 2022 and 16 January 2023 respectively, following searches conducted by the
Committee in conjunction with an executive recruitment consulting firm.
The Committee and the Board agreed that Ms. Dawson and Mr. Rohan had a balance of skills,
knowledge, experience and diversity that matched the requirements set.
Committee
Refreshment
On appointment as Chairman of the Board, Mr. Tom Moran was also appointed as Chair of the
Governance, Nomination and Sustainability Committee on 28 April 2022.
Ms. Emer Gilvarry was appointed Chair of the Remuneration Committee on 28 April 2022,
Ms. Fiona Dawson was appointed to the Remuneration Committee on 14 February 2022
and Mr. Michael Kerr was appointed to the Governance, Nomination and Sustainability
Committee on 2 August 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 2023.
Kerry Group Annual Report 2022 142
Directors’ Report Governance, Nomination and Sustainability Committee Report
Key Activities (continued)
Subject
Committee Activity
Designated
Workforce
Engagement
Director
Remuneration
Committee
Chairperson
Mr. Tom Moran retired as the designated Workforce Engagement Director at the conclusion of
the AGM on 28 April 2022.
The Governance, Nomination and Sustainability Committee completed a formal process
and recommended to the Board the appointment of Dr. Karin Dorrepaal as the designated
Workforce Engagement Director effective from the conclusion of the 2022 AGM.
Mr. Tom Moran retired as Chairperson of the Remuneration Committee on his appointment as
Chairman of the Board at the conclusion of the AGM on 28 April 2022.
The Governance, Nomination and Sustainability Committee completed a formal process and
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
had been a member of the Remuneration Committee since June 2021 and is also Chair of the
Remuneration Committee of another listed plc.
Re-appointment
of non-Executive
Directors
During the year, Mr. Tom Moran, Dr. Hugh Brady, and Dr. Karin Dorrepaal, 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
Committee
Effectiveness
As outlined in detail on page 129, an evaluation of the Board and its Committees took place
in 2022.
This process was externally facilitated by Independent Audit Limited. The evaluation was
carried out through the use of an online questionnaire hosted by Independent Audit,
interviews held with selected Board members and the Company Secretary, review of Board
papers pertaining to the year and the observation of Board and Committee meetings. A
thorough discussion followed a presentation of the findings made to the Board by Independent
Audit at the December Board meeting.
The Committee considered the outcome of this review. 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 2023. The conclusion
from the evaluation process is that the Board and its Committees consider that they have
operated effectively during the period under review.
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 2022, the Committee reviewed the Company’s corporate governance policy in the
context of the 2018 UK Corporate Governance Code and the Irish Annex and monitored
developments in corporate governance best practice.
Sustainability
Strategy
The Committee provided guidance and oversight on the implementation of the Group’s Beyond
the Horizon 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
EU Taxonomy as well as the additional ESG disclosures the Group is reporting in its separate
2022 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 kerry.com.
Kerry Group Annual Report 2022
GOVERNANCE REPORT
Remuneration Committee Report
143
2022 has been a milestone year
for Kerry as we celebrated our
50th anniversary and reconnected
in person with many of our
stakeholders as borders and
economies reopened. In the face
of a challenging macro-economic
and geopolitical backdrop, and
through continued COVID-19
lockdowns in key geographies,
the Group again delivered a good
financial performance for the
year and made further significant
strategic developments to enhance
and solidify Kerry’s position as a
world-leading provider of taste and
nutrition solutions for the food,
beverage and pharmaceutical
markets.
We could not have achieved
this without the continued and
excellent leadership of our Executive
Directors, our leadership teams
and our entire global workforce
who continue to demonstrate
tremendous commitment and
agility. I would also like to pay
special tribute to our Ukrainian
colleagues and to our leadership
teams who ensured a rapid and
coordinated response to keep our
colleagues and their families safe as
they deal with the consequences of
the invasion of their country.
Supporting our People
We continue to prioritise the health
and wellbeing of our people and
throughout 2022, the Committee
was particularly cognisant of the
volatile economic environment,
global inflationary challenges
and the associated impact on our
people. The Committee is also
aware that the current inflationary
environment is disproportionally
affecting lower-paid workers and
therefore, a number of targeted
actions have been taken to support
our people where required:
– Salary increases for the wider
workforce in 2023 will be aligned
to market movements on a
country-by-country basis and
will be greater than those awarded
last year;
– Greater flexibility has been
introduced in the Group’s pay
review process to facilitate higher
increases for lower-paid positions
and to give managers greater
flexibility to differentiate where
pay levels are materially impacted
by inflation;
– More frequent salary increases
are and will be made in countries
experiencing hyperinflation;
– A new online, global wellbeing
centre hosting high quality
resources supporting emotional
wellbeing, physical wellbeing,
nutritional wellbeing and financial
wellbeing has been made available
to all employees;
– Renewed promotion of the Group’s
Global Employee Assistance
Programme (EAP) service across
all our Group locations. This
programme provides a wide range
of confidential services including
budgeting and addressing stress
to build financial confidence; and
– Employee benefit and discount
platforms are actively promoted
where available.
In a period of significantly higher
inflation, the Committee is aware
that restraint should be exercised
when reviewing Executive Director
remuneration. Having considered
the holistic actions and responses
taken for our wider workforce, the
Committee is satisfied that the
executive remuneration outturns
for 2022 and the implementation
of our Remuneration Policy for
the Executive and non-Executive
Directors in 2023, are appropriate.
Emer Gilvarry
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 2022. This
is my first Remuneration
Committee Report, having
taken over as Chairperson
following Tom Moran’s
appointment as Chairman of
the Board on 28 April 2022.
I would like to thank Tom for
his significant contribution
to this Committee over the
past number of years, firstly
as a member and more
recently as the Chairman.
Kerry Group Annual Report 2022
144 Directors’ Report Remuneration Committee Report
Remuneration Policy
The Group’s Remuneration Policy is summarised in
Section C on pages 149-155. This current 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, values
and culture 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 for 2022 and the remuneration outturns are
appropriate, however some minor changes have been
made to the operation of the Policy for 2023 following
a review of operation in 2022 in the context of the key
focus areas for 2023.
Consistent with our three-year review cycle, the
Committee will undertake a full review of the Policy in
2023 to ensure it remains appropriate and continues to
attract, retain and motivate individuals of the highest
quality on an international basis. Ahead of bringing a
new Policy to shareholders at the 2024 AGM, we will
engage with a range of key stakeholders on any material
changes proposed.
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, values
and culture, 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 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 Outturn 2022
In determining the Executive Directors’ 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, due to heightened levels of inflation and uncertain
economic conditions globally.
In 2022, the Group delivered good overall growth
with Group revenues reaching a record level of €8.8
billion, constant currency adjusted earnings per share
growth of 7.3% and free cash flow generation of €640
million. We achieved strong progress in evolving the
Group’s portfolio aligned to our strategic priorities
of Taste, Nutrition and Emerging Markets as well
as advancing further along our Beyond the Horizon
sustainability journey.
2022 Short-Term Incentive Plan Outturn
For Executive Directors, the 2022 STIP was based on
financial metrics aligned to the Group’s strategy with
35% based on Volume Growth, 27% on EBITDA Margin
Expansion and 18% on Cash Conversion. Performance
against key Strategic Objectives formed the remaining
20% of the overall STIP weighting.
The calculated outturn on the STIP for 2022 was 78%
of the maximum available opportunity. The outturn
was driven by achieving maximum vesting level for the
Volume Growth metric on the back of a year of record
growth, on target or slightly above vesting levels for
the Margin Expansion and Cash Conversion metrics,
and strong performance against Strategic Objectives.
The Committee reviewed the formulaic outturn of the
quantitative metrics and is satisfied that the overall
outturn is reflective of the Group’s and the Executive
Directors’ very strong performance during the year,
against the backdrop of the challenging macro-economic
environment and the 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.
Long-Term Incentive Plan 2020-2022
Outturn
The three-year performance period in respect of the
2020-2022 LTIP award ended on 31 December 2022.
The 2020 LTIP award was subject to growth in Adjusted
Earnings per Share (EPS), Total Shareholder Return
(TSR) and Return on Average Capital Employed (ROACE)
performance metrics with a weighting of 50%, 30% and
20% respectively.
The final outturn of the 2020-2022 LTIP award was 21.3%
of maximum opportunity as outlined in further detail on
page 164.
Kerry Group Annual Report 2022 145
2023 Short-Term Incentive Plan
The STIP performance metrics, weightings and target
calibrations were reviewed in 2022 and the Committee
concluded that, while no changes are required to
the metrics, the weighting attributable to the Cash
Conversion metric should be increased to reflect the
greater emphasis on cash generation management
during 2023. Other metrics will be reweighted
accordingly with Volume Growth retaining the highest
weighting. Annual STIP maximum opportunity will
remain unchanged for 2023.
2023 Long-Term Incentive Plan
The LTIP performance metrics, weightings and target
calibrations were also reviewed in 2022. The Committee
decided to adjust the target ranges for the EPS and
ROACE metrics, given the current uncertain, volatile and
inflationary economic environment, and to adjust the
target range for the sustainability metrics as the Group
moves another year closer to the targets included in
the 2030 Beyond the Horizon sustainability strategy. The
target for the TSR metric remains unchanged and there
are no changes to the weightings of the metrics or to
the LTIP maximum opportunity levels. The Committee
considers the revised targets similarly challenging to
the targets set in prior years allowing for global
economic conditions.
Pay for Performance
Kerry has a strong track record of demonstrating
appropriate rigour and discipline when setting
stretching targets. The Committee is satisfied that
the targets set for the 2023 STIP and LTIP awards
are appropriately stretching, particularly given the
current uncertain economic environment, significant
inflationary pressures, overall market growth rates and
the level of capital expenditure required to support
future growth ambitions.
Non-Executive Director Fees for 2023
For 2023, no substantive increases are proposed and,
in line with the Remuneration Policy, an annual increase
will again be applied to the base fee paid to Directors
in 2023. An increase of 3.2% will be applied to the base
fee paid to the Chairman and non-Executive Directors.
This increase is lower than the increase available to the
wider workforce in Ireland. No increases will be applied
to Committee membership fees, Committee chair fees or
any other fees.
While we have seen a strong recovery in our EPS
performance over the past two years, the COVID-19
impact on the 2020 EPS performance largely offset
the EPS growth achieved for the remaining two years
of the award, resulting in a low vesting level for this
metric. This is the third year in which the impact of the
pandemic in 2020 has had a very significant negative
effect on the LTIP outturn. Our TSR performance was
below median compared to our TSR peer group and has
therefore not achieved the threshold level for vesting.
ROACE performance was above threshold and vested
accordingly.
No discretion will be applied to the formulaic vesting
of the 2020 LTIP award for Executive Directors despite
their strong performance over the performance period.
However, consistent with the discretion previously
exercised, we adjusted the formulaic vesting of the
EPS metric of the 2020 LTIP for the Executive Directors’
extended leadership teams. The vesting of the 2020
LTIP will be adjusted for approximately 400 leaders
from 21.3% to 40%, in recognition of their sustained
commitment, agility and performance against a very
challenging backdrop.
Remuneration Policy Implementation 2023
Basic Salary
In reviewing the basic salaries for the Executive
Directors, the Committee was mindful of the broader
external environment, the strong performance of our
Executive team, and in particular our wider workforce
experience as outlined previously.
For 2023 the basic salaries of the Executive Directors will
be increased by 3.2% (Ireland based) and 4% (US based).
These increases are below the 2023 average increases
available for the wider workforce population in Ireland
(3.5%) and the US (4.5%), with higher increases available
for lower-paid employees or where market adjustments
are required.
Pension Alignment
As detailed on page 151, Executive Directors’ pension
contribution rates have been aligned to those of
Kerry’s wider workforce in Ireland with effect from
1 January 2023.
Incentive Plans
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 2022, the Remuneration
Committee reviewed the incentive plan metrics and
weightings again to ensure full alignment with the
Group’s purpose, values, culture, strategy and mid-
term targets.
Kerry Group Annual Report 2022 146 Directors’ Report Remuneration Committee Report
Other Matters
All Employee Share Plan
During 2022, a detailed review was undertaken to
design Kerry’s first global All Employee Share Plan which
will provide employees globally with the opportunity
to become shareholders and allow them to share in
the success of the Group. The Committee and the
Board believe that share ownership is a powerful and
important way of creating an ownership culture and
mindset and as such we will seek shareholder approval
for the plan at the 2023 AGM. Subject to shareholder
approval, implementation will commence on a phased
basis from 2023 onwards.
Committee Refreshment
Following Tom Moran’s appointment to Chairman of
the Board in April 2022, I was appointed to chair the
Committee. Ms. Fiona Dawson was appointed to the
Committee in February 2022, and she has brought with
her a valuable new perspective.
Committee Performance
An external review of the Remuneration Committee’s
performance was undertaken by Independent Audit
Limited during 2022 and the outcome of this review
is that the Committee concluded that it is operating
effectively.
Conclusion
The Committee has again faced difficult decisions in
appropriately recognising the contributions of our
leadership teams in very challenging circumstances.
While the 2020 LTIP outturn for our Executive Directors
is disappointing in the context of their sustained and
focused leadership over the three-year performance
period, the Committee is satisfied that the overall
remuneration outturn for 2022 is reflective of underlying
business performance and the wider stakeholder
experience. The Committee is also satisfied that the
remuneration set for 2023 for the Executive Directors
and our wider workforce is appropriate and reflective of
the general economic environment.
The Committee continues to review the Group’s
Remuneration Policy to ensure that it remains aligned
to shareholders’ long-term interests and provides the
right framework to attract, retain and motivate 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 97%
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.
Emer Gilvarry
Chairperson of the Remuneration Committee
Kerry Group Annual Report 2022
Section B:
Remuneration Committee
and Key Activities
Committee Membership
During 2022, the Remuneration Committee initially
comprised four independent non-Executive Directors;
Dr. Karin Dorrepaal, Ms. Emer Gilvarry, Mr. Christopher
Rogers and was chaired by Mr. Tom Moran. Ms. Fiona
Dawson was appointed to the Committee in February
2022 and following Mr. Tom Moran’s appointment
to Chairman in April 2022, Ms. Emer Gilvarry was
appointed to chair the Committee. Details of the skills
and experience of the Directors are contained in the
Directors’ biographies on pages 108-110.
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 2022, are set out in written
terms of reference which are available from the Group’s
website www.kerry.com or upon request.
147
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 2022
The Committee held five meetings during 2022. Attendance at these meetings is outlined on page 128.
The key activities undertaken by the Committee in discharging its duties during 2022 are set out below:
Subject
Remuneration Committee Activity
Remuneration
Report
A review of best practice remuneration reporting was completed during 2022 to ensure ongoing
compliance with relevant legislation and reporting requirements.
Remuneration
Policy Review
The Committee reviewed the Policy and concluded that it has operated as intended. The only significant
adjustment is the reduction in the Executive Directors’ Employer’s Pension contribution to 10% in line
with the wider workforce.
Basic salary
The Committee continued to monitor the level of basic salaries of the CEO and Executive Directors in line
with market practice.
STIP
LTIP
Chairman &
Non-Executive
Directors fees
The STIP was reviewed during 2022 to ensure that the metrics are aligned with Group strategy, purpose
and values, the weightings are appropriate and that the associated targets are appropriately stretching.
The Committee considered the overall effectiveness of the LTIP in 2022 to ensure that it is structured
appropriately to incentivise Executive Directors and senior managers across the Group and that there
were no windfall gains due to share price movements at the date of grant in 2020.
As provided in the Remuneration Policy, the Chairman’s and non-Executive Director base fees are
reviewed annually.
Kerry Group Annual Report 2022
148 Directors’ Report Remuneration Committee Report
Subject
Remuneration Committee Activity
Executive
Directors
Service
Contracts
Following the 2020 Executive Remuneration Policy review, the service contracts for the Executive Directors were
reviewed and updated to ensure they reflect the changes introduced in the most recent Policy and continue to be
appropriately aligned with current best practice.
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 regular updates on pay policies and procedures for the wider
workforce to ensure alignment with the Executive Directors’ Remuneration Policy. Updates included an overview
of the approach for the annual pay reviews in all the countries in which the Group operates including measures
taken in response to the cost-of-living crisis. Other agenda items included updates on gender pay gap reporting,
the design and deployment of an All Employee Share Plan, the timeline for UK living wage accreditation and
enhancements and additions to family leave policies.
Workforce
Engagement
Activity
The Committee was updated by the Chief Human Resources Officer and the designated Workforce Engagement
Director (who is also a member of the Committee) in relation to the dialogue with the workforce concerning
executive and workforce remuneration policies. The feedback received informed the Committee’s decision
making in relation to executive remuneration outcomes for 2022, as well as the level of salary increases for
Executive Directors and fee increase for non-Executive Directors applicable in 2023. It also influenced the
Committee’s decision to seek shareholder approval for an All Employee Share Plan at the AGM in 2023.
Shareholder
Consultation
The Committee reviewed the results of the shareholder vote on the Remuneration Report at the 2022 AGM
noting that 97% of shareholders 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 in relation to Executive Director remuneration and other matters. The
Committee welcomed the engagement and the shareholders consulted provided input and commentary which
the Committee took into account particularly when determining the outturn for the 2019 LTIP award which
vested in 2022.
Committee
Evaluation
As outlined on page 129 an external review of the Board and its Committees was conducted by Independent
Audit Limited during 2022. The outcome of the review is that the Remuneration Committee concluded that it 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 kerry.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.
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 2022 were €62,588 (2021: €84,990).
Remuneration Committee Advisors
The Remuneration Committee is authorised by the
Board to appoint external advisors and Korn Ferry is
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.
Votes on Remuneration
Total Votes Cast
Directors’ Remuneration Policy (2021 AGM)
Votes For
Votes Against
Votes Withheld/Abstained
108,924,838
105,041,472
3,883,366
1,242,809
96.4%
3.6%
Directors’ Remuneration Report (2022 AGM)
109,497,080
105,969,195
3,527,885
607,563
96.8%
3.2%
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 2022
149
Share
Price
Dividend
Total
Shareholder
Return
Volume
Growth
Margin
Expansion
Growth
EPS
Return
ROACE
Cash
Conversion
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 practical to do so.
In setting remuneration levels, the Committee has
regard to 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, values and culture, 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 outturns, the
Committee exercises independent judgement and
discretion, taking account of Group and individual
performance as well as the shareholder 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 35, 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 metrics. Together these
metrics deliver Total Shareholder Return which aligns
the interest of the Executive Directors with that of
the shareholders. 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 Executive Directors 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.
Kerry Group Annual Report 2022
150 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
Examples
Clarity
The Committee is committed to having a transparent approach to pay, by engaging regularly with Executives,
shareholders and their representative bodies in order to explain the approach to executive pay and how it links
to the Kerry strategy. We are also committed to clear and transparent disclosure on all aspects of executive
remuneration.
The Committee is informed of the feedback from the workforce in relation to executive and workforce
remuneration matters through regular updates provided by the Chief Human Resources Officer and the
designated Workforce Engagement Director.
Simplicity
The Committee considers that the Remuneration Policy is simple and easy to understand.
Risk
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 outturns.
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 (iii) malus and clawback provisions and
(iv) the ability of the Committee to utilise discretion to adjust formulaic outturns to ensure outturns 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 155 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, Enterprising Spirit, Inclusiveness,
Open-mindedness and Ownership.
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:
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
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
– Set at a level to attract,
retain and motivate
Executive Directors
– Reviewed annually
– Full review undertaken
every three years
– Paid monthly in Ireland and bi-weekly
in the US
– Salary is referenced to job responsibility and
internal/external market data
Performance
Metrics
– Not
applicable
Kerry Group Annual Report 2022 Purpose and
Link to Strategy
Benefits
To provide a competitive
benefit package aligned
with the role and
responsibilities of Executive
Directors
Pension
To provide competitive
retirement benefits to
attract and retain
Executive Directors
Operation
Opportunity
– These benefits primarily relate to the use of a
– Not applicable
company car or a car allowance
151
Performance
Metrics
– Not
applicable
– Pension arrangements may vary based on the
– Pension values prior to 1
– Not
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
applicable
January 2023 varied based
on local practice
– The pension contribution
rates for incumbent Executive
Directors have been reduced
to 10% of basic salary, in
line with Kerry’s Irish wider
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 wider
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, the delivery of the
Group’s strategy and value
creation for all stakeholders
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
– Maximum opportunity is
175%-200% of basic salary
– 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 153)
– Target opportunity is 50% of
maximum opportunity for on-
target performance
– Threshold performance
results in a STIP payable at
0% of maximum
For FY 2023
– 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 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 153)
– Maximum opportunity is
For FY 2023
250% - 300% of basic salary
– Adjusted
Earnings Per
Share ‘EPS’
– Total
Shareholder
Return ‘TSR’
– Return on
Average
Capital
Employed
‘ROACE’
- Sustainability
Metrics
Kerry Group Annual Report 2022
152 Directors’ Report Remuneration Committee Report
Purpose and
Link to Strategy
Shareholding Requirement
Maintain alignment of the
interests of the shareholders
and the Executive Directors
and commitment over the
long-term
Operation
Opportunity
Performance
Metrics
– 250%-300% of basic salary
– Not
applicable
– 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 STIP 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 awards granted after 2021 and does not
apply to own purchased shares
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 including relevant
sustainability priorities.
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 measures 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 Measure
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 2022 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
outturns under STIP and LTIP to ensure outturns 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 month’s 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, (accompanied by such payments as are
considered necessary or appropriate to sustain such
provisions) 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.
153
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 metrics 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 buyout 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 2022 To further strengthen the alignment between Executive
Directors and wider workforce, we will be seeking
shareholder approval for a new All Employee Share Plan
at the 2023 AGM. During 2022, a detailed review was
undertaken to design Kerry’s first global All Employee
Share Plan which will provide employees with the
opportunity to become shareholders and allow them
to share in the success of the Group. The Committee
and the Board believe that share ownership is a
powerful and important way of creating an ownership
culture and mindset. Subject to shareholder approval
implementation will commence on a phased basis from
2023 onwards.
Consultation with Employees
Our approach to employee engagement is set out
in detail on page 123 including the approach to
understanding the views of our wider workforce.
Dr. Karin Dorrepaal, a member of the Remuneration
Committee, is our current designated Workforce
Engagement Director, and she works closely with our
Chief Human Resources Officer (CHRO) to provide
the Committee with regular updates on engagement
with, and feedback from, 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. The Group has a
number of different channels for engagement including
an annual engagement survey, targeted pulse checks
with specific employee groups, regular town halls, a
dedicated digital employee communication platform and
our Speak Up facility. The Committee continually reviews
and enhances these channels to enable the Committee
to engage more effectively with the workforce to
explain the alignment between Executive Directors’
Remuneration Policy and the pay policy and practices
applicable to the wider workforce.
