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
3
SCIENCE-BACKED
SUSTAINABLE
NUTRITION
Kerry Group
Prince’s Street, Tralee,
Co. Kerry, V92 EH11, Ireland.
T: +353 66 718 2000
www.kerry.com
Kerry Group
Annual Report 2023
CONTENTS
STRATEGIC
REPORT
Our Performance in 2023 4
At a Glance 6
Chairman's Statement 8
Chief Executive Officer’s Review 10
Our People 14
Our Business Model 24
Our Markets 26
Our Strategy 28
Our Technologies 30
Strategy & Targets 32
Key Performance Indicators 34
Financial Review 36
Business Review: Taste & Nutrition 42
Business Review: Dairy Ireland 45
Sustainability Review 46
Risk Management Report 92
DIRECTORS’
REPORT
Board of Directors 108
Report of the Directors 112
Governance Report
Corporate Governance Report 118
Audit Committee Report 135
Governance and Nomination
Committee Report 141
Sustainability Committee Report 148
Remuneration Committee Report 150
FINANCIAL
STATEMENTS
Independent Auditors’ Report 184
Financial Statements 192
Notes to the Financial Statements 200
SUPPLEMENTARY
INFORMATION
Financial Definitions 269
Kerry Group Annual Report 2023
1
1
Strategic Report
STRATEGIC
REPORT
Our Performance in 2023 4
At a Glance 6
Chairman's Statement 8
Chief Executive Officer’s Review 10
Our People 14
Our Business Model 24
Our Markets 26
Our Strategy 28
Our Technologies 30
Strategy & Targets 32
Key Performance Indicators 34
Financial Review 36
Business Review: Taste & Nutrition 42
Business Review: Dairy Ireland 45
Sustainability Review 46
Better for People 51
Better for Society 56
Better for Planet 62
Climate-Related Risk and Opportunity 70
EU Taxonomy 84
Risk Management Report 92
FUSING SCIENCE AND
CULINARY EXPERTISE TO
PIONEER SUSTAINABLE
NUTRITION SOLUTIONS
THAT WILL NOURISH
GENERATIONS TO COME
2
Kerry Group Annual Report 2023
Strategic Report
Kerry Group Annual Report 2023
3
Strategic Report / Our Performance in 2023
OUR PERFORMANCE IN 2023
SOLVING OUR
CUSTOMERS' COMPLEX
CHALLENGES WITH
DIFFERENTIATED
SOLUTIONS
4
Kerry Group Annual Report 2023
Strategic Report / Our Performance in 2023
PERFORMANCE MEASURES
Financial
Group Revenue
Volume Growth¹
€8.0bn
2022: €8.8bn
-0.9%2022: +6.1%
Group EBITDA¹
Group EBITDA Margin¹
€1.2bn
2022: €1.2bn
14.5%
2022: 13.9%
Net Cash from
Operating Activities
Free Cash Flow¹
(cash conversion %)
€1,038m
2022: €722m
Basic
EPS
410.4c
+20%
2022: 341.9c (20.6%)
Total Dividend
Per Share
115.4c
+10.1%
2022: 104.8c +10.1%
€701m
92%
2022: €640m 82%
Constant Currency
Adjusted EPS¹
430.1c
+1.2%
2022: 440.6c +7.3%
Return on Average
Capital Employed¹
10.0%
2022: 10.3%
Non-Financial
Consumers reached with
Positive and Balanced
Nutritional Solutions²
1.25bn
2022: 1.2bn
Scope 1 & 2
Carbon Reduction²
48%2022: 45%
Reduction in
Food Waste²
39%2022: 41%
¹ See Key Performance Indicators section pages 34-35 and the Supplementary Information section page 269 for definitions,
calculations and reconciliations of Alternative Performance Measures
² See Sustainability Review pages 46-69 for further information on non-financial metrics
Kerry Group Annual Report 2023
5
5
Kerry Group Annual Report 2023 Strategic Report / At A Glance
AT A GLANCE
Kerry is a world leader in sustainable taste and nutrition solutions.
Using our unique capabilities, we partner with customers to create
healthier, tastier, and more sustainable products that are enjoyed
by over 1 billion people around the world.
OUR
PEOPLE
OUR
GLOBAL
FOOTPRINT
OUR
PROVEN
TRACK
RECORD1
21,000+
Employees
137
Manufacturing
Locations
1,100+
R&D Scientists
70+
Technology and
Innovation Centres
+9%
+12% +12% +13% +16%
Revenue
CAGR
EBITDA
CAGR
Adjusted
EPS
CAGR
Share
Price
CAGR
Dividend
per share
CAGR
1
6
CAGR = Compound Average Growth Rate (1986 - 2023)
Kerry Group Annual Report 2023
Strategic Report / At A Glance
OUR BUSINESSES
Taste & Nutrition
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.
24%
24%
24%
Geography
End Use Market
7%
7%
Channel
7%
31%
31%
31%
22%
22%
22%
26%
26%
26%
Americas
Europe
APMEA
Americas
Europe
APMEA
Americas
Food
Europe
Beverage
APMEA
Pharma
Food
Beverage
Pharma
Retail
Food
Foodservice
Beverage
Pharma
Retail
Foodservice
Retail
Foodservice
24%
24%
31%
31%
7%
7%
22%
22%
26%
26%
Americas
Europe
APMEA
Americas
Europe
APMEA
Food
Beverage
Pharma
Food
Beverage
Pharma
Retail
Retail
Foodservice
Foodservice
86%
96%
Group Revenue
€8.0bn
Group EBITDA
€1.2bn
14%
4%
Taste & Nutrition
Dairy Ireland
Dairy Ireland
A leading provider of Irish 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.
Kerry Group Annual Report 2023
77
Kerry Group Annual Report 2023 Strategic Report / Chairman's Statement
CHAIRMAN'S STATEMENT
KERRY DELIVERED
A RESILIENT
PERFORMANCE
IN 2023 AGAINST
A CHALLENGING
BACKDROP, WHILE
DEMONSTRATING
AGILE CAPITAL
DEPLOYMENT
Overview
I am pleased to report a solid performance against
the backdrop of significant macroeconomic challenges
and geopolitical issues. During 2023, the Group’s
Taste and Nutrition segment delivered volume growth
which represented a good market outperformance.
This exemplifies the resilience of the organisation and
our collective drive to deliver long-term sustainable
results through the execution of our strategy.
available and will prioritise those that will generate
sustained value over the longer-term taking account
of prevailing market conditions.
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.
The Group continues to evolve its portfolio to enable
long-term growth and solidify our position 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, without compromising on taste.
The Group’s standalone Sustainability Committee
was established in 2023 to enhance Board oversight
of the implementation of the Group’s sustainability
strategy as we help our customers create healthier,
more nutritious products that taste great in a way that
protects people and the environment around us.
Strategic Update
2023 is the second year of Kerry’s refreshed strategic
plan and the management team has continued to
make progress in implementing the Group’s strategy,
supported by agile capital deployment.
Through targeted capital investments and strategic
M&A activity, the Group continues to evolve its footprint
and technology portfolio to strengthen Kerry’s position
as a world-leading taste and nutrition company and to
enable sustainable long-term growth. To support our
growth ambitions, the Group is investing in a range of
digital initiatives which will make it easier and faster for
our customers to do business with us.
The Group will remain disciplined and flexible in terms
of assessing the various capital allocation options
Details regarding the Group’s sustainability strategy,
targets, performance, policies and programmes are
outlined in the Sustainability Committee Report on
pages 148-149, in the Sustainability Review on pages
46-91 and in the 2023 Sustainability Report, which is
available on kerry.com.
Corporate Governance
The Board is committed to maintaining the highest
standards of corporate governance. During 2023, the
Board reviewed the Company’s corporate governance
policies and procedures to monitor compliance with
the UK Corporate Governance Code and the Irish
Corporate Governance Annex (together the Code)
alongside the latest developments in best practice.
We also engaged with our stakeholders during the
year as we believe listening to their views and needs
8
Kerry Group Annual Report 2023 Strategic Report / Chairman's Statement
is fundamental to building a sustainable business.
Further details of our stakeholder engagement
activities are outlined on pages 123-127.
Each year, the Board undertakes a formal evaluation
of its own effectiveness and that of its Committees.
In 2023, the evaluation was an internal self-assessment
and the outcome of this review is that both the Board
and its Committees are operating effectively.
Board Changes
We are delighted to have further strengthened our
Board in 2023 with the addition of three new non-
Executive Directors, Mr. Patrick Rohan, Dr. Genevieve
Berger and Professor Catherine Godson. We also
announced recently that Ms. Liz Hewitt will join the
Board with effect from 1 March 2024. They each bring
a wealth of experience and expertise which will
complement our growth strategies and I look forward
to each of them making significant contributions to
the Board in the years ahead.
As part of the ongoing Board refreshment process,
the Governance and Nomination 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 2023, the Board continued to ensure that
management promotes our purpose and values
to unite the organisation across diverse cultures
and geographies. Staying true to Kerry’s purpose,
the organisation has responded to the economic
challenges arising from the inflationary and uncertain
macroeconomic environment, demonstrating the
significant agility, passion and resilience of our
people while operating in difficult circumstances and
doing the right thing for customers, shareholders,
communities and the environment.
People and Engagement
The hard work and commitment of all our employees
is central to Kerry’s success. As the cost-of-living crisis
took hold in 2023, the Board oversaw how the Group
actively supported employees, especially those in
lower-paid positions, during this period of significantly
higher inflation and increased interest rates.