Consultation with Shareholders
The Committee considers the guidelines issued by
the major institutional shareholders and the bodies
representing them, the guidelines and feedback
provided by proxy advisors and direct feedback from
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.
154 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
There is strong alignment between how we set pay
for our Executive Directors and the wider workforce,
as well as clear alignment in the mechanics of how we
operate our pay review process and design our benefit
and incentive plans. The key difference in remuneration
structures is that, overall, the Remuneration Policy for
the Executive Directors is more heavily weighted towards
variable pay compared to other employees.
An update on wider workforce remuneration is tabled
as a specific agenda item at every Remuneration
Committee meeting to enable the Committee to
consider the wider workforce experience when setting
the Remuneration Policy for Executive Directors and
making executive remuneration decisions.
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. 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.
Kerry Group Annual Report 2022 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 base fee is usually increased
in line with the increase available to the wider workforce
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 2023. 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.
155
Edmond Scanlon
59%
13%
48%
16%
41%
27%
14%
86%
Basic Salary
Pension & Benefits
2%
3%
STIP
LTIP
4%
28%
33%
26%
Marguerite Larkin
57%
15%
46%
19%
38%
31%
13%
87%
4%
27%
32%
26%
Gerry Behan
56%
15%
46%
19%
38%
30%
14%
86%
Basic Salary
Pension & Benefits
STIP
LTIP
Basic Salary
Pension & Benefits
STIP
LTIP
2%
3%
3%
3%
5%
27%
32%
26%
The charts above exclude the effect of any Company
share price appreciation except in the ‘maximum
+50%’ scenario.
Kerry Group Annual Report 2022
156 Directors’ Report Remuneration Committee Report
Section D: Remuneration
Policy Implementation
Part I: Remuneration Policy
Implementation 2023
This part of the report sets out how the proposed
Remuneration Policy as described on pages 149-150
will operate in 2023.
Basic Salary and Benefits
The salaries of the Executive Directors effective for the
year commencing on 1 March 2023, together with the
comparative figures, are as follows:
Directors
2023
€’000*
2022
€’000*
% Increase
Edmond Scanlon
1,289
1,249
Marguerite Larkin
797
773
3.2%
3.2%
$’000*
$’000* % Increase
Gerry Behan
1,060
1,019
4.0%
* The numbers above reflect rounding.
For 2023 the basic salaries of the Executive Directors will
be increased by 3.2% (Ireland based) and 4% (US based).
These increases are below the 2023 average increases
available for the wider workforce population in Ireland
(3.5%) and the US (4.5%), with higher increases available
for lower-paid employees or where market adjustments
are required.
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.
The pension contribution rate for Executive Directors has
been aligned to that of Kerry’s wider 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 2022
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, while no changes are required to the
metrics for 2023, the weighting attributable to the
Cash Conversion metric should be increased to 25%
(previously 18%) to reflect the increased focus on cash
generation management.
The weighting attributable to the Volume Growth and
the Margin Expansion metrics will be adjusted to 30%
(previously 35%) and 25% (previously 27%) respectively.
Strategic Objectives will continue to be weighted at 20%.
All 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
2022, 200% of salary for the CEO and 175% of salary for
the CFO and CEO Taste & Nutrition.
2023 STIP – Performance Metrics and Weightings
for Executive Directors
Group Metrics
Volume growth
Margin expansion
Cash conversion
Strategic objectives
Total
% of award
Target
15%
12.5%
12.5%
10%
50%
Max
30%
25%
25%
20%
100%
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.
Kerry Group Annual Report 2022
157
Each Executive Director will be awarded their maximum
LTIP opportunity in 2023 as follows, CEO 300% of
basic salary, CFO 250% of basic salary and CEO Taste
& Nutrition 250% of basic salary. These maximum
opportunities are unchanged versus the previous year.
See Group Key Performance Indicators (KPIs) on pages
38-39 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
For 2023, no substantial increases are proposed and in
line with the Remuneration Policy, an annual increase
will again be applied to the base fee paid to non-
Executive Directors. An increase of 3.2% will be applied
to the base fee paid to the Chairman and non-Executive
Directors. This increase is lower than the increase
available to the wider workforce in Ireland.
The following increases will be applied effective 1 March
2023.
Fee Type1
Chairman’s fee
Non-Executive Director
Base fee
2023 Fees
€’000
2022 Fees
€’000
407
89
395
86
Note 1: There are no changes to the Committee membership,
Committee chair fees or any other fees. The numbers above
reflect rounding.
Long-Term Incentive Plan (LTIP)
A review of the LTIP metrics was completed in 2022 to
ensure that they remain appropriate, linked to strategy
and that targets are appropriately stretching. The
Committee decided to adjust the target ranges for the
EPS and ROACE metrics, given the current uncertain,
volatile and inflationary economic environment, and
to adjust the target range for the sustainability metrics
as the Group moves another year closer to the targets
included in the 2030 Beyond the Horizon sustainability
strategy. The target for the TSR metric remains
unchanged as do the weightings for all metrics.
LTIP Award Year
2023
Performance Metrics
Threshold Maximum
EPS (40% weighting) 1
Kerry’s EPS growth per annum
% of award which vests
ROACE (15% weighting)
ROACE achieved
% of award which vests
Relative TSR (25% weighting)
Position of Kerry in peer group 2
4%
25%
9%
25%
10%
100%
12%
100%
Median Above 75th
percentile
% of award which vests
25%
100%
Sustainability (20% weighting) 3
Nutrition Reach Goal
1.2bn
1.4bn
Carbon Reduction
Food Waste Reduction
% of award which vests
48%
35%
25%
50%
40%
100%
Note 1: Adjusted EPS growth is measured on a constant currency
basis.
Note 2: The TSR Peer Group companies are listed on page 163.
Note 3: Please see pages 38-39 for further details in relation to
sustainability metrics.
The Committee is satisfied that the target ranges
above are appropriately stretching particularly given
the current macro-economic environment, challenging
trading conditions, 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).
Kerry Group Annual Report 2022
158 Directors’ Report Remuneration Committee Report
Part II: Remuneration Policy Outturn 2022
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 188.
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 2022 (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
2022
€’000
1,244
74
224
1,542
40%
1,941
416
2,357
60%
3,899
2021
€’000
1,217
62
219
1,498
39%
1,752
605
2,357
61%
3,855
2022
€’000
770
35
139
944
42%
1,050
231
1,281
58%
2,225
2021
€’000
752
34
135
921
42%
948
337
1,285
58%
2,206
2022
$’000
1,014
81
226
1,321
44%
1,384
307
1,691
56%
3,012
€’000
2,869
2021
$’000
984
72
207
1,263
42%
1,240
513
1,753
58%
3,016
€’000
2,534
Note 1: Annual pay increases are effective from 1st March each 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 2022 for both Edmond Scanlon and Marguerite
Larkin was 18% of their basic salaries. The pension figure for Gerry Behan includes both defined benefit and defined contribution
retirement benefits.
Note 4: The 2022 STIP amount represents two thirds delivered in cash with one third delivered by way of shares/share options which are
deferred for two years.
Note 5: 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. The negative share price movement versus that applicable at the date the conditional awards were granted has decreased
the valuation of the awards (that will vest in 2023) over the three years by (€91k) for Edmond Scanlon, (€51k) for Marguerite Larkin
and by (€64k) for Gerry Behan. The LTIP included in this table was awarded in 2020.
Note 6: The table shows the Executive Director’s pay in the currency of payment to ensure clarity in reflecting the year-on-year payment
comparisons.
Note 7: The total remuneration for Executive Directors was €8,993k (2021: €8,595k) using a US dollar exchange rate of 1.05 (2021: 1.19).
Kerry Group Annual Report 2022
159
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 3.3% respectively, effective from 1 March 2022, in line with increases for the
wider workforce in Ireland and the US respectively.
Annual Incentive Outturns (STIP)
Table 2: STIP Achievement Against Targets
Financial Metrics (CEO, CFO, and CEO T&N – 80% weighting)
Metric
s Threshold
t
e
g
r
a
T
Target
Max
Actual performance
Bonus outturn
Link to strategy
1. Volume
Growth
(35% weighting)
2. EBITDA Margin
Expansion*
(27% weighting)
3. Cash
Conversion
(18% weighting)
Group
0%
4%
6%
6.1%
35%
Group
40 bps
80 bps
100 bps
80 bps
14%
Group
70%
80%
90%
82%
11%
Volume Growth is a key
performance metric as it
is one of the main drivers
of Adjusted EPS Growth
EBITDA Margin Expansion
is a key performance
metric as it is also a 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 targets and actual performance for the EBITDA Margin Expansion metric exclude the dilution resulting from the mathematical effect
of implementing selling price increases to maintain cash margin in light of unprecedented input cost inflation. The dilutive impact on
reported EBITDA margin resulting from the price increases implemented in 2022 was 160bps.
When setting the targets above, the Committee considered them to be appropriate as they are aligned with the
Group’s Strategic Plan, and were reflective of overall market conditions in 2022, including the anticipated significant
inflationary environment. The targets also took 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 ongoing global supply chain challenges.
Strategic Objectives – 20% weighting
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.
The table below sets out the performance outturn for the strategic element of the STIP.
Metric
4. Strategic Objectives (All – 20% weighting)
Threshold
Target
s
t
e
g
r
a
T
Max
Actual performance
Metric outturn
Link to strategy
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 2022
160 Directors’ Report Remuneration Committee Report
Details of Strategic Objectives
The Committee reviewed progress against these objectives and concluded that strong progress was made by the
Executive Directors against the objectives outlined below, which resulted in an award that was close to maximum
opportunity.
Strategic
Objective
CEO
Performance Assessment
Achievement: 18% (90%)
Portfolio &
Strategy
Significant strategic portfolio developments to enhance and further solidify Kerry’s position as a world-
leading Taste & Nutrition Company:
– Rigorous integration of Niacet and other strategic acquisitions across all regions of Kerry to enhance
the Group’s capability in Authentic Taste, Plant-based, Food Waste and Health & Bio-Pharma.
– Following a strategic portfolio review, reached agreement for the potential sale of Kerry’s Sweet Ingredients
Portfolio
– External innovation partnerships significantly evolved and c-LEcta, a technology and innovation-led
investment, now integrated in to Kerry
Operating
Model &
Digital
Enablement
Strong progress in driving further alignment of Kerry’s Operating Model to build and embed capability for
excellent execution of the refreshed strategy
– Continued to build Group commercial capability to accelerate growth in priority areas of focus including:
enhanced global account management capability, refreshed global commercial academy and sales
incentive plan as well as enhanced digital cross and upselling capability
– Further embedded the newly established Global Business Services organisation, with portfolio, scope and
capabilities expanded significantly on a global scale in 2022
– Significant progress in driving operational effectiveness; focused uplift in manufacturing and process
capability, coupled with enhanced supply-chain agility. Enhancement of operations leadership capability,
through a global Plant Leader development programme and targeted recruitment for key specialist
capability
Stakeholder
Engagement
Significant personal focus, upon re-opening of economies and borders, on stakeholder engagement
globally vis-a-vis Kerry’s sustainable nutrition ambition and capability
– Fully leveraged Kerry’s 50th anniversary celebrations globally to showcase and motivate employees,
customers, and communities around Kerry’s purpose, vision, strategy, and capability
– Extended next generation of Kerry’s World Food Programme (Burundi) and Concern Partnership (Kenya).
Continued and expanded Kerry MyCommunity programme, enabling employee-led sustainability
initiatives in local communities, through a combination of funding and paid volunteering
Leadership
Team and
Succession
Planning
Strong progress in building strength, depth and diversity of the leadership team and talent pipeline:
– Seamless succession into key Executive Leadership roles, in particular CEO North America
– Ongoing ownership of the Executive Leadership Team development, complemented by externally
facilitated team development and mentoring interventions
– Championed continued rigour in executive succession planning and development
– Significant progress in gender diversity in senior leadership (now 33% v 2025 ambition of 35%)
– Global DI&B Executive Council established, and Global Head of DI&B appointed. DI&B 2030 roadmap
refreshed and enhanced, with key 2022 milestones achieved
CFO
Achievement: 18% (90%)
Portfolio &
Strategy
Significant strategic portfolio developments to enhance and further solidify Kerry’s position as a
world-leading Taste & Nutrition company:
Operating
Model &
Digital
Enablement
– Rigorous integration of Niacet and other strategic acquisitions across all regions of Kerry to enhance
the Group’s capability in Authentic Taste, Plant-based, Food Waste and Health & Bio-Pharma
– Following a strategic portfolio review, reached agreement for the Potential sale of Kerry’s Sweet
Ingredients Portfolio
– External innovation partnerships significantly evolved and c-LEcta, a technology and innovation-led
investment, now integrated in to Kerry
Strong progress in driving further alignment of Kerry’s Operating Model to build and embed capability for
excellent execution of the refreshed strategy:
– Further embedded the newly established Global Business Services (GBS) organisation, with portfolio,
scope and capabilities expanded significantly on a global scale in 2022
– Significant progress in operational and commercial effectiveness through disciplined performance
management and capital allocation, enabled by strengthened analytics and digital capability
– Seamless execution of global finance function transformation; delivering performance-focused
finance business partnering in regions, supported by deep expertise in global specialist functions, and
consistent scalable finance services, delivered through GBS finance teams in two global centres
Kerry Group Annual Report 2022 161
Stakeholder
Engagement
Significant personal focus upon re-opening of economies and borders, on stakeholder engagement
globally, vis-a-vis Kerry’s sustainable nutrition ambition and capability:
– Fully leveraged Kerry’s 50th anniversary celebrations globally to showcase and motivate employees,
customers and communities around Kerry’s purpose, vision, strategy, and capability
– Extensive external engagement with investors, financial institutions, business schools and communities
around Kerry’s purpose, vision, strategy, and capability
– Strengthened Group Sustainability reporting and oversaw Kerry’s first standalone Sustainability Report,
in reference to GRI standards
Leadership
Team and
Succession
Planning
Strong progress in building strength, depth and diversity of the Finance leadership team and talent
pipeline:
– Strength and diversity of global Finance Leadership Team further enhanced through internal promotions
and accelerated development programmes
– Ongoing ownership of Finance Leadership Team development, complemented by externally-facilitated
team development and mentoring interventions
– Championed Diversity, Inclusion and Belonging as a key business priority
– Multiple internal and external engagements on Kerry’s DI&B priorities and progress
– Sponsored Kerry’s International Women’s Day programmes
CEO T&N
Achievement: 18% (90%)
Portfolio &
Strategy
Significant strategic portfolio developments to enhance and further solidify Kerry’s position as a world-
leading Taste & Nutrition company:
– Rigorous integration of Niacet and other strategic acquisitions across all regions of Kerry to enhance
the Group’s capability in key growth platforms of Authentic Taste, Plant-based, Food Waste and
Health & Bio-Pharma
– Following a strategic portfolio review, reached agreement for the potential sale of Kerry’s Sweet
Ingredients Portfolio
– External innovation partnerships significantly evolved and c-LEcta, a technology and innovation-led
investment, now integrated in Kerry
Operating
Model &
Digital
Enablement
Strong progress in driving further alignment of Kerry’s Operating Model to build and embed capability for
excellent execution of the refreshed strategy:
– Foundational Technology capability further enhanced through focused global portfolio and product
management teams, complemented by regional technology business development teams
– Significant progress on building process technology capability, in particular in food waste reduction and
authentic taste
– Strategic raw material sourcing strategy refreshed, with a particular focus on sustainability
Stakeholder
Engagement
Significant personal focus, upon re-opening of economies and borders, on stakeholder engagement
globally vis-a-vis Kerry’s sustainable nutrition ambition and capability:
– Extensive external engagement, focused on Kerry’s technology leadership and deep specialism in key
growth platforms
– Significant progress in positioning Kerry as an externally recognised specialist in the industry through
participation at key external forums and events and appointment of Kerry Executives to external boards
and councils. Committed to continuation of multiple academic partnerships and collaborations in the
food research space
– Technology innovation elevated and showcased as a key value driver for customers and current and
future talent. Technology leadership extended to Kerry’s World Food Programme partnership in Burundi
Leadership
Team and
Succession
Planning
Strong progress in building strength, depth and diversity of Foundational Technology leadership team and
talent pipeline:
– Global Portfolio and Product Management leadership, and Regional Business Development leadership,
further strengthened through strategic hires, acquisition integration and internal promotions
– Significant progress in Foundational Technology capability building for technology teams, end-use
market teams and commercial teams
– Championed rigour in executive succession planning and development
– Significant progress in gender diversity in senior leadership (now 33% v 2025 ambition of 35%)
Kerry Group Annual Report 2022 162 Directors’ Report Remuneration Committee Report
Discretion
The Committee concluded that there was no
requirement to exercise discretion as the 2022 STIP
outturns 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 2022
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 and inflationary environment. For 2022 a pay-
out of 78% of maximum opportunity was achieved by
each Director.
Under the Policy, one third of the STIP is awarded by way
of shares or options which are issued following the end
of the two-year deferral period.
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.
2020 LTIP Awards
Set out below is the performance against targets for
the 2020 LTIP award where the three-year performance
period ended on 31 December 2022 and the award vests
in 2023.
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 Group’s adjusted EPS growth 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:
Long-Term Incentive Plan (LTIP)
LTIP Approved in 2021 (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.
Threshold
Target
Maximum
Average
Adjusted EPS
Growth
Percentage
of the Award
Which Vests
6%
10%
12%
25%
50%
100%
LTIP Approved in 2013 (LTIP 2013)
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.
Below 6% none of the award vests. Vesting between
target points is on a straight line basis.
The COVID-19 pandemic had a particularly adverse
impact on the EPS metric in 2020 (-9.4%), which largely
offset the strong adjusted EPS growth (pre dilutive
effect of disposals) achieved in 2021 (+15.3%) and
2022 (+14.9%) respectively. Accordingly, the outturn
of the EPS performance test, calculated on a constant
currency basis over the three-year period, is an annual
average adjusted EPS growth of 6.9% which results in
an award outturn of 15.3% out of a possible maximum
of 50%. When calculating the outturn for this metric,
the adjusted EPS growth % used for both 2021 and 2022
excludes the dilutive effect which the significant business
disposals (Consumer Foods’ Meats and Meals business
and the Russian business completed during those years),
had on the reported result for the adjusted EPS growth
metric as the disposals were not anticipated when the
targets were originally set three years ago. The reported
adjusted EPS growth for 2021 at 12.1% and 2022 at 7.3%
recognised a dilution of 3.2% and 7.6% respectively.
Vesting Level for EPS Metric
The outturn of the EPS performance test is an average
adjusted EPS growth of 6.9% which results in an award
outcome of 15.3% out of a possible maximum of 50%.
Kerry Group Annual Report 2022
163
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.
The awards vest in line with the following table:
Position of Kerry in the Peer Group
Percentage of the Award Which Vests
Below median
Median
0%
30%
Between median and 75th percentile
Straight line between 30% and 100%
Greater than 75th percentile
100%
Vesting Level for TSR Metric
The outturn of the measurement of the TSR metric in relation to the 2020 awards is in the 4th quartile, resulting in
an award outturn of 0% out of a possible maximum of 30% as the threshold performance level for this metric was
not achieved.
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 outturn of the measurement of the ROACE metric in relation to the 2020 award is a ROACE of 10.4% resulting in
an award outturn of 6% out of a maximum of 20%.
Kerry Group Annual Report 2022
164 Directors’ Report Remuneration Committee Report
Table 3: Overall Outturn of the 2020 LTIP Award Vesting in 2023
LTIP Metric
Weighting %
Actual Vesting %
EPS
TSR
ROACE
50%
30%
20%
15.3%
0%
6%
21.3%
The Committee was satisfied that the Executive Directors did not benefit from a windfall gain taking into account the
share price at grant and share price performance over the performance period.
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 2022 relate to awards made in 2019, 2020 and 2021 which have a three year performance period.
The 2019 awards vested in 2022. The 2020 and 2021 awards will potentially vest in 2023 and 2024 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
LTIP
Schemes
Conditional
Awards at
1 January
2022
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
2022
Share Price
at Date of
Conditional
Award Made
During the Year
Directors
Edmond Scanlon1 2013/21
83,561
Marguerite Larkin 2013/21
41,417
_
_
(9,723)
(18,973)
38,739
93,604
(2,978)
(10,560)
19,964
47,843
Gerry Behan
2013/21
49,796
(3,817)
_
(13,535)
23,567
56,011
€96.76
€96.76
€96.76
Company Secretary
Ronan Deasy
2013/21
11,772
_
(638)
(2,263)
3,366
12,237
€96.76
Note 1: In the case of Edmond Scanlon the share options vested includes 4,372 Career Share options granted prior to his appointment as an
Executive Director.
Conditional LTIP awards made on 11 March 2022, under the 2021 LTIP Plan, have a three-year performance period
and will potentially vest in March 2025. Under the 2021 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 2027.
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.
Kerry Group Annual Report 2022
165
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 2022
Share Options
Exercised
During the Year
Share Options
Vested During
the Year1
Share Options
Outstanding at
31 December 2022
Exercise
Price Per
Share
Directors
Edmond Scanlon 2
Marguerite Larkin
Company Secretary
38,683
4,541
Ronan Deasy
2,955
–
–
–
15,697
6,211
54,380
10,752
€0.125
€0.125
638
3,593
€0.125
Note 1:
Note 2:
Share Options which vested in March 2022 related to 2019 LTIP awards and 33% of the 2021 STIP (paid in March 2022). 50% of
share options vested under the LTIP are subject to a two-year deferral period and 33% of the STIP payments which are delivered
in share options are subject to a two year deferral period.
In the case of Edmond Scanlon the share options vested includes 4,372 Career Share options granted prior to his appointment
as an Executive Director.
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 plan 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
Annual Pension Accrued
During the Year
(Excluding Inflation)
$’000
Total Annual
Accrued Pension
at End of Year
$’000
Transfer Value
of Increase in
Accrued Pension
$’000
Gerry Behan
2022
2021
117
17
717
599
1,752
229
Note:
Note:
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 158.
Payments to Former Directors
No payments were made to former Directors during 2022 (2021: €nil) in respect of their duties as Directors.
Vested 2017 LTIP awards which were subject to a two-year deferral period and delivered in 2022 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 2022 (2021: €nil).