The Board also recognises the importance of
employee engagement and continues to enhance
our employee engagement activities. During 2023,
Dr. Karin Dorrepaal, the designated Workforce
Engagement Director, participated in a programme
of activities where she had the opportunity to assess
the engagement levels of our people, both in-person
within our offices and manufacturing sites as well as
remotely. Details of these activities are outlined in the
Corporate Governance Report on pages 118-134.
Operational Visits
In 2023, the Board travelled to Indonesia to hold
the June Board meeting. The visit afforded Board
members the opportunity to meet and engage with
key leaders and emerging talent from the region.
The Board attended the official opening of the
Group’s new Taste manufacturing facility situated
just outside Jakarta, to see first-hand how the region
has benefitted from significant capital investment
approved by the Board. The Board also participated
in customer immersion experiences that showcased
the Group’s capabilities in helping customers to solve
industry challenges with differentiated solutions.
During 2023, I also visited Group facilities in Ireland,
the US, China and most recently, Colombia. During
those visits, I had the opportunity to meet and
engage with the local management teams and in
the case of my visit to Colombia, to welcome those
employees who joined the Group following the
acquisition of Proexcar S.A.S. in May.
Dividend and Share Buyback Programme
The Board recommends a final dividend of 80.8 cent
per share, (an increase of 10.1% on the 2023 final
dividend) payable on 10 May 2024 to shareholders
registered on the record date of 12 April 2024.
Together with the interim dividend of 34.6 cent per
share paid in November 2023, this brings the total
dividend for the year to 115.4 cent, an increase of
10.1% on 2022.
In October, the Board approved a share buyback
programme which will return up to €300 million
in cash to shareholders. The buyback programme
commenced on 1 November and is expected to be
completed by the end of April 2024. The buyback
programme is underpinned by the Group’s strong
balance sheet and cash flow and is aligned to the
Company’s Capital Allocation Framework.
Prospects
The Board remains confident that the Group’s
business model, strategic priorities and capital
allocation decision making will continue to deliver
growth, enhance shareholder value and benefit our
stakeholders in the years to come. In this regard the
Group’s balance sheet is well placed to support our
objectives. The view of management regarding the
business outlook for 2024 is presented in the Chief
Executive Officer’s Review.
On behalf of the Board, I would like to sincerely
thank Edmond and the Executive Leadership Team
for their exceptional leadership and thank everyone
throughout the organisation for their contribution to
the ongoing success of the Group.
Tom Moran
Chairman
14 February 2024
9
Kerry Group Annual Report 2023 Strategic Report / Chief Executive Officer’s Review
CHIEF EXECUTIVE OFFICER’S REVIEW
outperformance of our markets, while also
recognising it followed two very strong years
of growth. This was driven by continued strong
performance in our foodservice channel, where
we are uniquely positioned. 2023 represented a
turbulent year for Dairy Ireland given the significant
change in market conditions.
From a capital allocation perspective, we continued
to make good strategic progress in 2023 through
a number of capital investments and acquisitions,
building on our significant portfolio developments
and geographical expansion in recent years. We
continued to grow our dividend at a double-digit
rate, and recognising the change in cost of financing
and lower sector share prices, we initiated a share
buyback programme, given our strong balance sheet
and good cash flow generation.
Creating value for all stakeholders has been
central to the Group’s success over the years. I am
confident this will continue to be an important
part of Kerry’s story, with our recent strategic and
operational progress better positioning the Group
for sustainable long-term success.
I would like to recognise the contribution of our
people globally, who bring our purpose to life every
day by Inspiring Food, Nourishing Life. I am truly
inspired by your commitment to our Vision of being
our customers’ most valued partner, creating a world
of sustainable nutrition.
IN 2023 WE NAVIGATED
DYNAMIC MARKET
CONDITIONS, WHILE
CONTINUING TO DEVELOP
OUR FOOTPRINT AND
EVOLVE OUR PORTFOLIO
FOR FUTURE SUCCESS
Dear fellow shareholders and all stakeholders,
Over the past number of years our industry has had
to navigate significant disruption, which continued
into 2023 including the impact from the inflationary
environment, customer inventory management
and more cautious consumer behaviour in places.
Despite these dynamics, we achieved Group revenue
of €8.0bn and EBITDA of €1.2bn in the year, while
extending our nutritional reach of positive and
balanced solutions to 1.25 billion consumers globally.
Our Taste & Nutrition business delivered volume
growth, which importantly represented an
10
Kerry Group Annual Report 2023 20
15
10
5
0
-5
+18%
+9%
+14%
+8%
+5%
+6%
2021
2022
+9%
+1%
2023
Foodservice Channel
Taste & Nutrition
Retail Channel
Portfolio Evolution
SWEET
INGREDIENTS
PORTFOLIO
DISPOSAL
This important development adds to Kerry’s
extensive local manufacturing footprint and in-
market development application centres across
Southeast Asia, as we continue to support our
customers across key end use markets.
We also continued to invest in our digital initiatives
across the year, with a particular focus on leveraging
digital value streams across customer excellence,
data & analytics and process automation. We will
continue to focus our investment on digital priorities
aligned to strategy that make it easier and more
valuable for customers to do business with Kerry.
Strategic Report / Chief Executive Officer’s Review
Taste & Nutrition Volume
Growth Driven by Continued
Strength in Foodservice
While overall volume growth achieved in 2023 in
Taste & Nutrition was lower than recent years,
this represented a strong market outperformance
thanks to continued strong growth in our
foodservice channel across all regions. This was
driven by ongoing innovation with quick service
restaurants, fast casuals and coffee chains on
menu enhancement, seasonal products and
back-of-house efficiency solutions.
Continued Strategic
Development
We continued to build on our significant recent
strategic portfolio developments and geographical
expansion through a combination of capital investment
and complementary strategic acquisitions. These
developments helped expand our taste capabilities and
footprint across our regions, enhance our nutrition
portfolio and extend our foodservice offering.
The acquisition of Proexcar in Colombia strengthens
Kerry’s capabilities and position in the Latin American
meat market, while also providing a platform for
further strategic growth within the ANDEAN region.
The acquisition of Greatang strongly complements
Kerry’s authentic taste capabilities in China, while
expanding into new foodservice channels and with
local and international customers in the meals and
snacks markets.
At the end of the year, we entered into a definitive
agreement to acquire part of the global lactase
enzyme business of Chr. Hansen and Novozymes. This
is strongly aligned to our recent strategic progress in
developing our biotechnology capabilities through the
acquisitions of Enmex and c-LEcta’s enzyme innovation
capabilities in particular. These important strategic
developments extend Kerry’s enzymes manufacturing
footprint across three continents with our focus on
food, beverage and pharma applications.
The Group’s Sweet Ingredients Portfolio was also sold
during the year, as we continue to refine and develop
our Taste & Nutrition portfolio in the areas where we
can create the most value.
We continued to invest in our business with a
number of capital projects completed in the year,
including the opening of our new authentic taste
facility in Karawang, Indonesia.
* See Acquisitions History on Kerry.com for further detail on acquisitions
11
Kerry Group Annual Report 2023 Strategic Report / Chief Executive Officer’s Review
Our Markets and Performance
The overall demand environment in the year
was characterised by a number of noteworthy
market dynamics including customer destocking,
shrinkflation and the impact of recent broad-based
inflation on consumers’ spending habits. Despite
these factors, customer innovation activity remained
strong, with a focus on adding new taste profiles,
improving products’ nutritional and sustainability
characteristics, and also providing more relative
value options for consumers.
Group reported revenue for the year was €8.0bn
and EBITDA was €1.2bn. Group EBITDA margin
increased by 60bps to 14.5% and Taste & Nutrition
EBITDA margin increased to 17.0%. Adjusted
earnings per share increased by 1.2% on a constant
currency basis and strong free cash flow of €701m
was achieved in the year.
We made good progress against our Beyond the
Horizon sustainability strategy and commitments.
Under Better for People, we increased our
nutritional reach of positive and balanced nutrition
solutions to 1.25 billion people, as we continue to
support our customers in improving the nutritional
profile of their products.
Under Better for Society, we made further progress
towards our diversity commitments including the
launch of our Women in Leadership programme,
aimed at accelerating female talent within our
organisation. We also launched our Global All
Employee Share Plan ‘OurShare’ in eight countries,
with the next phase of the plan to commence in 2024.
This programme provides employees the opportunity
to become shareholders and participate in the
success of the company.
Under Better for the Planet, we delivered an overall
48% reduction in carbon and reduced food waste in our
operations by 39%. We continue to intensify our efforts
across our sustainability commitments, as we aim to
support our customers in producing more nutritious,
sustainable food and beverage products that deliver a
better impact for people, society and the planet.
€8.0bn
Group Revenue
€1.2bn
EBITDA
€701m
Free Cash Flow
12
Kerry Group Annual Report 2023 Strategic Report / Chief Executive Officer’s Review
Regional Performance
Within the Americas, reported revenue was €3.8bn,
with lower volumes of 1.8% reflective of softer
market conditions and strong comparatives.
Performance in the retail channel was particularly
impacted in the Beverage, Bakery and Meat
markets, while growth in foodservice was driven by
continued menu enhancement and back-of-house
efficiency solutions. In North America, Snacks and
Dairy achieved good growth driven by authentic
taste-led innovations with global leaders, emerging
brands and private label. LATAM achieved overall
growth led by Mexico, with good performances in
Snacks and Meat, while Brazil experienced softer
market conditions in the second half of the year.
In Europe, reported revenue was €1.5bn,
with volume growth of 2.9% driven by strong
performances in the UK and Ireland in particular.