Kerry Group Annual Report 2022
166 Directors’ Report Remuneration Committee Report
Non-Executive Director Remuneration and Shareholdings
Table 7: Remuneration paid to non-Executive Directors in 2022 and Shareholdings (Audited)
Hugh Brady
Gerard Culligan
Fiona Dawson
Karin Dorrepaal
Joan Garahy
Emer Gilvarry
Michael Kerr
Tom Moran
Con Murphy
Christopher Rogers
Philip Toomey
Jinlong Wang
Fees 2022
€’000 1
Fees 2021
€’000
31 Dec 2022
Ordinary Shares
Number 1
31 Dec 2021
Ordinary Shares
Number
121
28
95
114
-
116
130
307
28
121
130
126
114
84
-
104
45
100
78
126
84
119
385
120
6,850
-
167
-
-
850
10,000
1,029
7,728
1,640
9,000
-
1,700
-
-
-
1,050
850
10,000
539
7,728
640
9,000
-
1,316
1,359
Note 1: Non-Executive Directors fees are reflective of when the individuals were appointed to or retired from the Board (see page 141).
Year-on-year fee level variances arise due to annual fee increases in line with the wider workforce and additional fees paid for
appointment to different Committees/Chair roles. Shareholdings for retired non-Executive Directors are reflected as of their date
of retirement.
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 €19k.
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 below:
Table 8: Executive Directors and Company Secretary Shareholdings
31 December
2022
Ordinary
Shares
Number
31 December
2022
Share
Options
Number
31 December
2022
Total
Number
31 December
2021
Ordinary
Shares
Number
31 December
2021
Share
Options
Number
31 December
2021
Total
Number
Directors
Edmond Scanlon
- Deferred1
Marguerite Larkin
- Deferred1
Gerry Behan
- Deferred1
Company Secretary
Ronan Deasy
- Deferred1
19,611
–
4,335
–
69,147
8,604
3,230
–
41,566
12,814
4,887
5,865
–
–
2,518
1,075
61,177
12,814
9,222
5,865
69,147
8,604
5,748
1,075
19,611
–
1,500
–
61,346
11,405
3,230
–
25,749
12,934
1,838
2,703
–
–
1,093
1,862
45,360
12,934
3,338
2,703
61,346
11,405
4,323
1,862
Note 1: The deferred shares and share options above, relate to 33% of the awarded amount of the Executive Directors 2021 STIP award and
50% of the 2018 and 2019 LTIP awards (vested in March 2021 and 2022 respectively). These awards are subject to a two year deferral
period and will be delivered in shares/share options in March 2023 and March 2024 respectively.
Shareholding Guidelines
The table below sets out the Executive Directors’ shareholding at 31 December 2022 shown as a multiple of
basic salary. Refer to the Remuneration Policy Table on page 152 in Section C for details of the Executive Director
shareholding requirements.
Kerry Group Annual Report 2022
350
300
250
200
150
100
50
0
167
Table 9: Individual Shareholding as a Multiple of Basic Salary
Executive Director
Edmond Scanlon
Marguerite Larkin2
Gerry Behan
As a Multiple of Basic Salary1
5x
2x
7x
Note 1: The share price used to calculate the above is the share price as at 31 December 2022 and the shareholding is based on all shares
held and vested option awards (including deferred) reflected in table 8 above.
Note 2: Marguerite Larkin, in line with the current policy, has to increase her shareholding to at least the minimum 2.5x basic salary through
the retention of 50% of vested annual STIP and LTIP shares/options (after sales to meet taxes).
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 2012 to 31 December 2022. Also outlined in the table on
page 168, the remuneration of the Chief Executive Officer is calculated in line with the methodology captured under
legislation which was enacted for UK incorporated companies.
10 Year Total Shareholder Return (Value of €100 Invested on 31/12/2012)
€350
€300
€250
€200
€150
€100
€50
€0
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Kerry
MSCI Europe Food Producers
E300 Food & Beverage
Table 10: Remuneration Paid to the CEO 2013 – 2022
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
2013
2014
2015
2016
2017
CEO – Edmond Scanlon
20171
2018
2019
2020
2021
2022
3,592
3,283
4,161
3,625
5,285
808
2,577
3,991
2,323
3,855
3,899
70%
57%
58%
62%
75%
75%
60%
76%
0%
72%
78%
100%
91.9%
61.8%
29.4%
62.3%
62.3%
63.7%
62.8%
32.5%
22.0%
21.3%
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 2022
168 Directors’ Report Remuneration Committee Report
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 2021 to the year ended 31 December 2022.
Year-on-year change in pay for Directors compared to the global average employee
Executive Directors
Edmond Scanlon *
Marguerite Larkin *
Gerry Behan *
Non-Executive Directors 1
Hugh Brady
Gerard Culligan
Fiona Dawson
Karin Dorrepaal
Joan Garahy
Emer Gilvarry
Michael Kerr
Tom Moran
Con Murphy
Christopher Rogers
Philip Toomey
Jinlong Wang
All Group Employees 2
2022
€’000
3,899
2,225
$’000
3,012
€’000
121
28
95
114
-
116
130
307
28
121
130
126
56
2021
€’000
2021 to 2022
Change %
2020 to 2021
Change %
2019 to 2020
Change %
3,855
2,206
$’000
3,016
€’000
114
84
-
104
45
100
78
126
84
119
385
120
47
1%
1%
66%
98%
(42%)
(28%)
(0.1%)
44%
(47%)
6%
(67%)
100%
10%
(100%)
16%
67%
144%
(67%)
2%
(66%)
5%
19%
24%
15%
-
13%
(63%)
581%
-
22%
15%
17%
15%
-
2.3%
(6%)
(6%)
-
(6%)
(6%)
100%
-
(2%)
(6%)
(1%)
(6%)
-
1.2%
*
The table shows the Executive Director’s pay in the currency of payment to ensure clarity in reflecting the year-on-year payment
comparisons.
Note 1: Non-Executive Directors fees are reflective of when the individuals were appointed to or retired from the Board (see page 141). Year-
on-year fee level variances arise due to annual increases in line with the wider workforce and additional fees paid for appointment to
different Committees/Chair roles.
Note 2: Calculated by dividing the aggregate payroll costs of employees in 2022 (excluding social welfare costs and costs related to Executive
Directors) by the average number of employees in 2022, as disclosed in note 4 to the consolidated financial statements.
Note 3: The Company performance can be seen in the 10 Year Total Shareholder Return graph on page 167.
Kerry Group Annual Report 2022
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.
169
2022
2021
Director Remuneration (0.4%)
Director Remuneration (0.5%)
Profit after tax
before NTIs (29.3%)
Dividends Paid (7%)
Taxation Paid (10.3%)
Employee Costs (53%)
Profit after tax
before NTIs (28.3%)
Dividends Paid (7.1%)
Taxation Paid (9.8%)
Employee Costs (54.3%)
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 2022 is 1.1%. 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 0.8%.
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
*
The numbers above reflect rounding.
2022
€’000*
€3,899
€50
€47
77x
31x
2021
€’000*
€3,855
€43
€41
89x
37 x
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 for 2022 is lower than 2021 which is primarily due to a change in the
profile of our median Irish employee following the divestment of our Consumer Foods Meats and Meals business
during 2021. The equivalent total remuneration figure for the CEO is largely unchanged in 2022 as compared to 2021.
The combined performance outturn under both the short-term and long-term incentive plans is broadly similar year-
on-year.
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
2022 and this ratio has also decreased year-on-year.
Kerry Group Annual Report 2022 170
170
Financial Statements
Kerry Group Annual Report 2022
FINANCIAL
STATEMENTS
Kerry Group Annual Report 2022
Kerry Group Annual Report 2022
171
171
Financial Statements
172 Independent Auditors’ Report
180 Financial Statements
188 Notes to the
Financial Statements
Supplementary Information
255 Financial Definitions
172
Financial Statements Independent Auditors’ Report
INDEPENDENT AUDITORS’ REPORT
Independent auditors’ report
to the members of Kerry Group plc
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’):
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).
– give a true and fair view of the Group’s and the
Company’s assets, liabilities and financial position as
at 31 December 2022 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 2022;
– 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;
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.
– 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.
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
2022 to 31 December 2022.
Certain required disclosures have been presented
elsewhere in the Annual Report, rather than in the
notes to the financial statements. 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 2022 Our audit approach
Overview
173
Overall materiality
– €42 million (2021: €35 million) - Consolidated financial statements.
– Based on approximately 5% of profit before taxation and non-trading items.
– €10.6 million (2021: €10.5 million) - Company financial statements.
– Based on approximately 1% of net assets.
Performance materiality
– €31.5 million (2021: €26 million) - Consolidated financial statements.
– €7.9 million (2021: €7.9 million) - Company financial statements.
Audit scope
– We conducted audit work in 36 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 23 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 80% of Consolidated revenues and in excess of
80% of Consolidated profit before taxation and non-trading items.
Key audit matters
– Goodwill and indefinite life intangible assets impairment assessment (Group).
– Income taxes (Group).
– Recoverability of Investments in Subsidiaries (Company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. 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 2022
174
Financial Statements Independent Auditors’ Report
Key audit matter
How our audit addressed the key audit matter
Goodwill and indefinite life intangible assets
impairment assessment (Group)
Refer to note 1 ‘Statement of accounting policies’ -
‘Intangible assets’ and ‘Critical accounting estimates
and judgements’ and note 12 ‘Intangible assets’.
The Group has goodwill and indefinite life
intangible assets of €4,900 million at 31 December
2022 representing approximately 40% 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. Management carried out an
impairment test as at 31 December 2022 and
concluded there was no 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.
Income taxes (Group)
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 many 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 by tax
authorities 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.
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 the current macro-economic environment and climate
related risks 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 which
included the potential impact of climate related events 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.
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 2022 to be within an acceptable range of
reasonable estimates.
Kerry Group Annual Report 2022 175
Key audit matter
How our audit addressed the key audit matter
Recoverability of Investments in Subsidiaries
(Company)
Refer to note 1 ‘Statement of accounting policies’ -
‘Investments in subsidiaries’ and note 15 ‘Investments in
subsidiaries’.
The Company has investments in subsidiaries of €843.5
million at 31 December 2022. The carrying value of the
investment in subsidiaries needs to be considered for
impairment where any indicators arise that suggest that
the carrying value of these investments would not be
recoverable.
We determined this to be a key audit matter as
investments in subsidiaries are the principal assets held
by the Company.
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 Dairy Ireland. The majority of
the Group’s components are supported by one of the
Group’s principal shared service centres in Malaysia,
Mexico and the United States.
We determined that an audit of the complete financial
information (a ‘full scope’ audit) should be performed at
23 components due to their size or risk characteristics
and to ensure appropriate coverage. These 23
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. The reporting components where an audit
of the complete financial information was performed
accounted for in excess of 80% of Consolidated revenues
and in excess of 80% of Consolidated profit before
taxation and non-trading items.
The Group team performed the audit of certain central
functions. 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.
We considered management’s assessment as to
whether there were any indicators of impairment at
year end taking into account the market capitalisation
of the Company and the procedures performed
on the future cash flow forecasts prepared for the
purposes of the impairment assessment as described
in the ‘Goodwill and indefinite life intangible assets
impairment assessment’ key audit matter above. Based
on our procedures we determined that management’s
conclusion that there are no impairment indicators was
reasonable.
In the current year, the Group team resumed site visits
which are designed so that senior team members visit
the full scope audit locations regularly on a rotational
basis. During 2022, the Group team visited component
locations in Ireland, the USA, Mexico and Malaysia. In
addition to site visits, 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 certain
management and component audit teams in locations
which we did not visit in the current year.
The meetings, both physical and virtual, 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 that
supplemented our understanding of the individual
components. The Group engagement team also
reviewed certain audit working papers in component
audit files. Post audit conference calls were held with all
full scope audit teams to discuss their audit findings.
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 and impairment testing
of goodwill and indefinite life intangible assets.
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.
Kerry Group Annual Report 2022
176
Financial Statements Independent Auditors’ Report
Based on our professional judgement, we determined
materiality for the financial statements as a whole
as follows:
Consolidated
financial
statements
Overall
materiality
€42 million
(2021: €35 million).
How we
determined
it
Approximately 5%
of profit before taxation
and non-trading items.
Rationale
for
benchmark
applied
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 non-
recurring items which are
not reflective of the Group’s
ongoing trading activity.
Company
financial
statements
€10.6 million
(2021: €10.5
million).
Approximately
1% of net
assets.
The entity
is a holding
Company
whose main
activity is the
management
of investments
in subsidiaries.
We use performance materiality to reduce to an
appropriately low level the probability that the
aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the
scope of our audit and the nature and extent of our
testing of account balances, classes of transactions
and disclosures, for example in determining sample
sizes. Our performance materiality was 75% of overall
materiality, amounting to €31.5 million (Group audit) and
€7.9 million (Company audit).
In determining the performance materiality, we
considered a number of factors - the history of
misstatements, risk assessment and aggregation
risk and the effectiveness of controls - and concluded
that an amount at the upper end of our normal range
was appropriate.
We agreed with the Audit Committee that we would
report to them misstatements identified during our
audit above €1.9 million (Group audit) (2021: €1.7 million)
and €532,000 (Company audit) (2021: €525,000) as well
as misstatements below that amount that, in our view,
warranted reporting for qualitative reasons.
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
the current macroeconomic environment 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
9.8.6R(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.
Kerry Group Annual Report 2022 177
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.
– 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.
Corporate Governance Statement
The Listing Rules and ISAs (Ireland) require us to review
the directors’ statements in relation to going concern,
longer-term viability and that part of the Corporate
Governance Statement relating to the Company’s
compliance with the provisions of the UK Corporate
Governance Code and the Irish Corporate Governance
Annex (the ‘Code’) specified for our review. Our additional
responsibilities with respect to the Corporate Governance
Statement as other information are described in the
Reporting on other information section of this report.
Based on the responsibilities described above and
our work undertaken in the course of the audit, ISAs
(Ireland) and the Companies Act 2014 require us to also
report certain opinions and matters as described below.
– 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
2022 is consistent with the financial statements and
has been prepared in accordance with the applicable
legal requirements.
– 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).
– 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.
– 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.
Based on the work undertaken as part of our audit, we
have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent
with the financial statements and our knowledge obtained
during the audit and we have nothing material to add or
draw attention to in relation to:
– The directors’ confirmation that they have carried out a
robust assessment of the emerging and principal risks;
– The disclosures in the Annual Report that describe those
principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are
being managed or mitigated;
– The directors’ statement in the financial statements
about whether they considered it appropriate to
adopt the going concern basis of accounting in
preparing them, and their identification of any material
uncertainties to the Group’s and Company’s ability to
continue to do so over a period of at least twelve months
from the date of approval of the financial statements;
– The directors’ explanation as to their assessment of
the Group’s and Company’s prospects, the period this
assessment covers and why the period is appropriate;
and
– The directors’ statement as to whether they have a
reasonable expectation that the Company will be able
to continue in operation and meet its liabilities as they
fall due over the period of its assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
Our review of the directors’ statement regarding the
longer-term viability of the Group was substantially less in
scope than an audit and only consisted of making inquiries
and considering the directors’ process supporting their
statement; checking that the statement is in alignment
with the relevant provisions of the UK Corporate
Governance Code; and considering whether the statement
is consistent with the financial statements and our
knowledge and understanding of the Group and Company
and their environment obtained in the course of the audit.
Kerry Group Annual Report 2022
178
Financial Statements Independent Auditors’ Report
In addition, based on the work undertaken as part of
our audit, we have concluded that each of the following
elements of the Corporate Governance Statement is
materially consistent with the financial statements and
our knowledge obtained during the audit:
– The directors’ statement that they consider the
Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary
for the members to assess the Group’s and Company’s
position, performance, business model and strategy;
– The section of the Annual Report that describes the
review of effectiveness of risk management and internal
control systems; and
– The section of the Annual Report describing the work of
the Audit Committee.
We have nothing to report in respect of our responsibility
to report when the directors’ statement relating to the
Company’s compliance with the Code does not properly
disclose a departure from a relevant provision of the
Code specified under the Listing Rules for review by the
auditors.
Responsibilities for the financial statements
and the audit
Responsibilities of the directors for the financial
statements
As explained more fully in the Directors’ Responsibility
Statement set out on pages 114-115, 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.
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities,
including fraud, is detailed below.
Based on our understanding of the Group and industry,
we identified that the principal risks of non-compliance
with laws and regulations related to breaches of
environmental regulations, food safety and hygiene
regulations and health and safety regulations, and we
considered the extent to which non-compliance might
have a material effect on the financial statements. We
also considered those laws and regulations that have
a direct impact on the preparation of the financial
statements such as tax legislation and the Irish
Companies Act 2014. We evaluated management’s
incentives and opportunities for fraudulent manipulation
of the financial statements (including the risk of override
of controls), and determined that the principal risks
were related to posting inappropriate journal entries to
manipulate financial results and potential management
bias in accounting estimates. Audit procedures
performed by the engagement team included:
– Discussions with the Audit Committee, management,
legal and internal audit including consideration of
known or suspected instances of non-compliance with
laws and regulations and fraud;
– Reading the meeting minutes of the Board of
Directors, Audit, Risk Oversight, Governance,
Nomination and Sustainability and Remuneration
Committees;
– Considered the results of reporting from component
teams relating to compliance with applicable laws and
regulations and procedures performed to address
assessed fraud risk;
– Assessment of matters reported on the Group’s
whistleblowing service referred to as the ‘Speak
Up Programme’ and the results of the Ethics and
Compliance Team’s investigation in so far as they
related to the financial statements;
– Inspection of internal audit reports in so far as they
related to the financial statements;
– Evaluating whether there was evidence of
management bias that represents a risk of material
misstatement due to fraud;
– Identifying and testing journal entries, including
manual revenue entries, unusual account
combinations and consolidation journals based on our
risk assessment; and
– Designing audit procedures to incorporate elements of
unpredictability around the nature, timing or extent of
audit procedures performed.
Kerry Group Annual Report 2022 179
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 7 years,
covering the years ended 31 December 2016 to 31
December 2022.
Enda McDonagh
for and on behalf of PricewaterhouseCoopers
Chartered Accountants and Statutory Audit Firm
Dublin
15 February 2023
There are inherent limitations in the audit procedures
described above. We are less likely to become aware of
instances of non-compliance with laws and regulations
that are not closely related to events and transactions
reflected in the financial statements. Also, the risk of not
detecting a material misstatement due to fraud is higher
than the risk of not detecting one resulting from error,
as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or
through collusion.
Our audit testing might include testing complete
populations of certain transactions and balances,
possibly using data auditing techniques. However, it
typically involves selecting a limited number of items
for testing, rather than testing complete populations.
We will often seek to target particular items for testing
based on their size or risk characteristics. In other
cases, we will use audit sampling to enable us to draw a
conclusion about the population from which the sample
is selected.
A further description of our responsibilities
for the audit of the financial statements is
located on the 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.
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.
Kerry Group Annual Report 2022 180
Financial Statements
Consolidated Income Statement
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022
Before
Non-
Trading
Items
2022
€’m
Non-
Trading
Items
2022
€’m
Before
Non-
Trading
Items
2021
€’m
Non-
Trading
Items
2021
€’m
Total
2022
€’m
Notes
Continuing operations
Revenue
Earnings before interest, tax, depreciation
and amortisation
Depreciation (net) and intangible asset amortisation
Non-trading items
Operating profit
Finance income
Finance costs
2
8,771.9
1/2/3
1,216.1
3
5
3
6
6
(304.3)
6.6
(72.8)
-
-
-
8,771.9
7,350.6
1,216.1
1,077.0
(304.3)
(282.3)
-
-
-
6.6
0.3
(72.8)
(70.2)
(0.4)
-
-
(146.2)
(146.2)
-
911.8
(146.2)
765.6
794.7
Share of joint ventures’ results after taxation
14
(0.4)
Profit before taxation
845.2
(146.2)
699.0
724.8
91.5
816.3
Total
2021
€’m
7,350.6
1,077.0
(282.3)
91.5
886.2
0.3
(70.2)
-
-
-
-
91.5
91.5
-
-
-
7
(114.5)
22.0
(92.5)
(96.2)
42.9
(53.3)
730.7
(124.2)
606.5
628.6
134.4
763.0
Income taxes
Profit after taxation
Attributable to:
Equity holders of the parent
Non-controlling interests
606.4
0.1
606.5
Cent
341.9
341.3
763.0
-
763.0
Cent
430.6
429.9
Earnings per A ordinary share
- basic
- diluted
9
9
Kerry Group Annual Report 2022 Consolidated Statement of Comprehensive Income
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022
181
Profit after taxation
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
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 recognised directly in total other comprehensive income
Total comprehensive income
Attributable to:
Equity holders of the parent
Non-controlling interests
Notes
2022
€’m
2021
€’m
606.5
763.0
5.9
(2.8)
0.8
(0.2)
(0.3)
(0.9)
-
0.1
24
24
17
152.2
217.7
5
14.9
16.2
26
17
(13.4)
7.6
165.0
110.2
(20.0)
323.0
771.5
1,086.0
771.4
1,086.0
0.1
-
771.5
1,086.0
Kerry Group Annual Report 2022
182
Financial Statements
Consolidated Balance Sheet
AS AT 31 DECEMBER 2022
Non-current assets
Property, plant and equipment
Intangible assets
Financial asset investments
Investments 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
Total liabilities directly associated with assets classified as held for sale
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
Equity
Share capital
Share premium
Other reserves
Retained earnings
Equity attributable to equity holders of the parent
Non-controlling interests
Total equity
31 December
2022
€’m
31 December
2021
€’m
Notes
11
12
13
14
23
26
17
16
19
23
23
18
20
23/24
23/24
25
21
18
23/24
23/24
26
22
17
25
21
27
2,099.3
5,720.0
2,091.3
5,580.7
58.9
41.7
0.3
95.6
71.9
49.9
21.7
34.8
90.3
67.8
8,087.7
7,936.5
1,354.4
1,423.8
970.0
59.5
388.0
1,204.2
1,181.7
1,039.1
15.2
18.7
4,195.7
3,458.9
12,283.4
11,395.4
1,966.5
1,791.5
701.1
18.4
190.9
15.3
3.4
19.7
5.6
40.1
141.6
13.6
3.0
-
2,915.3
1,995.4
2,432.6
3,118.0
20.3
30.2
142.6
452.3
50.5
16.0
3,144.5
6,059.8
6,223.6
22.1
398.7
64.3
5,736.8
6,221.9
1.7
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
-
6,223.6
5,601.2
The financial statements were approved by the Board of Directors on 15 February 2023 and signed on its behalf by:
Tom Moran, Chairman
Edmond Scanlon, Chief Executive Officer
Kerry Group Annual Report 2022
Company Balance Sheet
AS AT 31 DECEMBER 2022
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
183
31 December
2022
€’m
31 December
2021
€’m
Notes
11
15
23
19
20
21
27
0.1
843.5
843.6
-
231.0
231.0
0.2
843.5
843.7
0.1
218.9
219.0
1,074.6
1,062.7
5.9
5.9
0.1
0.1
6.0
10.0
10.0
0.1
0.1
10.1
1,068.6
1,052.6
22.1
398.7
132.3
515.5
22.1
398.7
109.4
522.4
1,068.6
1,052.6
The Company earned a profit after taxation of €166.7m for the financial year ended 31 December 2022 (2021: €319.8m).