Overall growth was led by Dairy, Snacks and Meals
markets. Strong growth was achieved across the
foodservice channel driven by menu enhancement
activity, seasonal products and ongoing nutritional
profile improvements. Performance in the retail
channel softened through the year as expected,
reflective of constrained market demand given
the recent inflationary environment.
In APMEA, reported revenue was €1.6bn, with
volume growth of 6.2% primarily driven by a
strong performance in the foodservice channel.
Within the region, strong growth was achieved
in the Middle East across the year. China
delivered good growth considering local market
dynamics, while performance in Southeast Asia
was impacted by challenging market conditions
through the second half of the year. Overall
growth in the region was led by Bakery, Meat and
Meals markets with good launch activity across
global and regional leaders.
Within Dairy Ireland, overall performance reflected
the sharp reduction in dairy market prices.
Overall volumes were lower through the year
due to supply conditions and elevated input costs
impacting overall market demand dynamics,
particularly within Dairy Ingredients across the
middle part of the year. Dairy Consumer Products
performed well, given the market context, led by
good growth in branded cheese.
Forward Looking Statement
In 2023, Kerry delivered a solid overall business
performance recognising the challenging
market conditions and strong comparisons,
with Taste & Nutrition achieving volume growth
ahead of the market, good margin expansion,
strong cash generation and continued progress
against the Group’s Beyond the Horizon sustainability
commitments.
At the outset of 2024, while consumer market
volumes remain relatively muted, Kerry has a good
innovation pipeline and remains strongly positioned
for market volume outperformance and good
margin expansion.
Edmond Scanlon
Chief Executive Officer
14 February 2024
13
Kerry Group Annual Report 2023 Strategic Report / Our People
OUR PEOPLE
Our Purpose and Culture
At Kerry, our Purpose Inspiring
Food, Nourishing Life is central
to everything we do.
The impact of our purpose is evidenced through the
passion and commitment of our people to building a
better future. It represents the collective voice of our
people, bringing to life and reinforcing our strategy. It
underpins our culture and is deeply embedded across
our business. It is reflected in the decisions we make,
in how we innovate and grow, how we nurture and
develop our people and in how we leverage our deep
science and technical expertise and our industry-leading
taste and nutrition capabilities to enhance the lives of
others - solving our customers’ complex challenges
with differentiated solutions whilst upholding our
commitments to protecting the planet.
INSPIRING
EACH OTHER
TO BE AT
OUR BEST
14
Kerry Group Annual Report 2023
Nationalities
119
200+
55+
Locations
Countries globally
Strategic Report / Our People
Our purpose and our Values of Courage,
Enterprising Spirit, Inclusiveness, Open-mindedness
and Ownership guide our actions and behaviours,
inspiring us to build the future we want to
experience, connecting our 21,000+ people across
the world through a shared vision to be our
customers’ most valued partner, creating a world
of sustainable nutrition.
Our people represent 119 nationalities, and work
across 200+ locations in more than 55 countries
globally. We believe that every individual at Kerry
can be a powerful force for change and is inspired
to make a positive difference to the world by
collaborating with colleagues and customers to
reach over 2 billion people with sustainable nutrition
solutions by 2030. To enable this, we 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 attracting high quality, diverse talent,
to how we build future skills and capabilities, reward
individual and team performance and support our
local communities through volunteering and other
charitable activities.
Engaging and empowering our teams is
fundamental to our group-wide approach to people
leadership. We encourage our leaders to focus on
promoting a positive environment, providing our
people with meaningful work that is connected
to our purpose and enables them to clearly see
how their efforts contribute to our shared success.
Ensuring that the diversity of our leadership teams
reflects and celebrates the broad mix of capabilities
and cultural diversity within our organisation and
the communities in which we operate continues
to be a key imperative for us. In 2023, we further
enhanced the cultural and gender diversity of
our leadership talent pipelines through internal
promotions and strategic hires, and we continue to
be encouraged by the progression of local talent into
our regional leadership teams.
We seek to differentiate ourselves as an organisation
through the quality, dedication 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 behaviour in everything we do
and continue to reinforce this through our global
standards and policies.
WE ARE COMMITTED TO
NURTURING A HIGHLY
INCLUSIVE WORKPLACE
15
Kerry Group Annual Report 2023 Strategic Report / Our People
Our Values
Our values, which underpin our culture,
translate into behaviours which reflect
how our people interact and collaborate
with each other to achieve our vision.
In living our values, our people bring
stability, authenticity, and success
to our business, by being fully aligned
with who we are and what we stand
for, reinforcing our purpose and
why we exist in the world.
We’re bold, we think big picture,
we add value and we grow.
We’re brave, we speak up
and we inspire each other
to get the best results.
COURAGE
ENTERPRISING
SPIRIT
INCLUSIVENESS
OPEN-
MINDEDNESS
OWNERSHIP
We’re curious, we innovate
and we believe in possibility.
We’re welcoming, we are authentic
and we see strength in diversity.
We’re accountable and
we care about the business
as if it were our own.
16
Kerry Group Annual Report 2023 Strategic Report / Our People
Our values unite us across our diverse cultures and
geographies, providing a guiding framework and
explaining the alignment between our purpose
and strategy in a meaningful way, enabling us to
build trust and mutual respect with 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 in all aspects of their roles, across
all areas of Kerry and we regularly recognise and
celebrate our people through our Global Recognition
Programme, Inspiring People, for demonstrating our
values in their day-to-day activities.
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, creating a safe environment
in which everyone feels comfortable to do so and
where integrity is non-negotiable.
In turn, Kerry commits to listening. We remain
open to new ways of working and are continually
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.
17
Kerry Group Annual Report 2023 During 2023, our designated Workforce Engagement
Director, Dr. Karin Dorrepaal, participated in several
employee engagement activities throughout the
year, prioritising focus on gender equity and our
foundational technologies. This is an important role,
ensuring the employee’s voice is considered and
represented at the Board when making decisions
impacting our people.
Key activities this year included participating in the
panel discussion on International Day of Women and
Girls in Science, discussing how women in science are
driving change and disruption in the food industry;
introducing our International Women’s Day global
webinar, giving her perspective on the global years’
theme ‘Embracing Equity’; a site visit to our Customer
Co-Creation Centre, in Barcelona, to see first-hand
how we are bringing our sustainable nutrition
solutions to life for our customers, and how we are
integrating talent from our acquisitions through a visit
to Tiel in the Netherlands. Highlights from the year
included joining our CEO and Executive Leadership
Team for our Inspiring People awards, our key
employee recognition event of the year and attending
the graduation of participants in our first Women
in Leadership programme, successfully launched in
Europe this year, recently extended to Latin America,
and due to be rolled out globally in 2024. Karin also
met with Kerry’s third-party employee engagement
survey provider, to understand our progress on
employee engagement, as compared to our peers
and external industry benchmarks, along with our
key focus areas for 2024.
For further details on key activities supported by
our Workforce Engagement Director during 2023,
please see our Corporate Governance section on
page 118.
Strategic Report / Our People
Enhancing our
Employee Experience
Driven by our aspiration to be
first choice for the best talent in
our industry, we maintain focus
on engaging our workforce
consistently throughout the year.
Through providing growth and development
opportunities for our people, and empowering
them to reach their full potential, we ensure that
our business is well positioned for continued
and sustainable business growth. 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.
Becoming a top quartile employer for employee
engagement remains an ambition for us. We will
achieve this through our regular engagement
action planning, where all regions, functions and
plants across our business set and track actionable
goals. These goals are designed to make things
easier, better and clearer for our employees and
focus on improving the working experience for
our people. Throughout the year, we celebrate
progress on these goals, both individually and
as teams, which is key to helping make Kerry a
better and more successful business for the future.
We look forward to running our next employee
engagement survey in 2024.
18
Kerry Group Annual Report 2023 Strategic Report / Our People
Kerry celebrates culture week in Kenya
Fostering Diversity,
Inclusion and Belonging
At Kerry, we are proud of our rich
diversity and strive to ensure that
we reflect the communities in which
we operate, across the globe.
We harness and celebrate our differences, seeking
to foster an inclusive and supportive environment
that encourages full participation and contribution
from our people. We continue to promote and
drive positive change within our organisation
through which our people can flourish, and we strive
to always provide equal access to opportunities for
development and career advancement.
Our Group’s Code of Conduct sets out our
commitments to fair and equal treatment of all our
people and this is reflected in several dedicated
policies within the Code, including our Diversity,
Inclusion and Belonging (DI&B) Policy. This policy,
reviewed in 2023, requires that employees treat
fellow workers with dignity and respect and never
engage in any form of unlawful discrimination.
During 2023, we continued to accelerate our
journey, engaging in an independent review of our
progress to date, involving representation from our
people across the organisation, alongside access to
external best practices, to inform our focus moving
forward. The outputs were shared with the Global
DI&B Council which is accountable on behalf of the
Executive Leadership Team for continuing to evolve
our DI&B ambition and ensure achievement of
agreed organisational commitments.
Kerry remains committed to achieving equal gender
representation among senior management roles
by 2030, with women representing 35% of senior
leadership roles by 2025. In 2023, we became a
signatory of the Women’s Empowerment Principles
(WEPs), established by the United Nations (UN)
Global Compact and UN Women, as we seek to
embrace a broader view of diversity within the
organisation. At the end of 2023, we achieved 37%
representation of women in senior management
roles and 34% in senior leadership roles. We will
review our goals in 2024 and focus on targeted
strategies to maintain and accelerate our progress.