The financial statements were approved by the Board of Directors on 15 February 2023 and signed on its behalf by:
Tom Moran, Chairman
Edmond Scanlon, Chief Executive Officer
Kerry Group Annual Report 2022
184
Financial Statements
Kerry Group Annual Report 2022
Consolidated Statement of Changes in Equity
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022
Attributable to equity holders of the parent
Share
Capital
€’m
Share
Premium
€’m
Other
Reserves
€’m
Retained
Earnings
€’m
Notes
Non-
controlling
interests
€’m
Total
€’m
Total
equity
€’m
Group:
At 1 January 2021
Profit after taxation
Other comprehensive expense
Total comprehensive income
Shares issued during the financial year
Dividends paid
Share-based payment expense
At 31 December 2021
Profit after taxation
Other comprehensive income
Total comprehensive income
Shares issued during the financial year
Dividends paid
Share-based payment expense
Non-controlling interests arising on
acquisition
27
10
28
27
10
28
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
606.4
171.0
171.0
(6.0)
600.4
606.4
165.0
771.4
-
-
22.9
-
-
-
(173.6)
(173.6)
-
-
22.9
-
-
-
-
-
-
-
-
-
0.1
-
0.1
-
-
-
1.6
4,655.5
763.0
323.0
1,086.0
-
(157.5)
17.2
5,601.2
606.5
165.0
771.5
-
(173.6)
22.9
1.6
At 31 December 2022
22.1
398.7
64.3
5,736.8
6,221.9
1.7
6,223.6
Other Reserves comprise the following:
Capital
Redemption
Reserve
€’m
Other
Undenominated
Capital
€’m
Note
Share-
Based
Payment
Reserve
€’m
Translation
Reserve
€’m
Hedging
Reserve
€’m
Cost of
Hedging
Reserve
€’m
Total
€’m
At 1 January 2021
Other comprehensive
income/(expense)
Share-based payment expense
28
At 31 December 2021
Other comprehensive income
Share-based payment expense
28
At 31 December 2022
1.7
-
-
1.7
-
-
1.7
0.3
90.2
(472.0)
2.6
(2.3)
(379.5)
-
233.9
(1.2)
-
-
17.2
-
0.3
107.4
(238.1)
-
-
-
167.1
22.9
-
0.3
130.3
(71.0)
-
1.4
3.1
-
4.5
-
-
232.7
17.2
(2.3)
(129.6)
0.8
171.0
-
(1.5)
22.9
64.3
The nature and purpose of each reserve within shareholders’ equity are described in note 35.
185
Total
€’m
873.1
319.8
-
Company Statement of Changes in Equity
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022
Share
Capital
€’m
Share
Premium
€’m
Other
Reserves
€’m
Retained
Earnings
€’m
Notes
Company:
At 1 January 2021
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
Profit after taxation
Other comprehensive income
Total comprehensive income
Shares issued during the financial year
Dividends paid
Share-based payment expense
At 31 December 2022
Other Reserves comprise the following:
At 1 January 2021
Share-based payment expense
At 31 December 2021
Share-based payment expense
At 31 December 2022
8
27
10
28
8
27
10
28
Note
28
28
22.1
398.7
92.2
-
-
-
-
-
-
-
-
-
-
-
-
22.1
398.7
-
-
-
-
-
-
-
-
-
-
-
-
22.1
398.7
-
-
-
-
-
17.2
109.4
-
-
-
-
-
22.9
132.3
360.1
319.8
-
319.8
319.8
-
-
(157.5)
(157.5)
-
17.2
522.4
1,052.6
166.7
166.7
-
-
166.7
166.7
-
-
(173.6)
(173.6)
-
22.9
515.5
1,068.6
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
90.2
17.2
107.4
22.9
130.3
Total
€’m
92.2
17.2
109.4
22.9
132.3
The nature and purpose of each reserve within shareholders’ equity are described in note 35.
Kerry Group Annual Report 2022
186
Financial Statements
Consolidated Statement of Cash Flows
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022
Cash flows from operating activities
Profit before taxation
Adjustments for:
Depreciation (net)
Intangible asset amortisation
Share of joint ventures’ results after taxation
Non-trading items income statement charge/(income)
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
Purchase of share in joint ventures
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)
Proceeds from borrowings
Net cash movement due to financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the financial year
Exchange translation adjustment on cash and cash equivalents
Cash and cash equivalents at end of the financial year
Reconciliation of Net Cash Flow to Movement in Net Debt
Net (decrease)/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
Net debt at end of the financial year
Notes
2022
€’m
2021
€’m
699.0
816.3
221.6
82.7
0.4
146.2
66.2
201.5
80.8
(3.9)
(91.5)
69.9
(224.0)
(184.3)
(15.7)
(85.4)
(27.2)
863.8
(80.0)
5.4
(67.4)
721.8
(14.7)
(76.1)
(0.7)
797.3
(72.0)
0.4
(71.7)
654.0
(221.0)
(300.4)
38.1
1.4
4.0
0.7
(353.8)
(1,084.9)
(1.8)
(10.4)
(20.4)
(15.2)
(583.1)
(173.6)
(35.1)
-
(3.0)
2.0
(209.7)
(71.0)
1,033.8
7.0
969.8
(71.0)
1.0
(70.0)
1.4
(29.7)
(98.3)
(2,049.9)
(2,148.2)
(69.2)
(18.9)
(4.4)
-
775.2
(628.7)
(157.5)
(34.9)
-
(1,093.3)
1,705.0
419.3
444.6
560.3
28.9
1,033.8
444.6
(611.7)
(167.1)
(0.1)
(19.1)
(186.3)
(1,863.6)
(2,049.9)
(74.2)
(2,217.4)
(2,124.1)
14
5
6
29
29
5
30
13
14
5
10
29
27
29
29
29
23
11/29
23/29
Kerry Group Annual Report 2022
Company Statement of Cash Flows
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022
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 (decrease)/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
187
Notes
2022
€’m
2021
€’m
162.1
317.5
0.1
-
(0.6)
11.3
172.9
0.6
173.5
-
-
-
0.1
-
(0.5)
(29.2)
287.9
0.5
288.4
(129.1)
(1.7)
(130.8)
(173.6)
(157.5)
-
-
(173.6)
(157.5)
(0.1)
0.1
-
0.1
-
0.1
29
15
10
27
29
Kerry Group Annual Report 2022
188
Notes to the Financial Statements
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022
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
and liabilities 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.
The Group has determined that earnings before interest,
tax, depreciation (net) and amortisation (EBITDA) is a key
performance metric used by the Group’s Chief Operating
Decision Maker (the Executive Directors). From 1 January
2022 EBITDA replaces trading profit as one of the key
measures utilised in assessing the performance of the
Group. EBITDA represents profit before finance income
and costs, income taxes, depreciation (net of capital
grant amortisation), intangible asset amortisation, non-
trading items and share of joint ventures’ results after
taxation and is a widely used measure in the evaluation
of profitability and performance. This has been reflected
in the presentation of the Group’s Consolidated Income
Statement and note 2 ‘Analysis of results’, as permitted
under IAS 1 ‘Presentation of Financial Statements’.
The Group has updated its ‘Basis of consolidation’ in
respect of a new non-controlling interests policy.
In the 2022 consolidated financial statements, the Group
has re-presented corresponding 2021 balances to align
with current year presentation in the Consolidated Income
Statement, note 2 ‘Analysis of results’, note 3 ‘Operating
profit’, note 4 ‘Total staff numbers and costs’, note 12
‘Intangible assets’, note 24 ‘Financial instruments’ and note
28 ‘Share-based payments’.
Certain income statement headings and other financial
measures included in the consolidated financial statements
are not defined by IFRS. The Group makes this distinction
to enhance the understanding of the financial performance
of the business as outlined in the Supplementary
Information section pages 255-259.
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 and position of the Group, including
liquidity and access to financing as outlined in note 24
and the potential impacts of climate, geopolitical and
macroeconomic environment related risks on profitability.
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 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 gained control until
the date the Company ceased to control the subsidiary. All
inter-group transactions and balances are eliminated on
consolidation.
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
1. Statement of accounting policies (continued)
Basis of consolidation (continued)
Non-controlling interests
Non-controlling interests represent the portion of the
equity of a subsidiary not attributable either directly or
indirectly to the Group and are presented separately in
the Consolidated Income Statement and within equity in
the Consolidated Balance Sheet, distinguished from the
Group’s shareholders’ equity. Where not all of the equity of
a subsidiary is acquired, the non-controlling interests are
recognised at the non-controlling interest’s share of the
acquiree’s net identifiable assets.
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’
results after taxation’ 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 both segments 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 & other which affect
the nature, amount, timing and uncertainty of revenue and
cash flows are similar.
189
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. EBITDA 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, are reported along with the
elimination of inter-group activities under the heading
‘Group Eliminations and Unallocated’. 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 Dairy Ireland. The Taste & Nutrition
segment is a world leading provider of taste and nutrition
solutions for the food, beverage and pharmaceutical
markets. Utilising a broad range of ingredient solutions
to innovate with our customers to create great tasting
products, with improved nutrition and functionality, while
ensuring a better impact for the planet. Kerry is driven to
be our customers’ most valued partner, creating a world of
sustainable nutrition through solving our customers’ most
complex challenges with differentiated solutions. The Taste
& Nutrition segment supplies industries across Europe,
Americas and APMEA (Asia Pacific, Middle East and Africa).
The Dairy Ireland segment is a leading Irish provider of
value-add dairy ingredients and consumer products. Our
dairy ingredients product portfolio includes functional
proteins and nutritional bases, while our dairy consumer
brands can be found in chilled cabinets in retailers across
Ireland and 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:
Buildings
Plant, machinery and equipment
-
-
- Motor vehicles
2% - 5%
7% - 25%
20%
The charge in respect of periodic depreciation is calculated
after establishing an estimate of the asset’s useful
economic life and the expected residual value at the end of
its useful economic life. Increasing/(decreasing) an asset’s
expected useful economic 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 economic lives of Group assets are determined
by management at the time the assets are acquired and
reviewed annually for appropriateness. These useful
economic lives are based on historical experience with
similar assets as well as anticipation of future events, which
may impact their useful economic life, such as changes
in technology or the location of the asset and its climate
related risk. Historically, changes in useful economic lives
or residual values have not resulted in material changes to
the Group’s depreciation charge.
Kerry Group Annual Report 2022
190
1. Statement of accounting policies (continued)
Property, plant and equipment (continued)
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.
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 economic 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 nil.
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 and liabilities classified as held for sale
Assets and related liabilities 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 assets and related liabilities
are available for immediate sale in their 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 and related liabilities classified as held for sale are
measured at the lower of carrying value or 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 economic 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 economic life.
In arriving at the conclusion that these brand related
intangibles have an indefinite useful economic 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 economic
lives, which predominantly range from 2 to 20 years, by
charging equal annual instalments to the Consolidated
Income Statement. The useful economic 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
economic 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 2022Financial Statements Notes to the Financial Statements
191
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.
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;
the cost of the asset can be measured reliably; and
the Group controls the asset.
Computer software is amortised over its expected useful
economic 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 economic 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.
Kerry Group Annual Report 2022
192
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 predominantly 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, impairment of
goodwill and intangible assets, costs relating to material
restructuring or material transformation plans and material
transaction, integration and restructuring costs associated
with acquisitions. Non-trading items are disclosed in note 5
to the consolidated financial statements and are presented
separately in the Consolidated Income Statement.
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 2022Financial Statements Notes to the Financial Statements
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.
193
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 other comprehensive income (‘OCI’) or
through profit or loss); and
those to be measured at amortised cost.
Kerry Group Annual Report 2022
194
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. The amount
of consideration that is unconditional approximates to
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 (FVPL)
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 2022Financial Statements Notes to the Financial Statements
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.
195
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.
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. These estimates may
depend upon the outcome of future events and may need
to be revised as circumstances change.
Kerry Group Annual Report 2022
196
1. Statement of accounting policies (continued)
Critical accounting estimates and judgements
(continued)
Impairment of goodwill and intangible assets (Estimation)
(continued)
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 impact of climate change
has also been considered, specifically on the timing and the
extent of costs and cash outflows and is based on a critical
evaluation of the facts currently available to the Group
taking into account factors such as, existing technology,
currently enacted laws and regulations and knowledge
and expertise within the Group. Changes to legislation and
government policy relating to climate change have been
considered in the assessment of the impact of climate
change. The measurement of the impact of climate change
is based on reasonable and supportable assumptions that
represent management’s current best estimate of the
range of conditions that will exist in the foreseeable future.
The potential impact of climate related events considered
as part of the sensitivity analysis 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 accelerating
inflationary cost pressures, disruption of global supply
chains and the challenges presented in China with localised
restrictions. 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 not considered likely to occur in the next
financial year.
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 climate related risk and 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 economic 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’.
The useful economic lives of intangible assets are
determined by management at the time the assets are
acquired and reviewed annually for appropriateness,
including assessment as finite or indefinite. These useful
economic lives are based on historical experience with
similar assets as well as anticipation of future events, such
as changes in technology, the location of the asset and its
climate related risk.
Intangible assets are disclosed in note 12 and
business combinations 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 2022Financial Statements Notes to the Financial Statements
197
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 2022 but do not have a material
effect on the results or financial position of the Group:
Effective Date
- 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
1 January 2022
1 January 2022
1 January 2022
1 January 2022
1 January 2022
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:
Effective Date
- IAS 1 (Amendments)
Presentation of Financial Statements
- IFRS 17
Insurance Contracts
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
- IFRS 16 (Amendments)
Leases
1 January 2023
1 January 2024
Kerry Group Annual Report 2022
198
2. Analysis of results
The Group has determined it has two reportable segments: Taste & Nutrition and Dairy Ireland. The Taste & Nutrition segment
is a world leading provider of taste and nutrition solutions for the food, beverage and pharmaceutical markets. Utilising a broad
range of ingredient solutions to innovate with our customers to create great tasting products, with improved nutrition and
functionality, while ensuring a better impact for the planet. Kerry is driven to be our customers’ most valued partner, creating
a world of sustainable nutrition through solving our customers’ most complex challenges with differentiated solutions. The
Taste & Nutrition segment supplies industries across Europe, Americas and APMEA (Asia Pacific, Middle East and Africa). The
Dairy Ireland segment is a leading Irish provider of value-add dairy ingredients and consumer products. Our dairy ingredients
product portfolio includes functional proteins and nutritional bases, while our dairy consumer brands can be found in chilled
cabinets in retailers across Ireland and the UK.
Prior year 31 December 2021 has been re-presented to reflect the changes in our reporting segments in line with how the
Chief Operating Decision Maker (the Executive Directors) assesses the Group’s performance from 1 January 2022. The Irish
dairy processing activities, previously reported in Taste & Nutrition, have been combined with the remaining dairy activities
of the Consumer Foods business and this segment is named Dairy Ireland. Included within the Dairy Ireland 31 December
2021 comparatives are the results of the Consumer Foods Meats and Meals business which was disposed by the Group on 27
September 2021.
Taste &
Nutrition
2022
€’m
Dairy
Ireland
2022
€’m
Group
Eliminations
and
Unallocated
2022
€’m
Taste &
Nutrition
2021
€’m
Total
2022
€’m
Dairy
Ireland
2021
€’m
Group
Eliminations
and
Unallocated
2021
€’m
Total
2021
€’m
External revenue
7,387.0
1,384.9
-
8,771.9
5,689.3
1,661.3
-
7,350.6
Inter-segment revenue
29.6
154.0
(183.6)
-
40.1
116.3
(156.4)
-
Revenue
EBITDA*
Depreciation (net)
Intangible asset amortisation
Non-trading items
Operating profit
Finance income
Finance costs
Share of joint ventures’ results
after taxation
Profit before taxation
Income taxes
Profit after taxation
Attributable to:
Equity holders of the parent
Non-controlling interests
7,416.6
1,538.9
(183.6)
8,771.9
5,729.4
1,777.6
(156.4)
7,350.6
1,220.1
70.7
(74.7)
1,216.1
1,013.5
136.0
(72.5)
1,077.0
(221.6)
(82.7)
(146.2)
765.6
6.6
(72.8)
(0.4)
699.0
(92.5)
606.5
606.4
0.1
606.5
(201.5)
(80.8)
91.5
886.2
0.3
(70.2)
-
816.3
(53.3)
763.0
763.0
-
763.0
*
EBITDA represents profit before finance income and costs, income taxes, depreciation (net of capital grant amortisation),
intangible asset amortisation, non-trading items and share of joint ventures’ results after taxation.
Segment assets and liabilities
Assets
Liabilities
Net assets
Other segmental information
Property, plant and equipment
additions
8,583.1
766.2
2,934.1 12,283.4
7,801.9
661.9
2,931.6 11,395.4
(1,897.0)
(289.4)
(3,873.4) (6,059.8)
(1,534.1)
(306.4)
(3,953.7)
(5,794.2)
6,686.1
476.8
(939.3)
6,223.6
6,267.8
355.5
(1,022.1)
5,601.2
238.9
17.6
0.3
256.8
264.4
28.2
0.2
292.8
Depreciation (net)
200.1
20.5
Intangible asset additions
Intangible asset amortisation
Share of joint ventures’ results
after taxation
0.4
43.0
0.4
0.1
0.2
-
1.0
11.7
39.5
-
221.6
169.4
31.5
12.2
82.7
0.4
1.3
28.9
-
0.2
3.9
-
0.6
32.6
48.0
-
201.5
34.1
80.8
-
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
199
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 & other 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 & other
External revenue
Taste &
Nutrition
2022
€’m
4,925.2
1,959.1
502.7
Dairy
Ireland
2022
€’m
1,286.2
98.7
-
Total
2022
€’m
6,211.4
2,057.8
502.7
Taste &
Nutrition
2021
€’m
3,837.5
1,515.2
336.6
Dairy
Ireland
2021
€’m
1,587.4
73.9
-
Total
2021
€’m
5,424.9
1,589.1
336.6
7,387.0
1,384.9
8,771.9
5,689.3
1,661.3
7,350.6
Analysis by primary geographic market
Disaggregation of revenue from external customers is analysed by geographical split:
Republic of Ireland
Rest of Europe
Americas
APMEA
External revenue
Taste &
Nutrition
2022
€’m
82.2
1,459.8
4,172.2
1,672.8
7,387.0
Dairy
Ireland
2022
€’m
458.2
768.8
84.0
73.9
1,384.9
Total
2022
€’m
540.4
2,228.6
4,256.2
1,746.7
8,771.9
Taste &
Nutrition
2021
€’m
64.1
1,168.7
3,137.5
1,319.0
5,689.3
Dairy
Ireland
2021
€’m
394.6
1,089.6
97.7
79.4
1,661.3
Total
2021
€’m
458.7
2,258.3
3,235.2
1,398.4
7,350.6
Information about geographical areas
Europe
2022
€’m
Americas
2022
€’m
APMEA
2022
€’m
Total
2022
€’m
Europe
2021
€’m
Americas
2021
€’m
APMEA
2021
€’m
Total
2021
€’m
Assets by location
5,357.9
5,486.3
1,439.2
12,283.4
5,205.1
4,959.2
1,231.1
11,395.4
Property, plant and equipment
additions
55.8
147.4
53.6
256.8
83.7
152.5
56.6
292.8
Intangible asset additions
12.1
0.1
-
12.2
33.1
1.0
-
34.1
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 €540.4m (2021: €458.7m). The non-current assets located in the Republic of Ireland are €1,503.6m (2021: €1,598.4m).
Revenues from external customers include €958.9m (2021: €1,379.5m) in the UK and €3,399.8m (2021: €2,610.7m) in the USA.
The non-current assets in the UK are €353.3m (2021: €391.9m) and in the USA are €3,267.1m (2021: €3,166.1m). For clarity the
UK is included within Europe in the tables above.
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 2022
200
3. Operating profit
(i) Analysis of costs by nature
Revenue
Less operating costs:
Raw materials and consumables
Other general overheads
Staff costs
Loss allowances on trade receivables
Foreign exchange gains
Change in inventories of finished goods
Share of joint ventures’ results after taxation*
Continuing
Operations
2022
€’m
Continuing
Operations
2021
€’m
8,771.9
7,350.6
Notes
4,940.0
1,186.1
1,495.0
11.4
(0.9)
(75.8)
-
4,023.2
1,000.8
1,349.3
9.8
(8.6)
(97.0)
(3.9)
4
19
16
14
Earnings before interest, tax, depreciation and amortisation
1,216.1
1,077.0
*
Share of joint ventures’ results after taxation was not included in the Group’s EBITDA, but as a separate line item on the
face of the Consolidated Income Statement for the year end 31 December 2022.
Depreciation (net):
- property, plant and equipment
- right-of-use assets
- capital grants amortisation
Intangible asset amortisation
Non-trading items
Operating profit
And is stated after charging:
Research and development costs
(ii) Auditors’ remuneration
11(i)
11(ii)
21
12
5
190.9
172.0
32.7
(2.0)
82.7
146.2
765.6
31.4
(1.9)
80.8
(91.5)
886.2
303.2
297.2
PwC
Ireland
2022
€’m
PwC
Other
2022
€’m
PwC
Worldwide
2022
€’m
PwC
Ireland
2021
€’m
PwC
Other
2021
€’m
PwC
Worldwide
2021
€’m
Statutory disclosure:
Group audit
Other assurance services
Total assurance services
Tax advisory services
Other non-audit services
Total non-audit services
1.4
0.1
1.5
-
-
-
Total auditors’ remuneration
1.5
Assurance services
Non-audit services
Total
2.1
-
2.1
-
0.2
0.2
2.3
3.5
0.1
3.6
-
0.2
0.2
3.8
95%
5%
100%
1.4
0.1
1.5
-
-
-
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%
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 €4,838 (2021: €4,720) which are due to the Group’s auditor in respect of the Parent Company.