37% OF WOMEN IN SENIOR
MANAGEMENT ROLES
19
Kerry Group Annual Report 2023 Strategic Report / Our People
Examples include building on our Women in
Leadership programme, having extended this
beyond Europe to Latin America in 2023, with plans
to roll out to all regions in 2024, as well as our
Regional Women@Kerry networks, continuing to
promote opportunities to improve workplace policies
and practices for women across Kerry.
Our broader areas of focus include supporting
LGBTQI+ colleagues, raising awareness on issues
relating to race, ethnicity and cultural belonging,
increasing dialogue on disability and managing
multiple generations within the workplace. This
is enabled by our passionate colleagues and the
role they play in actively contributing to our DI&B
agenda through our global employee networks,
such as PRYSM, which has continued to promote
LGBTQI+ rights not only internally, but also in
collaboration with Kerry customers and with the
broader international community. Through Kerry’s
membership of the Partnership for Global LGBTIQ+
Equality (PGLE) we are contributing to the work
of the United Nations in assessing the gaps in the
inclusion of LGBTIQ+ workers in business. In 2023,
to celebrate World Day for Cultural Diversity for
Dialogue and Development, our global employee
network group, SEEN, together with our regional
DI&B teams organised an engaging and educational
Culture Week celebrating cultural diversity, including
the launch of a Cultural Awareness eLearning
module and toolkit.
In 2024, guided by our Global Director of DI&B,
appointed in 2023, we will focus on strengthening
inclusive leadership behaviours, promoting
equitable experiences and improving education
and awareness across all aspects of diversity within
Kerry. This will be supported by a strong governance
structure that brings together our Global DI&B
Council and Regional DI&B Committees to drive
alignment and focus, resulting in measurable
progress and business impact.
WE HARNESS AND
CELEBRATE OUR
DIFFERENCES, SEEKING
TO FOSTER AN INCLUSIVE
AND SUPPORTIVE
ENVIRONMENT THAT
ENCOURAGES FULL
PARTICIPATION AND
CONTRIBUTION FROM
OUR PEOPLE
20
Investing in Learning,
Leadership and Talent
to Fuel our Growth
At Kerry, we are passionate about
unlocking the full potential of our
people, enabling them to perform
at their best, through a focus on
continuous learning, encouraging
self-growth and building new
capabilities for the future.
We are investing in new digital tools within our
learning eco-system to create personalised learning
experiences, ensuring our people can access what
they need, when they need it, to further grow,
develop new skills and progress their careers within
the organisation.
Our leaders are committed to ensuring the core
capabilities to achieve growth are in place. Our
Leadership Academy offers learning experiences at
all levels, designed to grow our leaders’ competencies
and confidence to deliver on our organisational
commitments. During 2023, we accelerated our
focus on building leadership expertise across our
manufacturing facilities, further embedding our
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. All our plant
leader population are now fully participating in the
programme and this will continue into 2024, with
a focus on following up on results and sustaining
behavioural change which will be monitored through
our employee engagement survey.
We 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 Managing People@Kerry programme
has now been deployed across all regions, through
a combination of eLearning and live online sessions
delivered by internal experts. We have also
introduced ‘watch parties’, where people leaders
come together in person to watch an eLearning or
live online session and then share their experiences,
helping to reinforce our Kerry Leadership
Competencies in action, and build greater
confidence across all aspects of people leader
responsibilities. All newly-promoted people leaders
are automatically enrolled into the programme to
support the first step in their leadership career.
Our Learning Academies across Commercial and
Science and Technologies support our growth, by
enabling the development and application of our
foundational technologies, fostering a customer-
centric approach and enhancing commercial
effectiveness in line with business priorities.
Kerry Group Annual Report 2023 Strategic Report / Our People
They provide learning solutions to specific target
audiences across the group, which match best-in-
class practices in the industry, such as negotiation
skills and customer care and leverage our subject
matter specialists to develop internal expertise,
for example around our proprietary technologies,
within our Research, Development and Applications
function. The Integrated Operations Academy is
focused on delivering operational excellence across
our global footprint. It offers a wealth of learning
solutions to all employees in Manufacturing,
Engineering, Safety and Quality, Supply Chain
and Procurement, founded on the core skills
required for each role and a structured process
to assess individual learning needs. The learning
opportunities are provided either by our dedicated
learning platform, that offers training on several
topics relevant to operations, such as Workplace
Safety, Food Safety, Warehouse and Transportation,
or through face-to-face sessions delivered in the
plant, in line with specific site needs. The overall
aim of our learning academies has been to build
confidence and competence and encourage great
cross-functional collaboration to maximise value
to customers whilst solidifying foundations for the
long-term career development of our people.
We continue to support the development of enterprise
initiatives across the group to build core capabilities
aligned to our strategic objectives. One such example
is our Sustainability Essentials programme, designed
to foster a sustainability mindset in all our people,
which was externally recognised with an Excellence
Award for Best Organisational Development &
Transformation Initiative in 2023.
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.
Finally, we continue to evaluate and further
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 senior 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
business school programmes.