Reimbursement of auditors’ expenses amounted to €0.2m (2021: €0.2m).
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
4. Total staff numbers and costs
The average number of people employed by the Group was:
Taste &
Nutrition
2022
Number
Dairy
Ireland
2022
Number
Total
2022
Number
Taste &
Nutrition
2021
Number
Dairy
Ireland
2021
Number
Europe
Americas
APMEA
4,688
11,037
5,998
21,723
1,628
6,316
4,513
5,427
-
-
11,037
10,034
5,998
5,221
-
-
1,628
23,351
19,768
5,427
25,195
201
Total
2021
Number
9,940
10,034
5,221
The aggregate payroll costs of employees (including Executive Directors) was:
Europe
Americas
APMEA
Taste &
Nutrition
2022
€’m
337.3
806.3
243.3
Dairy
Ireland
2022
€’m
108.1
-
-
Total
2022
€’m
445.4
806.3
243.3
Taste &
Nutrition
2021
€’m
281.8
615.0
188.4
Dairy
Ireland
2021
€’m
264.1
-
-
Total
2021
€’m
545.9
615.0
188.4
1,386.9
108.1
1,495.0
1,085.2
264.1
1,349.3
Social welfare costs of €175.9m (2021: €145.6m) and share-based payment expense of €22.9m (2021: €17.2m) are included in
payroll costs. Pension costs included in the payroll costs are disclosed in note 26.
Prior year 31 December 2021 has been re-presented to reflect the changes in our reporting segments in line with how the
Chief Operating Decision Maker (the Executive Directors) assesses the Group’s performance from 1 January 2022. The Irish
dairy processing activities, previously reported in Taste & Nutrition, have been combined with the remaining dairy activities
of the Consumer Foods business and this segment is named Dairy Ireland. Included within the Dairy Ireland 31 December
2021 comparatives are the results of the Consumer Foods Meats and Meals business which was disposed by the Group on 27
September 2021.
Kerry Group Annual Report 2022
202
5. Non-trading items
(Loss)/profit on disposal of businesses and assets
Global Business Services expansion
Acquisition integration costs
Accelerate Operational Excellence
Tax on above
Tax on inter-group transfer
Non-trading items (net of related tax)
(i) Loss on disposal of businesses and assets
Property, plant and equipment - disposed
Goodwill
Brand related intangible assets
Computer software
Deferred tax assets
Cash disposed
Inventories
Assets classified as held for sale - disposed
Assets classified as held for sale - impaired
Trade and other receivables
Tax receivables
Trade and other payables
Other non-current liabilities
Consideration
Cash received
Deferred consideration
Disposal related costs
Cumulative exchange difference on translation recycled on disposal
Loss on disposal of businesses and assets
Net cash inflow on disposal:
Cash received
Less: cash disposed
Less: disposal related costs paid
Notes
(i)
(ii)
(iii)
(iv)
7
(v)/7
Businesses
2022
€’m
Notes
11
12
12
12
18
(16.0)
(9.6)
(2.1)
(0.2)
-
(4.6)
(21.0)
-
-
(9.0)
(0.4)
20.0
3.0
2022
€’m
(63.1)
(13.6)
(20.3)
(49.2)
(146.2)
22.0
-
(124.2)
*Assets
2022
€’m
(28.6)
(0.3)
(0.4)
(0.3)
-
-
-
(3.0)
(5.6)
-
-
-
-
2021
€’m
179.7
(33.3)
(54.9)
-
91.5
26.3
16.6
134.4
Total
2022
€’m
(44.6)
(9.9)
(2.5)
(0.5)
-
(4.6)
(21.0)
(3.0)
(5.6)
(9.0)
(0.4)
20.0
3.0
(39.9)
(38.2)
(78.1)
1.8
8.5
(18.5)
(8.2)
(14.9)
(63.0)
Businesses
2022
€’m
1.8
(4.6)
(12.4)
(15.2)
51.7
-
(13.6)
38.1
-
(0.1)
*Assets
2022
€’m
51.7
-
(13.6)
38.1
53.5
8.5
(32.1)
29.9
(14.9)
(63.1)
Total
2022
€’m
53.5
(4.6)
(26.0)
22.9
*
Assets represent non-current assets and assets classified as held for sale.
(Loss)/profit of disposal of businesses
As previously announced on 4 April 2022, the Group suspended its operations in Russia and Belarus. This suspension was
managed in an orderly manner, during which the Group continued to pay employees, fulfilled its legal obligations and a decision
was made to classify these businesses as held for sale during H1 2022. On 7 July 2022, the Group reached agreement to sell 100%
of the share capital of Unitary Manufacturing Enterprise ‘Vitella’, a Taste & Nutrition entity based in Belarus.
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
203
5. Non-trading items (continued)
(i) (Loss)/profit on disposal of businesses and assets (continued)
(Loss)/profit of disposal of businesses (continued)
On 22 July 2022, the Group reached agreement to divest 100% of the share capital of Kerry Limited Liability Company, its
subsidiary in Russia, to local management. 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 also disposed of a small cereal operation in North America. The loss on disposal of these businesses
was €63.0m (2021: €nil). A tax credit of €4.3m (2021: a tax credit of €nil) arose on the disposal of these businesses.
In 2021 the Group disposed of its Meats and Meals business operating in Ireland and the UK from the Consumer Foods (now Dairy
Ireland) 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. A tax credit of €0.5m arose on the disposal of these businesses.
Profit/(loss) on disposal of assets
During the year, the Group disposed of property, plant and equipment (note 11) primarily in North America and APMEA for a
combined consideration of €51.7m resulting in a gain of €6.2m. In 2021, 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.
A tax charge of €1.9m (2021: a tax credit of €nil) arose on the disposal of assets.
In 2022, certain assets classified as held for sale (note 18) based in the USA and APMEA were impaired to their fair value less costs
to sell by €5.6m (2021: €48.6m), consisting of €1.2m (2021: €17.1m) of property, plant and equipment impairment, €2.7m (2021:
€nil) of goodwill impairment, €1.7m (2021: €nil) of brand related intangibles impairment and €nil (2021: €31.5m) of estimated
costs to sell including marketing, legal, site rectification, environmental and other related expenses necessary to complete the
disposals. These assets held for sale are expected to sell in 2023. The related tax credit was €0.5m (2021: €12.2m).
In 2022, there was a specific impairment charge of €0.3m and €0.4m (2021: €nil) in relation to goodwill and brand related
intangibles respectively recorded in intangible assets (note 12).
(ii) 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 2022, the Group incurred costs of €13.6m (2021:
€33.3m) reflecting relocation of resources, advisory fees, redundancies and the streamlining of operations. The associated tax
credit was €3.0m (2021: €1.2m).
(iii) Acquisition integration costs
These costs of €20.3m (2021: €54.9m) 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 €4.5m (2021: €12.4m) arose due to tax deductions available on acquisition related costs.
(iv) Accelerate Operational Excellence
These costs of €49.2m (2021: nil) predominantly reflect consultancy fees, project management costs and costs of streamlining
operations incurred in the period relating to our Accelerate Operational Excellence transformation programme, which will run
until 2024. This material transformation project deploying next generation manufacturing processes, including advanced process
controls, is combined with building capabilities within the Group to enhance continuous improvement in manufacturing processes
which will deliver step change manufacturing excellence across the organisation. This project will also focus on supply chain
excellence, optimising the Group’s warehousing and distribution network. A tax credit of €11.6m (2021: €nil) arose due to tax
deductions available on accelerated operational excellence costs.
(v) Tax on inter-group transfer
During 2021, a net tax credit of €16.6m 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 and finance charges
Interest on lease liabilities
Interest rate derivative
Net interest income/(cost) on retirement benefits obligation
Finance costs
Notes
2022
€’m
2021
€’m
6.6
0.3
(70.9)
(3.4)
0.4
(73.9)
1.1
(72.8)
(66.7)
(4.4)
1.6
(69.5)
(0.7)
(70.2)
11(iii.i)
26
Kerry Group Annual Report 2022
204
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
2022
€’m
125.4
(1.3)
124.1
(9.6)
114.5
0.2
(22.2)
(22.0)
125.6
(1.3)
124.3
(31.8)
92.5
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
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 asset transfer
Other adjusting items
Income tax expense
2022
€’m
699.0
87.4
0.3
9.6
0.6
(3.6)
-
(1.8)
92.5
2021
€’m
816.3
102.0
(0.9)
4.2
5.2
(42.7)
(16.6)
2.1
53.3
An increase in the Group’s applicable tax rate of 1% would reduce profit after taxation by €7.0m (2021: €8.2m). 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 addition, the EU Directive on Pillar Two Global Minimum Tax was approved in December 2022.
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 2022Financial Statements Notes to the Financial Statements
205
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 €166.7m (2021: €319.8m).
9. Earnings per A ordinary share
Basic earnings per share
Profit after taxation attributable to equity holders of the parent
341.9
606.4
430.6
763.0
EPS
cent
2022
€’m
EPS
cent
2021
€’m
Diluted earnings per share
Profit after taxation attributable to equity holders of the parent
341.3
606.4
429.9
763.0
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
2022
m’s
177.4
0.3
177.7
177.0
2021
m’s
177.2
0.3
177.5
176.8
10. Dividends
Group and Company:
Amounts recognised as distributions to equity shareholders in the financial year
Final 2021 dividend of 66.70 cent per A ordinary share paid 6 May 2022
(Final 2020 dividend of 60.60 cent per A ordinary share paid 14 May 2021)
Interim 2022 dividend of 31.40 cent per A ordinary share paid 11 November 2022
(Interim 2021 dividend of 28.50 cent per A ordinary share paid 12 November 2021)
2022
€’m
2021
€’m
118.0
107.1
55.6
50.4
173.6
157.5
Since the financial year end the Board has proposed a final 2022 dividend of 73.40 cent per A ordinary share which amounts to
€129.9m. The payment date for the final dividend will be 12 May 2023 to shareholders registered on the record date as at 14
April 2023. The consolidated financial statements do not reflect this dividend.
11. Property, plant and equipment
Group:
Property, plant and equipment
Right-of-use assets
Notes
2022
€’m
2021
€’m
(i)
(ii)
2,037.2
2,026.1
62.1
65.2
2,099.3
2,091.3
Kerry Group Annual Report 2022
206
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 2021
Businesses acquired
Additions
Purchase adjustments
Transfer from construction in progress
Businesses disposed
Disposals
Transfer to held for sale
Exchange translation adjustment
At 31 December 2021
Businesses acquired
Additions
Purchase adjustments
Transfer from construction in progress
Businesses disposed
Disposals
Transfer to held for sale
Exchange translation adjustment
1,298.7
2,177.3
47.7
20.4
(0.9)
36.1
(143.6)
-
(33.2)
83.1
23.9
80.2
(0.6)
138.5
(243.4)
(45.9)
(18.7)
101.5
1,308.3
2,212.8
21.0
34.9
5.8
43.8
(9.5)
(16.9)
(65.1)
29.0
22.1
41.3
3.2
126.9
(16.4)
(100.9)
(189.0)
52.6
238.4
17.6
158.4
-
(174.6)
(15.0)
-
-
15.8
240.6
3.0
136.3
-
(170.7)
(0.6)
(0.8)
(4.7)
6.2
30
5
5
18
At 31 December 2022
1,351.3
2,152.6
209.3
Accumulated depreciation and impairment
At 1 January 2021
Charge during the financial year
Businesses disposed
Disposals
Transfer to held for sale
Impairments
Exchange translation adjustment
At 31 December 2021
Charge during the financial year
Businesses disposed
Disposals
Transfer to held for sale
Exchange translation adjustment
At 31 December 2022
Carrying value
At 31 December 2021
At 31 December 2022
3
5
5
18
458.6
36.3
(90.6)
-
(13.6)
2.5
27.1
420.3
43.0
(4.7)
(8.1)
(28.5)
8.0
430.0
888.0
921.3
1,342.3
134.7
(193.0)
(32.4)
(15.0)
14.6
66.6
1,317.8
146.9
(7.2)
(82.2)
(153.1)
26.4
1,248.6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13.8
-
1.0
-
-
(0.8)
(0.9)
-
0.7
13.8
-
1.3
-
-
(0.1)
(1.1)
-
0.5
14.4
11.1
1.0
(0.4)
(0.9)
(0.1)
-
0.6
11.3
1.0
(0.1)
(0.8)
-
0.4
11.8
3,728.2
89.2
260.0
(1.5)
-
(402.8)
(46.8)
(51.9)
201.1
3,775.5
46.1
213.8
9.0
-
(26.6)
(119.7)
(258.8)
88.3
3,727.6
1,812.0
172.0
(284.0)
(33.3)
(28.7)
17.1
94.3
1,749.4
190.9
(12.0)
(91.1)
(181.6)
34.8
1,690.4
895.0
904.0
240.6
209.3
2.5
2.6
2,026.1
2,037.2
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
11. Property, plant and equipment (continued)
(i) Property, plant and equipment analysis (continued)
Company:
Cost
At 1 January 2021
At 31 December 2021 and 2022
Accumulated depreciation
At 1 January 2021
Charge during the financial year
At 31 December 2021
Charge during the financial year
At 31 December 2022
Carrying value
At 31 December 2021
At 31 December 2022
207
Land and
Buildings
Total
€’m
4.7
4.7
4.4
0.1
4.5
0.1
4.6
0.2
0.1
Kerry Group Annual Report 2022
208
11. Property, plant and equipment (continued)
(ii) Right-of-use assets analysis
Group:
Cost
At 1 January 2021
Businesses acquired
Additions
Businesses disposed
Terminations
Exchange translation adjustment
At 31 December 2021
Businesses acquired
Additions
Businesses disposed
Terminations
Transfer to held for sale
Exchange translation adjustment
At 31 December 2022
Accumulated depreciation
At 1 January 2021
Charge during the financial year
Businesses disposed
Terminations
Exchange translation adjustment
At 31 December 2021
Charge during the financial year
Businesses disposed
Terminations
Transfer to held for sale
Exchange translation adjustment
At 31 December 2022
Carrying value
At 31 December 2021
At 31 December 2022
The right-of-use assets consist of:
Land and
Buildings
€’m
Notes
Plant,
Machinery
and
Equipment
€’m
Motor
Vehicles
€’m
90.6
0.8
23.7
(16.4)
(12.0)
5.5
92.2
0.2
34.9
(3.9)
(9.4)
(10.8)
1.5
104.7
35.4
21.6
(5.4)
(10.4)
2.6
43.8
23.6
(2.8)
(7.6)
(4.0)
1.9
54.9
48.4
49.8
30
5
18
3
5
18
19.7
0.5
6.5
(3.4)
(1.3)
1.1
23.1
0.1
5.2
(0.1)
(4.2)
(2.4)
-
21.7
7.3
5.8
(1.2)
(0.9)
0.7
11.7
5.8
(0.1)
(2.7)
(1.1)
(0.1)
13.5
11.4
8.2
15.0
1.1
2.6
(0.9)
(1.5)
0.5
16.8
-
2.9
(1.3)
(4.5)
(1.0)
0.8
13.7
8.2
4.0
(0.4)
(0.8)
0.4
11.4
3.3
(1.0)
(4.3)
(0.6)
0.8
9.6
5.4
4.1
Total
€’m
125.3
2.4
32.8
(20.7)
(14.8)
7.1
132.1
0.3
43.0
(5.3)
(18.1)
(14.2)
2.3
140.1
50.9
31.4
(7.0)
(12.1)
3.7
66.9
32.7
(3.9)
(14.6)
(5.7)
2.6
78.0
65.2
62.1
-
-
-
land and buildings for warehouse space, offices and manufacturing facilities. The lease terms vary and range from 1 to 91
years for buildings and range from 1 to 88 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 2 to 5 years with an average remaining term of 2 years.
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
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
Interest on lease liabilities charged during the financial year
6
Note
(iii.ii) Amounts recognised in the Consolidated Statement of Cash Flows:
Total cash outflow for leases during the year*
2022
€’m
32.7
3.7
0.2
3.4
2022
€’m
42.4
*
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
Transfer to held for sale
Businesses disposed
Exchange translation adjustment
At end of the financial year
Analysed as:
Current liabilities
Non-current liabilities
At end of the financial year
2022
€’m
74.2
43.9
(4.2)
-
(35.1)
(8.2)
(4.0)
2.6
69.2
2022
€’m
26.9
42.3
69.2
209
2021
€’m
31.4
2.1
0.1
4.4
2021
€’m
41.5
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
(iii.iv) At the balance sheet date the Group had commitments under non-cancellable leases which fall due as follows:
Within 1 year
Between 1 and 2 years
Between 2 and 5 years
After 5 years
Discounted
2022
€’m
Undiscounted
2022
€’m
Discounted
2021
€’m
Undiscounted
2021
€’m
26.9
15.6
21.6
5.1
69.2
32.0
19.5
24.3
6.4
82.2
28.0
19.7
20.9
5.6
74.2
31.0
22.2
22.3
6.9
82.4
Kerry Group Annual Report 2022
210
12. Intangible assets
Cost
At 1 January 2021
Businesses acquired
Additions
Purchase adjustment
Businesses disposed
Disposals
Exchange translation adjustment
At 31 December 2021
Businesses acquired
Additions
Purchase adjustment
Businesses disposed
Disposals
Transfer to held for sale
Exchange translation adjustment
At 31 December 2022
Accumulated amortisation and impairment
At 1 January 2021
Charge during the financial year
Businesses disposed
Disposals
Exchange translation adjustment
At 31 December 2021
Charge during the financial year
Businesses disposed
Disposals
Impairment
Transfer to held for sale
Exchange translation adjustment
At 31 December 2022
Carrying value
At 31 December 2021
At 31 December 2022
Notes
Goodwill
€’m
Brand
Related
Intangibles
€’m
Computer
Software
€’m
2,666.6
657.1
-
8.2
(292.6)
-
96.2
2,188.6
440.0
-
2.8
(91.7)
-
93.5
368.4
0.5
34.1
-
(5.8)
(1.0)
2.0
Total
€’m
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
30
197.8
122.8
-
(0.9)
(9.6)
-
(193.8)
96.1
-
3.0
(6.6)
-
(77.8)
51.4
0.5
12.2
(0.4)
(0.3)
(1.2)
-
0.8
3,225.1
2,726.0
409.8
16.6
-
(6.6)
-
4.2
14.2
-
-
-
0.3
-
(0.1)
14.4
296.5
46.2
(51.0)
-
22.7
314.4
50.9
(4.5)
-
0.4
(33.8)
10.2
337.6
223.4
34.6
(3.1)
(0.5)
3.2
257.6
31.8
(0.1)
(0.9)
-
-
0.5
288.9
5
5
18
3
5
5
18
321.1
12.2
1.7
(16.5)
(1.2)
(271.6)
148.3
6,360.9
536.5
80.8
(60.7)
(0.5)
30.1
586.2
82.7
(4.6)
(0.9)
0.7
(33.8)
10.6
640.9
3,121.3
3,210.7
2,318.8
2,388.4
140.6
120.9
5,580.7
5,720.0
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 €1,689.6m (2021: €1,621.9m) which have indefinite lives.
Approximately €3.8m (2021: €11.4m) of computer software additions during the year were internally generated, included in this
are payroll costs of €2.9m (2021: €10.0m). The Group has not capitalised product development expenditure in 2022 (2021: €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 2022Financial Statements Notes to the Financial Statements
211
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 2022 or 2021 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 2022, there was a specific impairment
charge of €3.0m and €2.1m (2021: €nil) in relation to goodwill and brand related intangibles respectively recorded in non-
trading items (note 5) in the Consolidated Income Statement.
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
Dairy Ireland
Europe
Goodwill
2022
€’m
634.7
2,157.1
279.5
Goodwill
2021
€’m
Indefinite Life
Intangibles
2022
€’m
Indefinite Life
Intangibles
2021
€’m
563.1
2,150.1
263.5
168.2
1,450.8
46.9
193.9
1,356.4
47.9
139.4
3,210.7
144.6
3,121.3
23.7
23.7
1,689.6
1,621.9
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
Dairy Ireland
Europe
Discount
Rates
2022
Discount
Rates
2021
Growth
Rates
2022
Growth
Rates
2021
8.1%
8.1%
9.4%
6.3%
7.1%
8.9%
1.3%
1.1%
3.6%
1.3%
1.1%
3.6%
7.9%
6.1%
2.0%
1.9%
Prior year 31 December 2021 has been re-presented to reflect the changes in our reporting segments in line with how the
Chief Operating Decision Maker (the Executive Directors) assesses the Group’s performance from 1 January 2022. The Irish
dairy processing activities, previously reported in Taste & Nutrition, have been combined with the remaining dairy activities of
the Consumer Foods business and this segment is named Dairy Ireland. Included within the Dairy Ireland 31 December 2021
comparatives are the results of the Consumer Foods Meats and Meals business which was disposed by the Group on
27 September 2021.
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 2022
212
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 including the Group’s strategic plans. Management also considered the impact of
accelerating inflationary cost pressures, disruption of global supply chains and the challenges presented in China with localised
restrictions 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 2022 or 2021. Further,
a 5% increase in the discount rate would not have resulted in an impairment charge in 2022 or 2021 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 2022 or 2021. 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
2022 or 2021. 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
and the estimated capital expenditure required to achieve the Group’s sustainability objectives in reducing carbon emissions
and achieving the ambition to become net zero before 2050 was also considered as part of the sensitivity analysis and had no
impact on our conclusions.
13. Financial asset investments
At 1 January 2021
Additions
Disposals
Fair value movements
Exchange translation adjustment
At 31 December 2021
Additions
Disposals
Fair value movements
Exchange translation adjustment
At 31 December 2022
FVOCI
Investments
€’m
Other
Investments
€’m
-
37.0
4.4
-
-
-
4.5
(2.1)
3.1
3.0
Total
€’m
37.0
8.9
(2.1)
3.1
3.0
4.4
45.5
49.9
10.4
-
-
0.3
15.1
2.7
(3.3)
(3.8)
2.7
43.8
13.1
(3.3)
(3.8)
3.0
58.9
Investments held at fair value through other comprehensive income
During 2022, the Group increased its investments by €10.4m (2021: €4.4m). These investments have no fixed maturity or
coupon rate. A fair value assessment was performed at 31 December 2022 and at 31 December 2021 which did not result in a
change to the carrying value of these assets.
Other investments
The Group maintains Rabbi Trusts in the USA. The assets of these trusts 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 liabilities are recognised within other non-current liabilities (note 22).
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
14. Investments in joint ventures
At 1 January
Additions
Share of results after taxation during the financial year
At 31 December
213
2021
€’m
17.8
-
3.9
21.7
Note
3
2022
€’m
21.7
20.4
(0.4)
41.7
The Group’s investments in joint ventures represents the shareholding in Proparent B.V. (see note 36).
In 2022, the Group increased its investments in joint ventures through an increase in its shareholding in Proparent B.V. from
55% to 75% for an incremental consideration of €20.4m. Proparent B.V. owns 100% of Ojah B.V., a Dutch manufactuer of
texturised plant based proteins. Management performed a review of the contractual arrangements and determined it remains
a joint venture. The amounts included in these Group consolidated financial statements in respect of the post acquisition profits
or losses of this joint venture are taken from their latest financial statements prepared up to their financial year end together
with management accounts for the intervening period to the Group’s year end.
15. Investments in subsidiaries
Company:
At 1 January
Additions
At 31 December
2022
€’m
2021
€’m
843.5
-
843.5
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
2022
€’m
598.7
690.6
65.1
2021
€’m
527.2
614.8
62.2
1,354.4
1,204.2
These inventory balances are valued at the lower of cost and net realisable value. Write-downs of inventories recognised as an
expense approximates to 1.4% (2021: 1.4%) of raw materials and consumables in the Consolidated Income Statement.
Kerry Group Annual Report 2022
214
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 2021
72.4
288.7
(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
Consolidated Income Statement movement
7
Recognised in OCI during the financial year
Related to businesses acquired/(disposed)
Exchange translation adjustment
-
(1.8)
4.6
93.6
4.1
-
1.6
3.7
-
96.3
13.4
362.2
(5.6)
-
23.4
17.8
0.6
-
(11.1)
(0.5)
(27.4)
1.2
-
(2.1)
(1.0)
At 31 December 2022
103.0
397.8
(29.3)
0.9
20.0
(0.4)
(0.7)
8.4
3.4
(7.6)
-
(0.7)
3.5
(5.7)
(0.1)
(10.4)
(4.2)
(22.0)
19.9
72.6
12.6
(57.3)
379.5
(34.9)
(31.8)
0.2
(0.5)
(2.1)
(7.4)
22.4
17.7
(94.6)
380.4
The short-term temporary differences and other temporary differences recognised in other comprehensive income comprise
fair value movements on cash flow hedges of €0.2m (2021: (€0.1m)). 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
2022
€’m
(71.9)
452.3
380.4
2021
€’m
(67.8)
447.3
379.5
The total deductible temporary differences and unused tax losses for which deferred tax assets have not been recognised is
€24.8m (2021: €26.9m). 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 €17.2m (2021: €16.7m).
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
18. Assets and liabilities classified as held for sale
Assets classified as held for sale
Property, plant and equipment
Goodwill
Brand related intangible assets
Inventories
Trade and other receivables
Total assets classified as held for sale
Trade and other payables
Total liabilities directly associated with assets classified as held for sale
Net assets classified as held for sale
215
2021
€’m
18.7
-
-
-
-
18.7
-
-
18.7
2022
€’m
100.8
191.1
42.3
53.1
0.7
388.0
(19.7)
(19.7)
368.3
Non-current assets are transferred to assets and liabilities classified as held for sale when it is expected that their carrying
amounts will be recovered principally through disposal and a sale is considered highly probable. They are held at the lower of
carrying amount and fair value less costs to sell.
As announced on 11 January 2023, the Group has entered into exclusive negotiations prior to the year ended 31 December
2022, to sell the trade and assets of its Sweet Ingredients Portfolio in the Taste & Nutrition segment, for a consideration
of €500m comprising an initial cash consideration of €375m plus a €125m interest bearing vendor loan note. The disposal
proceeds are expected to substantially exceed the carrying amount of the related net assets and accordingly no impairment
losses have been recognised on the classification of this business as held for sale. The potential sale is subject to relevant
regulatory approvals, employee consultation and routine closing adjustments. The associated assets and liabilities have
consequently been presented separately as assets held for sale in the financial statements for the year ended 31 December
2022. There will be no material impact recognised in other comprehensive income relating to this transaction.
During the year, the Group also reached agreement to sell a non-core business and its related assets in the APMEA Taste &
Nutrition segment. The assets of these businesses have been impaired to their fair value less costs to sell by €2.7m (2021: €nil)
of goodwill impairment and by €1.7m (2021: €nil) of brand related intangibles impairment following their transfer to assets held
for sale. The fair value less costs to sell of these assets are based on offers received for this business.
These businesses were not deemed to be discontinued operations and goodwill was allocated to these businesses using an
appropriate allocation methodology aligned with IAS 36 ‘Impairment of Assets’. Estimated costs to sell including marketing,
legal, site rectification, environmental and other related expenses necessary to complete the disposals incurred to date of
€7.6m (2021: €31.5m). These assets held for sale are expected to sell in the first half of 2023.
In 2022, assets classified as held for sale of property, plant and equipment based in the USA in the Taste & Nutrition segment,
were impaired to their fair value less costs to sell by €1.2m (2021: €17.1m) following their transfer to assets held for sale. The
fair value less costs to sell of these assets are based on offers received for these assets.
In 2021, the Group held property, plant and equipment classified as held for sale in the Taste & Nutrition segment in North
America and in the Dairy Ireland segment in the UK.
Kerry Group Annual Report 2022
216
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
2022
€’m
Group
2021
€’m
Company
2022
€’m
Company
2021
€’m
1,369.3
1,131.1
(46.3)
(42.1)
1,323.0
1,089.0
51.5
-
44.5
4.8
55.7
-
31.2
5.8
-
-
-
-
-
-
-
-
231.0
218.9
-
-
-
-
1,423.8
1,181.7
231.0
218.9
All receivable balances are due within 1 year except for €4.8m (2021: €5.8m) 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
Written off during the financial year
Exchange translation adjustment
At end of the financial year
2022
€’m
1,105.9
141.5
33.6
22.8
19.2
2021
€’m
940.1
107.2
28.3
10.5
2.9
1,323.0
1,089.0
2022
€’m
42.1
11.4
(8.4)
1.2
46.3
2021
€’m
37.1
9.8
(6.6)
1.8
42.1
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 2022Financial Statements Notes to the Financial Statements
217
19. Trade and other receivables (continued)
The Group considers the following as constituting an event of default for internal credit risk management purposes as historical
experience indicates that financial assets that meet either of the following criteria are generally not recoverable:
- When there is a breach of financial covenants by the debtor;
-
Information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors,
including the Group, in full.
The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and
there is no realistic prospect of recovery, for example when a debtor has been placed under liquidation or has entered into
bankruptcy proceedings.
20. Trade and other payables
Trade payables
Other payables and accruals
Lease liabilities
Deferred payments on acquisition of businesses
PAYE
Social security costs
Group
2022
€’m
Group
2021
€’m
Company
2022
€’m
Company
2021
€’m
1,705.7
1,577.9
206.0
161.9
26.9
5.6
15.1
7.2
28.0
4.0
13.1
6.6
1,966.5
1,791.5
5.3
-
-
0.6
-
-
5.9
7.7
-
-
2.3
-
-
10.0
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
Group
2022
€’m
Group
2021
€’m
Company
2022
€’m
Company
2021
€’m
Notes
Grants
At beginning of the financial year
Grants received during the financial year
Amortised during the financial year
3
Businesses disposed
Exchange translation adjustment
At end of the financial year
Analysed as:
Current liabilities
Non-current liabilities
20.9
0.8
(2.0)
-
(0.3)
19.4
3.4
16.0
19.4
21.8
3.1
(1.9)
(2.3)
0.2
20.9
3.0
17.9
20.9
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
2022
€’m
78.9
42.3
21.4
Group
2021
€’m
96.7
46.2
11.0
142.6
153.9
Company
2022
€’m
Company
2021
€’m
-
-
-
-
-
-
-
-
All of the above balances are due within 2 to 5 years except for €5.5m (2021: €5.6m) which is not due until after 5 years.
Kerry Group Annual Report 2022
218
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
2022
€’m
Assets/
(Liabilities)
at Fair Value
through Profit
or Loss
2022
€’m
Derivatives
Designated
as Hedging
Instruments
2022
€’m
Assets/
(Liabilities) at
FVOCI
2022
€’m
Notes
Total
2022
€’m
58.9
22.8
37.0
1,423.8
970.0
43.8
-
-
-
-
-
22.8
37.0
-
-
15.1
-
-
-
-
43.8
59.8
15.1
2,512.5
Group:
Financial asset investments
13
Forward foreign exchange contracts
24 (i.i)
Interest rate swaps
24 (ii.ii)
-
-
-
Trade and other receivables
19
1,423.8
Cash at bank and in hand
24 (iii.i)
Total financial assets
Current assets
Non-current assets
970.0
2,393.8
2,393.8
-
2,393.8
-
43.8
43.8
59.5
0.3
59.8
-
(17.2)
(21.5)
-
Borrowings and overdrafts
24 (iii.i)
(3,146.2)
12.5
Forward foreign exchange contracts
24 (i.i)
Interest rate swaps
24 (ii.ii)
-
-
Trade and other payables
20/22
(2,109.1)
-
-
-
Total financial liabilities
(5,255.3)
12.5
(38.7)
Current liabilities
Non-current liabilities
Total net financial (liabilities)/assets
(2,669.1)
(2,586.2)
(5,255.3)
(2,861.5)
Included in the above table are the following components of net debt:
Analysis of 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
Net debt
(0.2)
(1.7)
(3,144.3)
(3,146.2)
-
970.0
(2,176.2)
(69.2)
(2,245.4)
1.5
11.0
12.5
56.3
-
-
12.5
12.5
-
-
12.5
-
12.5
(18.4)
(20.3)
(38.7)
21.1
-
-
-
-
15.5
-
15.5
-
15.5
-
15.1
15.1
-
-
-
-
-
-
-
-
2,453.3
59.2
2,512.5
(3,133.7)
(17.2)
(21.5)
(2,109.1)
(5,281.5)
(2,686.0)
(2,595.5)
(5,281.5)
15.1
(2,769.0)
-
-
-
-
-
-
-
-
-
(0.2)
(1.7)
(3,131.8)
(3,133.7)
15.5
970.0
(2,148.2)
(69.2)
(2,217.4)
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
219
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 2022, the Group’s debt portfolio included:
-
-
-
-
US$750m of Senior Notes issued in 2013 maturing in 2023 (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 (2025 Senior
Notes). €175m of the issuance in 2015 were swapped, using cross currency swaps, to US dollar;
€750m of Senior Notes issued in 2019 (2029 Senior Notes). No interest rate derivatives were entered into for this issuance;
and
€750m of sustainability-linked bond notes issued in 2021 (2031 SLB Senior Notes) and no interest rate derivatives were
entered into for this issuance.
The adjustment to Senior Notes classified under fair value through profit or loss of €12.5m of an asset (2021: liability €10.9m)
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
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
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)
-
(10.9)
(10.9)
34.6
(40.1)
(0.5)
(40.6)
9.4
45.5
-
-
-
-
-
15.4
34.6
-
-
45.5
50.0
-
45.5
45.5
15.2
34.8
50.0
-
(40.6)
-
-
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)
Kerry Group Annual Report 2022
220
23. Analysis of financial instruments by category (continued)
Included in the above table are the following components of net debt:
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
(5.3)
(2.9)
(3,104.5)
(3,112.7)
-
1,039.1
-
-
(10.9)
(10.9)
-
-
(2,073.6)
(10.9)
(74.2)
-
(2,147.8)
(10.9)
-
-
-
-
34.6
-
34.6
-
34.6
-
-
-
-
-
-
-
-
-
Total
2021
€’m
(5.3)
(2.9)
(3,115.4)
(3,123.6)
34.6
1,039.1
(2,049.9)
(74.2)
(2,124.1)
Analysis of 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
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
Total net financial assets
Notes
2022
€’m
2021
€’m
19
20
-
231.0
231.0
-
(5.9)
(5.9)
225.1
0.1
218.9
219.0
-
(10.0)
(10.0)
209.0
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
221
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 equity holders 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 equity holders of the parent
Net debt - pre lease liabilities
Lease liabilities
Deferred payments on acquisition of businesses
Notes
23
20/22
20/22
2022
€’m
6,221.9
2,148.2
69.2
27.0
2021
€’m
5,601.2
2,049.9
74.2
15.0
8,466.3
7,740.3
In November 2022 Moody’s upgraded the credit rating of the Group to Baa1. There were no notable debt financing events in 2022.
In 2021 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; and
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 (Baa1).
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
2022
Times
1.8
18.1
2021
Times
2.0
14.9
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.
Kerry Group Annual Report 2022
222
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 asset of €6.8m (2021: €13.1m liability) and a sterling asset of
€21.7m (2021: €36.5m). Based on these net positions, as at 31 December 2022, 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 €1.2m (2021: €1.0m).
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 2022 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 €35.1m (2021: €25.9m) and €30.2m (2021: €23.2m),
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
2022
€’m
Asset
2022
€’m
Liability
22.5
0.3
22.8
(16.8)
(0.4)
(17.2)
2022
€’m
Total
5.7
(0.1)
5.6
2021
€’m
Asset
15.2
0.2
15.4
2021
€’m
Liability
(40.1)
(0.5)
(40.6)
2021
€’m
Total
(24.9)
(0.3)
(25.2)
Location of line item in the Consolidated Balance Sheet
*
1 Other current financial instruments
2 Other non-current financial instruments
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
223
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
2022
€’m
5.7
(0.1)
5.6
2021
€’m
(24.9)
(0.3)
(25.2)
2022
€’m
2021
€’m
1,835.6
2,798.0
38.2
50.2
1,873.8
2,848.2
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
2022
€’m
5.6
(6.1)
0.5
(5.6)
2021
€’m
(25.2)
(3.2)
28.4
25.2
The fair value included in the hedging reserve will primarily be released to the Consolidated Income Statement within 11
months (2021: 9 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
2022
€’m
5.1
(2.2)
2.9
2.2
-
2.2
2021
€’m
0.8
(0.5)
0.3
0.5
-
0.5
There were no transactions during 2022 or 2021 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 2022
224
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 cash at bank and lease liabilities):
Euro
Sterling
US Dollar
Others
At 31 December 2022
Euro
Sterling
US Dollar
Others
At 31 December 2021
Total
Pre CCS
€’m
Impact
of CCS
€’m
Total
after CCS
€’m
Floating
Rate Net
Debt
€’m
Fixed
Rate Debt
€’m
(2,166.6)
(59.1)
(2,225.7)
283.4
(2,509.1)
59.1
(318.4)
180.5
(2,245.4)
-
59.1
-
-
59.1
(259.3)
180.5
(2,245.4)
59.1
(25.2)
180.5
497.8
-
(234.1)
-
(2,743.2)
(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)
The currency profile of debt highlights the impact of the US$250m (2021: US$250m) 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. The retranslation of the foreign currency debt of US$250m (2021: US$250m) to the balance
sheet rate resulted in a foreign currency loss of €38.8m (2021: €25.5m) which is directly offset by a gain of €38.8m (2021:
€25.5m) 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 a liability of
€7.5m (2021: €2.9m asset) for movement in exchange rates since the date of execution which is directly offset by a gain of
€7.5m (2021: €2.9m loss) 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% (2021: 15%) of gross debt was held at floating rates.
The floating rate net debt as set out above, includes cash at bank, which attracts interest at market rates. If the interest rates
applicable 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 increase by 0.6% (2021: 0.8%).
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
225
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:
2022
€’m
Asset
2022
€’m
Liability
Notes
2022
€’m
Total
37.0
37.0
-
-
-
-
(21.5)
(21.5)
(1.6)
(19.9)
(21.5)
(1.6)
(19.9)
15.5
2021
€’m
Asset
2021
€’m
Liability
23.8
-
23.8
10.8
-
10.8
34.6
-
-
-
-
-
-
-
2021
€’m
Total
23.8
-
23.8
10.8
-
10.8
34.6
Designated in a hedging relationship:
Interest rate swap contracts - cash flow hedges
(a)
- current 1
- non-current 2
Interest rate swap contracts - fair value hedges
(b)
- current 1
- non-current 2
37.0
37.0
-
-
-
-
Interest rate swap contracts
37.0
Location of line item in the Consolidated Balance Sheet
*
1 Other current financial instruments
2 Other non-current financial instruments
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 2022
226
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
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:
Average Contracted
Fixed Interest Rate
Fair Value Asset
Notional Principal
2022
%
2021
%
2022
€’m
2021
€’m
2022
€’m
2021
€’m
Interest rate swap contracts
less than 1 year
1 - 2 years
Interest rate swap contracts - cash flow hedges
2.58
-
-
2.58
37.0
-
37.0
-
234.1
23.8
23.8
-
234.1
-
220.9
220.9
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:
2022
€’m
37.0
2021
€’m
23.8
Amount reclassified from hedge reserve to profit or loss re: foreign exchange rate fluctuations1
(38.8)
(25.5)
Retained earnings and other reserves:
Cash flow hedging reserve
Cost of hedging reserve
Accumulated hedge ineffectiveness
1.6
0.1
0.1
1.8
(0.3)
0.2
(37.0)
(23.8)
Location of line item in the Consolidated Balance Sheet
*
1 Borrowings & 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 gain 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
2022
€’m
13.8
0.4
(13.3)
(0.6)
(0.1)
0.2
2021
€’m
19.1
0.3
(17.2)
(0.4)
-
1.8
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
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:
227
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
2022
€’m
13.3
0.6
(0.1)
2021
€’m
17.2
0.4
-
(13.3)
0.5
(17.2)
0.4
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
Interest rate swap contracts - fair value hedges
Average Contracted
Fixed Interest Rate
Fair Value Asset/
(Liability)
Notional Principal
2022
%
2021
%
2022
€’m
2021
€’m
2022
€’m
2021
€’m
3.2
-
2.4
-
3.2
2.4
(1.6)
-
(19.9)
(21.5)
-
3.8
7.0
10.8
234.1
-
175.0
409.1
-
220.9
175.0
395.9
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
market interest rates for the underlying swap currency. All hedges are highly effective on a prospective and retrospective basis.
Kerry Group Annual Report 2022
228
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:
Interest rate movements 1
Receivables:
Foreign exchange rate fluctuations 2
Retained earnings and other reserves:
Hedge ineffectiveness
Cost of hedging reserve
2022
€’m
(21.5)
2021
€’m
10.8
12.5
(10.9)
7.5
(2.9)
0.1
1.4
21.5
0.4
2.6
(10.8)
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
2022
€’m
(1.2)
2021
€’m
(0.3)
The following table details the (expense)/income 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
2022
€’m
(10.4)
(22.2)
(1.5)
-
22.2
10.4
(1.5)
2021
€’m
(12.1)
(12.3)
1.1
(1.3)
12.3
13.4
1.1
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 2022Financial Statements Notes to the Financial Statements
229
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 2022 with significant available liquidity and no significant loan maturities arising until April 2023. No
significant financing activities were undertaken during 2022.
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 2022 and 2021.
All Group credit facilities are arranged and managed by Group Treasury and approved by the Board of Directors. Where
possible, facilities have common terms and conditions.
At 31 December 2022, the Group had undrawn committed bank facilities of €1,100m (2021: €1,100m), and a portfolio of
undrawn standby facilities amounting to €343m (2021: €337m). The undrawn committed facilities comprise primarily of a
revolving credit facility maturing between 3 - 4 years (2021: between 4 - 5 years).
(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 €1,934.0m (2021: €1,759.5m) is payable within 1 year, €78.9m
(2021: €96.7m) 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 2022
230
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 - contractual repayments
Lease liabilities (undiscounted)
11 (iii.iv)
Deferred payments on acquisition of businesses
Interest commitments on borrowings and overdrafts
(0.2)
-
(702.4)
(702.6)
(32.0)
(5.6)
(740.2)
(39.9)
Up to
2 years
€’m
-
(1.7)
2 - 5
years
€’m
> 5 years
€’m
-
-
-
-
Total
€’m
(0.2)
(1.7)
-
(950.0)
(1,500.0)
(3,152.4)
(1.7)
(950.0)
(1,500.0)
(3,154.3)
(19.5)
(5.2)
(26.4)
(33.8)
(24.3)
(16.2)
(6.4)
-
(82.2)
(27.0)
(990.5)
(1,506.4)
(3,263.5)
(49.4)
(33.8)
(156.9)
At 31 December 2022
(780.1)
(60.2)
(1,039.9)
(1,540.2)
(3,420.4)
Reconciliation to net debt position:
Borrowings and overdrafts - contractual repayments
(702.6)
(1.7)
(950.0)
(1,500.0)
(3,154.3)
Senior Notes - amortised cost adjustments
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)
Net debt as at 31 December 2022
Bank overdrafts
Bank loans
Senior Notes
-
1.5
-
-
(4.7)
11.0
12.8
-
8.1
12.5
(701.1)
(1.7)
(943.7)
(1,487.2)
(3,133.7)
35.4
970.0
304.3
(26.9)
277.4
-
-
(19.9)
-
-
-
15.5
970.0
(1.7)
(963.6)
(1,487.2)
(2,148.2)
(15.6)
(17.3)
(21.6)
(5.1)
(69.2)
(985.2)
(1,492.3)
(2,217.4)
11 (iii.iv)
On
demand &
up to 1
year
€’m
(5.3)
(0.3)
Note
Up to
2 years
€’m
-
(2.6)
2 - 5
years
€’m
> 5 years
€’m
-
-
-
-
Total
€’m
(5.3)
(2.9)
-
(662.6)
(950.0)
(1,500.0)
(3,112.6)
Borrowings and overdrafts - contractual repayments
(5.6)
(665.2)
(950.0)
(1,500.0)
(3,120.8)
Lease liabilities (undiscounted)
11 (iii.iv)
Deferred payments on acquisition of businesses
Interest commitments on borrowings and overdrafts
At 31 December 2021
Reconciliation to net debt position:
(31.0)
(4.0)
(40.6)
(55.0)
(95.6)
(22.2)
(4.6)
(22.3)
(6.4)
(6.9)
-
(82.4)
(15.0)
(692.0)
(978.7)
(1,506.9)
(3,218.2)
(39.6)
(72.0)
(45.0)
(211.6)
(731.6)
(1,050.7)
(1,551.9)
(3,429.8)
Borrowings and overdrafts - contractual repayments
(5.6)
(665.2)
(950.0)
(1,500.0)
(3,120.8)
Senior Notes - amortised cost adjustments
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)
-
-
-
(3.8)
(6.4)
(7.1)
14.5
8.1
-
(10.9)
(5.6)
(669.0)
(963.5)
(1,485.5)
(3,123.6)
-
1,039.1
27.6
-
7.0
-
-
-
34.6
1,039.1
1,033.5
(641.4)
(956.5)
(1,485.5)
(2,049.9)
11 (iii.iv)
(28.0)
(19.7)
(20.9)
(5.6)
(74.2)
Net debt as at 31 December 2021
1,005.5
(661.1)
(977.4)
(1,491.1)
(2,124.1)
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
231
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/(outflow)
Forward foreign exchange contracts inflow/(outflow)
At 31 December 2022
Interest rate swaps inflow
Interest rate swaps outflow
Net interest rate swaps inflow
Forward foreign exchange contracts outflow
At 31 December 2021
On demand &
up to 1 year
€’m
Up to
2 years
€’m
47.0
(18.4)
28.6
5.7
34.3
4.2
(12.2)
(8.0)
(0.1)
(8.1)
On demand &
up to 1 year
€’m
Up to
2 years
€’m
18.3
(12.4)
5.9
(24.9)
(19.0)
33.5
(7.6)
25.9
(0.3)
25.6
2 - 5
years
€’m
2.9
(15.6)
(12.7)
-
(12.7)
2 - 5
years
€’m
9.9
(9.3)
0.6
-
0.6
> 5 years
€’m
-
-
-
-
-
> 5 years
€’m
-
-
-
-
-
Total
€’m
54.1
(46.2)
7.9
5.6
13.5
Total
€’m
61.7
(29.3)
32.4
(25.2)
7.2
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/(outflow)
-
-
-
up to 1 year - swaps inflow of €38.8m (2021: €nil)
1 - 2 years - swaps inflow of €nil (2021: €25.5m)
2 - 5 years - swaps (outflow)/inflow of (€7.5m) (2021: €2.9m)
(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;
committed revolving credit facilities of €1,100m to June 2026; and
bilateral term loans with maturities ranging up to 1 year.
(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 01 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 2025 Euro Senior Notes.
Kerry Group Annual Report 2022
232
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 2022 and 2021 all cash, short-term deposits and other liquid investments had a maturity of less than 3 months. Cash
at bank and in hand of €970.0m (2021: €1,039.1m) includes an amount of €322.1m (2021: €545.0m) held on short-term deposit
of which €70.7m (2021: €100.0m) 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.
There is no material provision for impairment in the Company’s intercompany receivables balance of €231.0m (2021: €218.9m)
as all amounts are expected to be recovered in full.
(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 2022Financial Statements Notes to the Financial Statements
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)
233
Fair Value
Hierarchy
2022
€’m
2021
€’m
Financial assets
Interest rate swaps:
Non-current
Current
Forward foreign exchange contracts:
Non-current
Current
Financial asset investments:
Fair value through profit or loss
Level 2
Level 2
Level 2
Level 2
Level 1
Fair value through other comprehensive income
Level 3
Financial liabilities
Forward foreign exchange contracts:
Non-current
Interest rate swaps:
Current
Non-current
Current
Level 2
Level 2
Level 2
Level 2
-
37.0
0.3
22.5
43.8
15.1
(0.4)
(16.8)
(19.9)
(1.6)
34.6
-
0.2
15.2
45.5
4.4
(0.5)
(40.1)
-
-
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.
Fair Value
Hierarchy
Carrying
Amount
2022
€’m
Fair
Value
2022
€’m
Carrying
Amount
2021
€’m
Fair
Value
2021
€’m
Financial liabilities: Senior Notes - Public
Level 2
(3,144.3)
(2,761.4)
(3,104.5)
(3,174.7)
(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 2022
234
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 2022
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 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
970.0
22.8
37.0
1,029.8
-
-
-
-
1,039.1
15.4
34.6
1,089.1
-
-
-
-
-
-
-
-
(0.2)
(17.2)
(21.5)
(38.9)
-
-
-
-
(5.3)
(40.6)
-
(45.9)
970.0
22.8
37.0
1,029.8
(0.2)
(17.2)
(21.5)
(38.9)
1,039.1
15.4
34.6
1,089.1
(5.3)
(40.6)
-
(45.9)
-
(13.1)
(15.2)
(28.3)
-
13.1
15.2
28.3
-
(10.1)
-
(10.1)
-
10.1
-
10.1
970.0
9.7
21.8
1,001.5
(0.2)
(4.1)
(6.3)
(10.6)
1,039.1
5.3
34.6
1,079.0
(5.3)
(30.5)
-
(35.8)
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
25. Provisions
Group:
At 1 January 2021
Provided during the financial year
Utilised during the financial year
Released during the financial year
Transferred (to)/from payables and accruals
Exchange translation adjustment
At 31 December 2021
Provided during the financial year
Utilised during the financial year
Released during the financial year
Transferred (to)/from payables and accruals
Exchange translation adjustment
At 31 December 2022
Analysed as:
Current liabilities
Non-current liabilities
Insurance
€’m
Non-Trading
Items
€’m
Environmental
€’m
39.0
15.8
(8.4)
(5.7)
-
2.6
43.3
22.7
(5.7)
(11.3)
-
(2.3)
46.7
2.3
5.1
-
-
-
-
7.4
-
-
-
(0.9)
-
6.5
-
-
-
-
-
-
-
-
-
-
12.6
-
12.6
2022
€’m
15.3
50.5
65.8
235
Total
€’m
41.3
20.9
(8.4)
(5.7)
-
2.6
50.7
22.7
(5.7)
(11.3)
11.7
(2.3)
65.8
2021
€’m
13.6
37.1
50.7
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 expensed in 2022 and 2021; these costs are
expected to be paid within 18 months.
Environmental
This includes provisions for site remediation, restoration and environmental works stemming from established best practice for
a recently acquired acquisition. The timing of utilisation of these provisions is uncertain.
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 2022
236
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 2022 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 and in 2021 a number of deferred members transferred their past service benefits out of the Irish defined
benefit scheme.
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 (income)/cost
Recognised in the Consolidated Income Statement
Re-measurements of the net defined benefit liability:
2022
€’m
71.0
3.0
(2.0)
(1.1)
70.9
2021
€’m
64.9
5.5
(4.7)
0.7
66.4
- Return on scheme assets (excluding amounts included in net interest cost)
536.1
(129.8)
- Experience losses on schemes’ liabilities
- Actuarial (gains)/losses arising from changes in demographic assumptions
- Actuarial gains arising from changes in financial assumptions
Recognised in the Consolidated Statement of Comprehensive Income
Total
44.4
(2.6)
(564.5)
13.4
84.3
24.9
41.9
(47.2)
(110.2)
(43.8)
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 2022Financial Statements Notes to the Financial Statements
237
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
2022
€’m
Schemes
in Deficit
2022
€’m
Schemes
in Surplus
2021
€’m
Schemes
in Deficit
2021
€’m
Total
2022
€’m
Total
2021
€’m
Present value of defined benefit obligation
(286.6)
(677.7)
(964.3)
(1,448.6)
(111.5)
(1,560.1)
Fair value of scheme assets
382.2
647.5
1,029.7
1,538.9
87.4
1,626.3
Net recognised surplus/(deficit) before deferred tax
95.6
(30.2)
Net related deferred tax (liability)/asset
(11.9)
7.3
Net recognised surplus/(deficit) after deferred tax
83.7
(22.9)
65.4
(4.6)
60.8
90.3
(24.1)
(14.8)
4.9
75.5
(19.2)
Net recognised surplus/(deficit) by region:
Eurozone
2022
€’m
UK
2022
€’m
Rest of
World
2022
€’m
Total
2022
€’m
Eurozone
2021
€’m
UK
2021
€’m
Rest of
World
2021
€’m
66.2
(9.9)
56.3
Total
2021
€’m
Present value of defined
benefit obligation
(286.6)
(591.2)
(86.5)
(964.3)
(427.4)
(1,025.0)
(107.7)
(1,560.1)
Fair value of scheme assets
382.2
586.0
61.5
1,029.7
487.0
1,051.9
87.4
1,626.3
Net recognised surplus/
(deficit) before deferred tax
Net related deferred tax
(liability)/asset
Net recognised surplus/
(deficit) after deferred tax
95.6
(5.2)
(25.0)
65.4
59.6
26.9
(20.3)
66.2
(11.9)
1.0
6.3
(4.6)
(7.9)
(6.9)
4.9
(9.9)
83.7
(4.2)
(18.7)
60.8
51.7
20.0
(15.4)
56.3
The surplus at 31 December 2022 relates to the Irish scheme (31 December 2021: 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:
2022
2021
Rate used to discount schemes’ liabilities
Inflation assumption
Rate of increase in salaries
Eurozone
%
4.20
2.30
N/A*
UK
%
4.85
3.05
N/A*
Rate of increase for pensions in payment
and deferred pensions
2.30
2.35 - 3.00
Rest of
World
%
5.00 - 5.35
2.50
4.50
-
Eurozone
%
1.50
1.90
N/A*
UK
%
1.95
3.25
N/A*
1.90
2.50 - 3.15
Rest of
World
%
2.25 - 2.75
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 2022
238
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
2022
2021
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
26
21
24
23
26
Rest of
World
Years
21 - 22
23
22 - 23
24 - 25
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 & 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 2022 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
2022
2021
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
%
8.0%
(7.2%)
6.4%
(5.8%)
-
-
8.2%
(7.3%)
3.3%
(3.5%)
-
-
Increase in life expectancy of 1 Year
Decrease in life expectancy of 1 Year
4.1%
(4.1%)
3.0%
(3.0%)
Rest of
World
%
4.0%
(3.7%)
-
-
0.2%
(0.2%)
2.0%
(2.0%)
Eurozone
%
UK
%
10.4%
(9.0%)
7.9%
(7.1%)
-
-
11.0%
(9.5%)
4.3%
(5.2%)
-
-
3.9%
(3.9%)
3.0%
(3.0%)
Rest of
World
%
5.2%
(4.7%)
-
-
0.2%
(0.2%)
2.5%
(2.5%)
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
26. Retirement benefits obligation (continued)
(iv) Reconciliations for defined benefit schemes
The movements in the defined benefit schemes’ obligation during the financial year were:
239
2022
€’m
2021
€’m
Present value of the defined benefit obligation at beginning of the financial year
(1,560.1)
(1,505.5)
Current service cost
Past service and settlements
Contributions by employees
Interest expense
Benefits paid
Re-measurements:
- experience losses on schemes’ liabilities
- actuarial gains/(losses) arising from changes in demographic assumptions
- actuarial gains arising from changes in financial assumptions
Decrease arising on settlement
Exchange translation adjustment
(3.0)
2.0
-
(28.3)
54.4
(44.4)
2.6
564.5
-
48.0
(5.5)
4.7
-
(21.9)
46.7
(24.9)
(41.9)
47.2
17.7
(76.7)
Present value of the defined benefit obligation at end of the financial year
(964.3)
(1,560.1)
Present value of the defined benefit obligation at end of the financial year that relates to:
Wholly unfunded schemes
Wholly or partly funded schemes
(14.2)
(16.1)
(950.1)
(1,544.0)
(964.3)
(1,560.1)
The weighted average duration of the defined benefit obligation at 31 December 2022 is approximately 16 years
(2021: approximately 20 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
2022
€’m
2021
€’m
1,626.3
1,451.1
29.4
15.3
-
21.2
15.4
-
(54.4)
(46.7)
(536.1)
-
(50.8)
129.8
(17.7)
73.2
1,029.7
1,626.3
Kerry Group Annual Report 2022
240
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
2022
€’m
488.3
135.6
126.2
14.6
54.2
210.8
2021
€’m
537.7
380.0
308.4
24.4
185.9
189.9
Total fair value of pension schemes’ assets
1,029.7
1,626.3
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 2022 and 2021 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 2022 or 2021.
The Irish, UK and USA schemes have invested in 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 LDI solutions invest in various levered and unlevered bonds and the value of the LDI
assets at 31 December 2022 across the schemes was €488.3m (2021: €537.7m) 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 2023, the Group expects to make contributions of approximately €12.8m 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.
2022
€’m
2021
€’m
35.0
35.0
22.1
-
22.1
22.1
-
22.1
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
241
27. Share capital (continued)
Shares issued
During 2022 a total of 138,030 (2021: 148,415) 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 2022 was 176,986,481 (2021: 176,848,451).
Share buy back programme
At the 2022 Annual General Meeting, shareholders passed a resolution authorising the Company to purchase up to 5% of its
own issued share capital. In 2022 and 2021, 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 the Group’s plans are outlined below and are the same as those recognised in the Company
financial statements.
The Group recognised an expense of €22.9m (2021: €17.2m) 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), Return on Average Capital Employed (ROACE) and Sustainability
metrics of the Group during a three year period (‘the performance period’). The invitations made in 2020, 2021 and 2022 will
potentially vest in 2023, 2024 and 2025 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 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 and 2022 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 2017 - 2020 will potentially vest in 2023 - 2026 respectively. An invitation may lapse if
a participant ceases to be employed within the Group before the vesting date.
Kerry Group Annual Report 2022
242
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
Outstanding at end of the financial year
Number of
Conditional
Awards
2022
Number of
Conditional
Awards
2021
1,286,342
1,256,255
(66,854)
(62,724)
(46,137)
(50,382)
(119,222)
(129,018)
(224,567)
(229,909)
590,856
502,120
1,420,418
1,286,342
Number of Conditional Awards 2022
Number of Conditional Awards 2021
Shares
Share
Options
Total
Shares
Share
Options
Total
Outstanding at beginning of the financial year
384,130
902,212
1,286,342
374,980
881,275
1,256,255
Forfeited
Vested
Relinquished
(32,601)
(34,253)
(66,854)
(18,817)
(43,907)
(62,724)
(46,137)
(119,222)
(165,359)
(50,382)
(129,018)
(179,400)
(65,261)
(159,306)
(224,567)
(64,560)
(165,349)
(229,909)
New conditional awards
177,833
413,023
590,856
142,909
359,211
502,120
Outstanding at end of the financial year
417,964
1,002,454
1,420,418
384,130
902,212
1,286,342
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
2022
Number of
Share
Options
2021
187,027
160,483
65,141
65,125
66,586
48,046
(77,175)
(88,088)
240,118
187,027
Share options under the LTIP scheme have an exercise price of 12.50 cent. The remaining weighted average life for share
options outstanding is 4.1 years (2021: 4.4 years). The weighted average share price at the date of exercise was €99.19 (2021:
€113.07). 54,081 share options (2021: 62,432 share options) which vested in the financial year are deferred and therefore are
not exercisable at year end.
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
243
28. Share-based payments (continued)
(i) Long-Term Incentive Plan (continued)
At the invitation grant date, the fair value per conditional award and the assumptions used in the calculations are as follows:
LTIP Scheme
2022
Conditional
Award at
Grant Date
2021
Conditional
Award at
Grant Date
2020
Conditional
Award at
Grant Date
2019
Conditional
Award at
Grant Date
Conditional Award Invitation date
March 2022
March 2021
March 2020
March 2019
Year of potential vesting
Share price at grant date
Exercise price*
Expected volatility
Expected life
Risk free rate
Expected dividend yield
Expected forfeiture rate
2025
€95.46
€0.125
28.6%
3 years
(0.3%)
0.8%
5.0%
2024
2023/2026
2022/2025
€107.80
€109.00
€0.125
25.5%
€0.125
20.8%
€95.40
€0.125
19.3%
3 years
3/7 years
3/7 years
(0.7%)
0.8%
5.0%
(1.0%)
0.7%
5.0%
(0.5%)
0.7%
5.0%
Weighted average fair value at grant date
€77.68
€89.78 €92.06/€103.97
€78.00/€95.92
Valuation model
Monte Carlo
Pricing
Monte Carlo
Pricing
Monte Carlo
Pricing
Monte Carlo
Pricing
*
Exercise price refers to exercise price for both shares and share options.
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 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 33% 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 9,200 share options (2021: 4,632 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 2021 and 2022 financial years will be released from deferral in 2023 and 2024 respectively.
Kerry Group Annual Report 2022
244
29. Cash flow components
(i) Cash flow analysis
Change in working capital
Increase in inventories
Increase in trade and other receivables
Increase in trade and other payables
Increase/(decrease) in non-current liabilities
Share-based payment expense
Purchase of assets
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase 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
2022
€’m
(156.3)
(224.3)
108.2
25.5
22.9
(98.1)
102.6
(13.4)
17.2
(224.0)
(184.3)
(208.8)
(12.2)
-
(263.9)
(34.1)
(2.4)
(221.0)
(300.4)
970.0
(0.2)
969.8
1,039.1
(5.3)
1,033.8
Group
2021
€’m
Company
2022
€’m
Company
2021
€’m
(192.6)
-
-
(12.2)
(50.0)
0.6
-
22.9
11.3
3.6
-
17.2
(29.2)
-
-
-
-
-
-
-
-
-
-
-
0.1
-
0.1
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
Lease
liabilities*
€’m
Note
Net
Debt
€’m
At 1 January 2021
Cash flows
563.1
81.9
447.0
(39.3)
Foreign exchange adjustments
29.0
7.8
Other non-cash movements
-
(15.8)
At 31 December 2021
23
1,039.1
34.6
Cash flows
Foreign exchange adjustments
(76.0)
6.9
-
3.5
Other non-cash movements
-
(22.6)
(2.8)
(2.4)
(0.1)
-
(5.3)
5.0
0.1
-
-
(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)
0.3
(39.9)
0.7
(0.3)
(70.0)
(29.7)
35.1
(34.9)
(2.6)
(32.3)
(661.0)
685.0
1.4
(27.5)
(26.1)
At 31 December 2022
23
970.0
15.5
(0.2)
(700.9)
(2,432.6)
(2,148.2)
(69.2) (2,217.4)
*
Liabilities from financing activities.
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
30. Business combinations
The following acquisitions were completed by the Group during 2022:
Acquisition Type
Completion
date
Percentage
acquired
Segment Principal activity
Strategic rationale
245
Equity March
2022
100% share
acquisition
Taste &
Nutrition
A producer of quality spray dried
ingredients servicing the Snacks and
Dairy markets based in Malaysia.
Further supports Kerry’s
growth initiatives in authentic
taste and emerging markets.
Almer
Malaysia
Sdn. Bhd.
c-LEcta
GmbH*
Equity March
2022
93% share
acquisition
Taste &
Nutrition
A leading biotechnology
innovation company based in
Germany specialising in precision
fermentation, optimised bio-
processing and bio-transformation
for the creation of high-value
targeted enzymes and ingredients.
Brings leading innovation
capabilities in enzyme
engineering, fermentation
and bio-processing to further
enhance Kerry’s key growth
platform development.
A leader in Ayurvedic and botanical
ingredients, with strong research
capabilities and facilities in the USA
and India.
Brings a portfolio of clinically
backed branded ingredients
across the need states of
cognition and healthy ageing.
Natreon,
Inc.
Equity March
2022
100% share
acquisition
Taste &
Nutrition
Asset September
2022
Carve out
business
acquisition
Taste &
Nutrition
Kerry acquired the powdered
cheese business and related
assets of The Kraft Heinz Company,
based in the US.
Enhances Kerry’s scale,
manufacturing capability and
customer base in the important
snacking category.
Certain
trade and
assets of
The Kraft
Heinz
Company
*
The Group has a 93% equity shareholding in c-LEcta GmbH. It is consolidated in the Group financial statements
as a 93% owned subsidiary on the basis of contractual arrangements with the remaining portion recognised as
non-controlling interests.
The table below provides details of the identifiable net assets, including adjustments to provisional fair values, in respect of the
acquisitions completed during the year ended 31 December 2022:
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
Non-controlling interests
Goodwill
Total consideration
Satisfied by:
Cash
Deferred payment
Total
2022
€’m
46.4
122.8
0.5
24.8
35.1
10.2
(20.0)
(21.9)
(2.2)
195.7
(1.6)
197.8
391.9
376.6
15.3
391.9
Kerry Group Annual Report 2022
246
30. Business combinations (continued)
Net cash outflow on acquisition:
Cash
Less: cash and cash equivalents acquired
Plus: debt acquired (included in other non-current liabilities above)
Total
2022
€’m
376.6
(24.8)
2.0
353.8
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, primarily values relating to property, plant and equipment and liabilities (as not all information is available at
this point in time). The valuation of the fair value of assets and liabilities will be completed within the measurement period.
For the acquisitions completed in 2021, 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’. None of the
acquisitions completed during the period were considered material to warrant separate disclosure.
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. €30.3m of goodwill
recognised is expected to be deductible for income tax purposes.
Transaction expenses related to these acquisitions of €6.5m were charged in the Group’s Consolidated Income Statement
during the financial year. The fair value of the financial assets acquired includes trade and other receivables with a fair value of
€10.2m and a gross contractual value of €10.4m.
Non-controlling interests represent the portion of the equity of a subsidiary not attributable either directly or indirectly to the
Group and are presented separately in the Consolidated Income Statement and within equity in the Consolidated Balance
Sheet, and are distinguished from the Group’s shareholders’ equity. Where not all of the equity of a subsidiary is acquired, the
non-controlling interests are recognised at the non-controlling interest’s share of the acquiree’s net identifiable assets.
The revenue and profit after taxation attributable to equity holders of the parent to the Group contributed from date of
acquisition for all business combinations effected during the financial year is as follows:
Revenue
Profit after taxation attributable to equity holders of the parent
Total
2022
€’m
103.2
11.3
The revenue and profit after taxation attributable to equity holders of the parent to the Group determined in accordance with
IFRS as though the acquisition date for all business combinations effected during the financial year had been the beginning of
that financial year would be as follows:
Revenue
Profit after taxation attributable to equity holders of the parent
31. Contingent liabilities
Company:
2022
acquisitions
€’m
174.7
15.9
Kerry Group
excluding 2022
acquisitions
€’m
Consolidated
Group including
acquisitions
€’m
8,668.7
595.1
8,843.4
611.0
2022
€’m
2021
€’m
(i) Guarantees in respect of borrowings of subsidiaries
3,146.2
3,112.7
(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 2022 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 2022Financial Statements Notes to the Financial Statements
247
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
Included in other financial commitments are sustainability related projects of €12.5m (2021: €10.1m).
2022
€’m
70.5
129.5
200.0
2021
€’m
60.1
111.0
171.1
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
Dairy Ireland reporting segment. These Directors retired from the Group’s Board of Directors effective from 28 April 2022.
Aggregate purchases from, and sales to, these Directors during this period amounted to €0.1m (2021: €0.3m) and €0.1m (2021:
€0.1m) respectively. The trading balance outstanding to the Group at the financial year end was €nil (2021 €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 by the Parent Company
Cost recharges from subsidiaries of the Parent Company
Trade and other receivables to the Parent Company
(iii) Trading with joint ventures
Details of transactions and balances outstanding with joint ventures are as follows:
2022
€’m
185.0
26.5
230.9
2021
€’m
331.4
17.6
216.8
Joint ventures
Rendering of services
Sale of goods
Amounts receivable/
(payable) at 31 December
2022
€’m
0.1
2021
€’m
0.1
2022
€’m
0.2
2021
€’m
1.1
2022
€’m
3.1
2021
€’m
(0.1)
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 2022, dividends of €20.0m (2021: €18.8m) 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 (2021: €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
2022
€’m
2021
€’m
8.8
0.6
2.2
-
-
8.1
0.5
1.9
-
-
11.6
10.5
Kerry Group Annual Report 2022
248
33. Related party transactions (continued)
(v) Transactions with key management personnel (continued)
Retirement benefit charges of €0.2m (2021: €0.2m) arise under a defined benefit scheme relating to 1 Director (2021: 1 Director)
and charges of €0.4m (2021: €0.3m) arise under a defined contribution scheme relating to 2 Directors (2021: 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 (2021: €nil). Dividends
totalling €0.1m (2021: €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 exclusive negotiations prior to the year ended 31 December 2022 to sell the trade and assets of its Sweet
Ingredients Portfolio, for a consideration of €500m comprising an initial cash consideration of €375m plus a €125m interest
bearing vendor loan note as announced on 11 January 2023. The potential sale is subject to relevant regulatory approvals,
employee consultation and routine closing adjustments. The associated assets and liabilities have consequently been
presented separately as assets held for sale (note 18) in the financial statements for the year ended 31 December 2022; and
proposed a final dividend of 73.40 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 2022.
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 share-based payments 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.
Non-controlling interests
Non-controlling interests represent the portion of the equity of a subsidiary not attributable either directly or indirectly to
the Group.
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
36. Group entities
Principal subsidiaries and joint venture undertakings
249
Country
Ireland
Company Name
Nature of Business
Registered Office
Accommodation Tralee Limited
Ballyfree Farms Limited
Breeo Brands Limited
Breeo Foods Limited
Carteret Investments Unlimited Company
Investment
Dairy Ireland
Dairy Ireland
Dairy Ireland
Investment
Cuarto Limited
Taste & Nutrition
Dairy Consumer Foods (Ireland) Limited
Dawn Dairies Limited
Glenealy Farms (Turkeys) Limited
Golden Vale Clare Limited
Golden Vale Dairies Limited
Golden Vale Holdings Limited
Golden Vale Investments Limited
Golden Vale Limited
Grove Farm Limited
Helios Limited
Kerry Dairy Consumer Foods 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
Dairy Ireland
Dairy Ireland
Dairy Ireland
Investment
Dairy Ireland
Investment
Investment
Investment
Investment
Investment
Dairy Ireland
Investment
Dairy Ireland
Investment
Dairy Ireland
Dairy Ireland
Taste & Nutrition
Dairy Ireland
Services
Services
Services
Services
Services
Kerry Health and Nutrition Institute Limited
Taste & Nutrition
Kerry Holdings International (Ireland) Limited
Kerry Holdings (Ireland) Limited
Investment
Investment
Kerry Ingredients & Flavours Limited
Taste & Nutrition
Kerry Ingredients (Ireland) Limited
Kerry Ingredients Holdings (Ireland) Limited
Dairy Ireland
Investment
Kerry Taste & Nutrition (Ireland) Limited
Taste & Nutrition
Kerry Treasury Services Limited
Kerrykreem Limited
Lifesource Foods Research Limited
Linovale Limited
Maddens Milk Limited
Plassey Holdings Limited
Services
Dairy Ireland
Investment
Investment
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 2022
250
36. Group entities (continued)
Principal subsidiaries and joint venture undertakings (continued)
Company Name
Nature of Business
Registered Office
Country
Ireland
Princemark Holdings Designated Activity Company
Services
Putaxy Limited
Rye Developments Limited
Rye Investments Limited
Selamor Limited
Tacna Investments Limited
Zenbury International Limited
Newmarket Co-operative Creameries Limited
UK
Dairy Produce Packers Limited
Golden Cow Dairies Limited
Golden Vale (NI) Limited
Leckpatrick Dairies Limited
Leckpatrick Holdings Limited
RVF (UK) Limited
Driedale Limited
Kerry Foods Limited
Kerry Holdings (U.K.) Limited
Dairy Consumer Foods (UK) Limited
E B I Foods Limited
Gordon Jopling (Foods) Limited
Kerry Ingredients (UK) Limited
Investment
Services
Dairy Ireland
Dairy Ireland
Investment
Services
Dairy Ireland
Dairy Ireland
Dairy Ireland
Investment
Dairy Ireland
Investment
Dairy Ireland
Dairy Ireland
Dairy Ireland
Investment
Dairy Ireland
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Kerry Ingredients Holdings (U.K.) Limited
Investment
Titusfield Limited
Kerry Flavours UK Limited
Belgium
Kerry Ingredients Belgium N.V.
Netherlands
Kerry (NL) B.V.
Kerry Group B.V.
Proparent B.V. (75% shareholding)
Niacet Cooperatief U.A.
Niacet B.V.
Czech Republic
Kerry Ingredients & Flavours S.R.O.
France
Kerry Ingredients France SAS
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Investment
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Kerry Ingredients Holdings France SAS
Investment
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
Kerry Biotech GP GmbH
c-LEcta GmbH (93% shareholding)
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
1
1
1
1
1
1
1
2
3
3
3
3
3
3
3
4
4
5
5
5
5
5
5
5
6
7
7
8
9
9
10
11
11
11
12
13
13
14
14
15
16
17
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
251
Nature of Business
Registered Office
36. Group entities (continued)
Principal subsidiaries and joint venture undertakings (continued)
Country
Denmark
Italy
Poland
Hungary
Company Name
Cremo Ingredients A/S
Kerry Ingredients & Flavours Italia S.p.A.
Kerry Polska Sp. z o.o.
Kerry Hungaria Kft
Luxembourg
Kerry Luxembourg S.a.r.l.
Romania
Spain
Malta
Slovakia
Sweden
Ukraine
USA
Canada
Mexico
Zenbury International Limited S.a.r.l.
Kerry Romania S.R.L.
Kerry Iberia Taste & Nutrition, S.L.U.
Harinas y Semolas del Noroeste, S.A.U.
Pevesa Biotech, S.A.U.
Biosearch, S.A.U.
Kerry Malta Limited
Dera SK, S.R.O.
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.
Niacet Corporation
Natreon, Inc.
Kerry (Canada) Inc.
Kerry Ingredients (de Mexico), S.A. de C.V.
Enmex, S.A. de C.V.
Brazil
Kerry do Brasil Ltda
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Services
Services
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
Kerry da Amazonia Ingredientes e Aromas Ltda
Taste & Nutrition
Costa Rica
Baltimore Spice Central America, S.A.
Global Spice, S.A.
Taste & Nutrition
Taste & Nutrition
Chile
Kerry Chile Ingredientes, Sabores Y Aromas Ltda
Taste & Nutrition
Colombia
Kerry Ingredients & Flavours Colombia S.A.S.
Taste & Nutrition
Real S.A.S.
Panama
Kerry Panama, 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.
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Aromaticos de Centro America, S.A. de C.V.
Taste & Nutrition
Thailand
Kerry Ingredients (Thailand) Limited
Philippines
Kerry Food Ingredients (Philippines), Inc.
Kerry Manufacturing (Philippines), Inc.
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
18
19
20
21
22
22
23
24
25
26
27
28
29
30
31
32
32
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
53
54
55
56
Kerry Group Annual Report 2022
Company Name
Nature of Business
Registered Office
252
36. Group entities (continued)
Principal subsidiaries and joint venture undertakings (continued)
Country
Singapore
Malaysia
Japan
China
Kerry Ingredients (S) PTE Ltd
Kerry Ingredients (M) Sdn. Bhd.
Taste & Nutrition
Taste & Nutrition
Kerry Group Business Services (ASPAC) Sdn. Bhd.
Taste & Nutrition
Almer Malaysia Sdn. Bhd.
Kerry Japan Kabushiki Kaisha
Taste & Nutrition
Taste & Nutrition
Kerry Food Ingredients (Hangzhou) Co., Ltd
Taste & Nutrition
Kerry Ingredients Trading (Shanghai) Co., Ltd
Taste & Nutrition
Kerry Foods (Nantong) Co., Ltd
Taste & Nutrition
TianNing Flavor & Fragrance (JiangSu) Co., Ltd
Taste & Nutrition
Zhejiang Hangmai Food Technologies Co., Ltd
Taste & Nutrition
Sias Food Co., Ltd
Taste & Nutrition
Shandong Tianbo Food Ingredients Co., Ltd
Taste & Nutrition
Egypt
Kerry Egypt LLC
Indonesia
PT Kerry Ingredients Indonesia
PT Kerry Trading Indonesia
India
Australia
Kerry Ingredients India Private Limited
Kerry Ingredients Australia Pty. Ltd
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
South Africa
Kerry Ingredients South Africa (Proprietary) Limited
Taste & Nutrition
South Korea
Kerry Ingredients Korea LLC
Jungjin Food Co., Ltd
Saudi Arabia
AATCO Food Industries LLC
AATCO Food Industries SPC
Oman
Vietnam
UAE
Kerry Taste & Nutrition (Vietnam) Company Limited
Taste & Nutrition
Kerry MENAT DMCC
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
57
58
58
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
Notes
(a)
(b)
(c)
All group entities are wholly owned subsidiaries unless otherwise stated.
Country represents country of incorporation and operation. Ireland refers to the Republic of Ireland.
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.
Kerry Group Annual Report 2022Financial Statements Notes to the Financial Statements
36. Group entities (continued)
Registered Office
253
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
Prince’s Street, Tralee, Co Kerry, V92 EH11, Ireland.
Newmarket, Co. Cork, Ireland.
Millburn Road, Coleraine, Londonderry, 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 Brussel, 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, 63924, Kleinheubach, Germany.
Neckarstrasse 9, 65239, Hochheim, Germany.
Hanna-Kunath-Strasse 25, 28199, Bremen, Germany.
c/o Kerry Food GmbH , Hauptstrasse 22, 63924, Kleinheubach, Germany.
Perlickstrabe 5, 04103, Leipzig, Germany.
Toftegårdsvej 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.
313 - 315, Barbu Vacarescu str, 5th floor Bucureşti Sectorul 2, Romania.
Calle Coto de Doñana, 15, 28320 Pinto, Madrid, Spain.
Polígono Industrial de las Gándaras de Budiño, O Porriño, 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.
635 Oakwood Drive, 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.
275 Northpointe Parkway, Suite 105, Amherst NY 14228, United States.
C T Corporation Systems, 820 Bear Tavern Road, West Trenton NJ 08628, United States.
Osler, Hoskin & Harcourt, LLP, 100 King Street West, 1 First Canadian Place, Suite 6200, Toronto ON M5X 1B8, Canada.
Carretera Panamericana Irapuato-Salamanca, Km 11.2, Apartado Postal 789, Irapuato, Guanajuato, 36660, Mexico.
Rio Lerma 228, Fraccionamiento Industrial San Nicolas, Tlalnepantla de Baz, Estado de Mexico, CP 54030, Mexico.
Avenida Mercedes Benz 460, Distrito Industrial, Campinas, Sao Paolo, 13054-750, Brazil.
Kerry Group Annual Report 2022
254
Financial Statements Notes to the Financial Statements
36. Group entities (continued)
Registered Office (continued)
42
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
Rua Hidra 188, Santo Agostinho, Manaus, 69036-520, Brazil.
Liceo de Pavas 200m West, 100 mts North, PO Box 1035 - 1200, San Jose, 10109, Costa Rica.
De la esquina noreste fabrica BTICINO, 50 mts al este, edificio a mano izquierda , San José, 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.
Carrera 3 # 6a – 100 oficina 703., Ed. Torre Protección, Cartagena, Bolivar, Colombia.
Parque Industrial Costa del Este, Calle 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, 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, Tambol Prakesa, Amphur Muang Samutprakarn, Samutprakarn Province,
Thailand.
Room 406, Cebu Business & Investments Consultants, 4/F Tulips Centre, AS Fortuna Street, Mandaue City, Cebu, 6014,
Philippines.
8/F The W Fifth Avenue Building, 5th Avenue, Bonifacio Global City, Fort Bonifacio, Taguig City, 1634, Philippines.
8A Biomedical Grove, #02-05/12, Immunos, 138648, Singapore.
Tricor Corporate Services Sdn Bhd (779773-H), 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.
Renhe 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, Zhejiang 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.
5th Floor, Namaa Bulding, Rameses Extension Street, 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, Marathahalli-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 5802, PC 21432, 2nd Industrial City, Jeddah, Kingdom of Saudi Arabia.
P.O Box 729, 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 2022
255
SUPPLEMENTARY INFORMATION
Financial Definitions
(NOT COVERED BY INDEPENDENT AUDITORS’ REPORT)
Kerry uses a number of financial and non-financial key performance indicators (KPIs) to measure performance across its business.
These KPIs help inform decision making, assist effective goal setting and track progress in achieving the Group’s strategic objectives.
Kerry believes 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 Group’s purpose and values. Non-financial
key performance indicators are outlined in pages 38-39, while the principal financial definitions used by the Group, together with
reconciliations where the non-IFRS measures are not readily identifiable from the financial statements, are as follows:
1. Revenue
Volume growth
This represents the sales growth year-on-year, excluding pass-through pricing on input costs, currency impacts, acquisitions,
disposals and rationalisation volumes.
Volume growth is an important metric as it is seen as the key driver of organic top-line business improvement. Pricing impacts
revenue growth positively or negatively depending on whether inputs move up or down. A full reconciliation to reported
revenue growth is detailed in the revenue reconciliation below.
Revenue Reconciliation
2022
Taste & Nutrition
Dairy Ireland
Group
2021
Taste & Nutrition
Dairy Ireland
Group
Volume
growth
7.8%
0.1%
6.1%
8.7%
6.2%
8.0%
Price
8.7%
22.8%
11.7%
0.9%
1.8%
1.2%
Transaction
currency Acquisitions
Disposals
Translation
currency
0.2%
0.1%
0.2%
-
-
-
5.6%
(1.1%)
-
(37.6%)
4.3%
(9.8%)
2.4%
-
-
(13.0%)
1.8%
(3.5%)
8.2%
1.2%
6.8%
(2.8%)
1.1%
(1.8%)
Reported
revenue
growth
29.4%
(13.4%)
19.3%
9.2%
(3.9%)
5.7%
Prior year 31 December 2021 has been re-presented to reflect the changes in our reporting segments in line with how the
Chief Operating Decision Maker (the Executive Directors) assesses the Group’s performance from 1 January 2022. The Irish
dairy processing activities, previously reported in Taste & Nutrition, have been combined with the remaining dairy activities of
the Consumer Foods business and this segment is named Dairy Ireland. Included within the Dairy Ireland 31 December 2021
comparatives are the results of the Consumer Foods Meats and Meals business which was disposed by the Group on
27 September 2021.
Like-for-like¹ Revenue Reconciliation
2022
Taste & Nutrition
Dairy Ireland
Group
2021
Taste & Nutrition
Dairy Ireland
Group
Volume
growth
7.8%
0.2%
6.7%
8.7%
5.5%
8.2%
Price
8.7%
36.0%
12.9%
0.9%
3.2%
1.3%
Transaction
currency
Acquisitions
Disposals
Translation
currency
Like-for-like
revenue
growth
0.2%
0.2%
0.2%
-
-
-
5.6%
-
4.8%
2.4%
-
2.1%
(1.1%)
-
(0.8%)
-
-
-
8.2%
0.7%
7.2%
(2.8%)
0.6%
(2.4%)
29.4%
37.1%
31.0%
9.2%
9.3%
9.2%
Kerry Group Annual Report 2022
256
Supplementary Information Financial Definitions
2. EBITDA
EBITDA represents operating profit after taxation before finance income and costs, income taxes, depreciation (net of capital
grant amortisation), intangible asset amortisation, non-trading items and share of joint ventures’ results after taxation. EBITDA
is reflective of underlying trading performance and allows comparison of the trading performance of the Group’s businesses,
either year-on-year or with other businesses.
Profit after taxation
Share of joint ventures’ results after taxation
Finance income
Finance costs
Income taxes
Non-trading items
Intangible asset amortisation
Depreciation (net)
EBITDA
3. EBITDA Margin
EBITDA margin represents EBITDA expressed as a percentage of revenue.
EBITDA
Revenue
EBITDA margin
4. Operating Profit
2022
€’m
606.5
0.4
(6.6)
72.8
92.5
146.2
82.7
221.6
2021
€’m
763.0
-
(0.3)
70.2
53.3
(91.5)
80.8
201.5
1,216.1
1,077.0
2022
€’m
2021
€’m
1,216.1
1,077.0
8,771.9
7,350.6
13.9%
14.7%
Operating profit is profit before income taxes, finance income, finance costs and share of joint ventures’ results after taxation.
Profit before taxation
Finance income
Finance costs
Share of joint ventures’ results after taxation
Operating profit
2022
€’m
2021
€’m
699.0
816.3
(6.6)
72.8
0.4
(0.3)
70.2
-
765.6
886.2
Kerry Group Annual Report 2022
257
5. 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 equity holders 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
2022
EPS
cent
341.9
28.7
70.0
440.6
Performance
%
2021
EPS
cent
Performance
%
(20.6%)
430.6
37.6%
26.0
(75.8)
380.8
-
-
15.7%
(8.4%)
7.3%
-
-
10.2%
1.9%
12.1%
*
Impact of 2022 translation was (31.9)/380.8 cent = (8.4%) (2021: 1.9%).
6. Free Cash Flow
Free cash flow is EBITDA plus movement in average working capital, capital expenditure (net), payment of lease liabilities,
pensions contributions paid 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 joint ventures’ results after taxation*
Payments on non-trading items
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
2022
€’m
721.8
22.6
-
85.4
(221.0)
(35.1)
38.1
1.4
27.2
640.4
2021
€’m
654.0
146.6
3.9
76.1
(300.4)
(34.9)
19.4
0.7
0.7
566.1
*
Share of joint ventures’ results after taxation was not included in the Group’s EBITDA, but as a separate line item on the
face of the Consolidated Income Statement for the year end 31 December 2022, therefore appears as a reconciling item in
the comparative reconciliation for free cash flow.
Kerry Group Annual Report 2022
258
Supplementary Information Financial Definitions
7. Cash Conversion
Cash conversion is defined as free cash flow, expressed as a percentage of adjusted earnings after taxation. Cash conversion is
an important metric as it measures how much of the Group’s adjusted earnings is converted into cash.
Free cash flow
Profit after taxation attributable to equity holders of the parent
Brand related intangible asset amortisation
Non-trading items (net of related tax)
Adjusted earnings after taxation
Cash Conversion
8. Liquidity Analysis
2022
€’m
640.4
606.4
50.9
124.2
781.5
82%
2021
€’m
566.1
763.0
46.2
(134.4)
674.8
84%
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
2022
Times
1.8
18.1
2021
Times
2.0
14.9
9. Average Capital Employed
Average capital employed is calculated by taking an average of the shareholders’ equity and net debt over the last three
reported balance sheets.
2022
€’m
H1 2022
€’m
2021
€’m
H1 2021
€’m
2020
€’m
Equity attributable to equity holders of the parent
6,221.9
6,088.7
5,601.2
4,963.1
4,655.5
Net debt
Total capital employed
Average capital employed
2,217.4
2,456.3
2,124.1
1,980.6
1,945.1
8,439.3
8,545.0
7,725.3
6,943.7
6,600.6
8,236.5
7,089.9
The definition for total capital employed has been updated to reflect lease liabilities in ‘Net debt’ and ‘Equity attributable to
equity holders of the parent’ as reported on the Consolidated Balance Sheet. This calculation no longer adds back ‘Goodwill
amortised (pre conversion to IFRS)’ to ‘Equity attributable to equity holders of the parent’, in line with current market practice.
Kerry Group Annual Report 2022
10. Return on Average Capital Employed (ROACE)
This measure is defined as profit after taxation attributable to equity holders 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. ROACE is a key measure of the return the Group achieves on its investment in capital expenditure projects,
acquisitions and other strategic investments.
259
Profit after taxation attributable to equity holders 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
2022
€’m
606.4
124.2
50.9
66.2
2021
€’m
763.0
(134.4)
46.2
69.9
847.7
744.7
8,236.5
7,089.9
10.3%
10.5%
Prior year has been re-presented to align with the updated definition of ‘Total capital employed’.
11. 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
12. 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)
13. Enterprise Value
2022
2021
€113.25
€118.50
31.4
66.7
28.5
60.6
€84.24
€113.25
(24.7%)
(3.7%)
2022
2021
€84.24
€113.25
176,986.5
176,848.5
14,909.3
20,028.1
Enterprise value is calculated as per external market sources. It is market capitalisation plus reported borrowings less total cash
and cash equivalents.
14. Net Debt
Net debt comprises borrowings and overdrafts, interest rate derivative financial instruments, lease liabilities and cash at bank
and in hand. See full reconciliation of net debt in note 23 to the financial statements on pages 218-220.
Kerry Group Annual Report 2022
260
NOTES
Kerry Group Annual Report 2022 Courage
Enterprising Spirit
Open-mindedness
Ownership
Inclusiveness
Kerry Group
Prince’s Street, Tralee,
Co. Kerry, V92 EH11, Ireland.
T: +353 66 718 2000
www.kerry.com
K
e
r
r
y
G
r
o
u
p
A
n
n
u
a
l
R
e
p
o
r
t
2
0
2
2
Expanding Horizons is the story of
Kerry’s remarkable journey, from
our origins in the dairy pastures of
Southwest Ireland, to the company
we are today, a world leader in
taste and nutrition.
In 2022, as we celebrated our 50th anniversary,
this theme enabled us to reflect on our heritage,
on what we have achieved and to look to the future
with determination and optimism.
We celebrated the people who made Kerry what
it is today and who continue to do so every day,
delivering real impact for our customers, as we
strive to create a world of sustainable nutrition.
CBP010293
Kerry Group
Annual Report 2022