21
Kerry Group Annual Report 2023 Strategic Report / Our People
Rewarding and Recognising
our People
Total Reward at Kerry is about
more than just pay and financial
rewards. It encompasses career
development, personal growth
and access to opportunities where
all our people can excel, both
personally and professionally.
Our approach to Reward 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 2023, we implemented the next phase of
our Total Rewards roadmap which will continue
into 2024. 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
2023, and actions planned for 2024, include:
› The launch of Kerry’s first Global All Employee
Share Plan, ‘OurShare’, in September which
provides employees the opportunity to become
shareholders and allows them to share in the
success of the company. The Board and Executive
Leadership Team believe that share ownership
is a powerful and important way of creating an
ownership culture and mindset. Since its launch
‘OurShare’ has been recognised with several
nominations for external awards.
1 in 5 of our colleagues chose to join the
programme, representing 21% of our eligible
population within Phase 1 (8 countries) and
a total of 1,173 colleagues who have become
shareholders and now own part of Kerry. We
experienced a huge level of engagement from all
our people, across both Phase 1 countries and
from countries that will be part of future phases.
Plans are well underway in preparation for
our Phase 2 roll out. By end of 2024, we will
have made the plan available to the majority
of countries with headcount of over 100
employees and will include many of our largest
markets across all regions, representing another
significant milestone for Kerry.
› From 1st April 2023, we became an accredited UK
Living Wage employer. Since then, we have formed
a formal partnership with the Fair Wage Network
and have been preparing ourselves for the
expansion of our living wage commitment across
our wider global footprint. We will begin securing
accreditation on a country-by-country basis
from 2024 onwards and integrate this enhanced
standard into our wider pay infrastructure,
ensuring fair pay permeates all our pay practices.
› We continued to promote and embed our Global
Recognition Programme, Inspiring People, which
was launched in 2021. We held our second global
Inspiring People awards in June, recognising
our people for their active engagement and
commitment to living our Kerry values.
In addition to our global programmes, we made
further 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.
SHARE OWNERSHIP
IS A POWERFUL AND
IMPORTANT WAY OF
CREATING AN OWNERSHIP
CULTURE AND MINDSET
22
Kerry Group Annual Report 2023
Strategic Report / Our People
Promoting Health
and Wellbeing
At Kerry, we put our people first by
fostering a healthy, positive work
environment and providing our
people with the physical, emotional,
nutritional and financial resources
to support them through the
various life stages.
Our Health and Wellbeing framework 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.
The global reach and relevance of our Health and
Wellbeing programmes is paramount.
› Every Kerry employee has access to our global
Employee Assistance Programme (EAP). The EAP
is a complimentary, confidential service run by a
team of counsellors, psychologists and work-life
consultants who provide expert guidance and
support in the areas of finance, legal, family,
work, health and wellbeing. Details of the EAP
are visible and accessible for all employees via
our internal intranet.
› Kerry’s Global Sabbatical Leave Policy was
launched as part of a wider campaign to promote
the importance of flexibility and time away
from work for all employees, at every level of
the organisation. The programme is designed
to enable our people to take an extended
period of leave to be with family, pursue further
education and hobbies, or travel and ultimately
return to Kerry feeling refreshed and recharged,
which directly aligns with our commitment to
supporting the wellbeing of our people.
› To acknowledge World Mental Health Day, which
aims to foster a mentally-healthy workplace, we
announced our plan to engage with a leading
global partner in Emotional Health and Wellbeing
training. Starting with our People Leaders, we are
developing the competence and confidence of
our employees to navigate and manage signs of
ill-being in the workplace and at home.
World Safety and Wellbeing Day and World Mental
Health Awareness Day provide regular opportunities
for Kerry to promote the range of resources now in
place to support our people and their families through
various life stages, reinforcing our commitment to
supporting the wellbeing of our people.
23
Kerry Group Annual Report 2023 Strategic Report / Our Business Model
OUR BUSINESS MODEL
INPUTS
What We
Depend On
Financial
Funding available
to the Group
Manufacturing
137 manufacturing
locations and global
supply chain
infrastructure
Intellectual
Consumer insights,
technology,
know-how and
R&D capabilities
Human
21,000+ talented
employees across
50+ countries
Social and
Relationships
Global brand and
relationships with
local communities,
regulators and
industry bodies
Natural
A global network
of raw material
suppliers across
almost 80 countries
24
Kerry Group Annual Report 2023
What We Do
Kerry is a world leader in sustainable taste and nutrition
solutions. Using our unique capabilities, we partner with
customers to create healthier, tastier, and more sustainable
products that are enjoyed by over 1 billion people around
the world.
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 comprises our broad range of
taste and nutrition foundational technologies, product process
technologies, culinary and insights expertise, and development
and application teams.
SOLVING OUR
CUSTOMERS'
CHALLENGES
WITH
DIFFERENTIATED
SOLUTIONS
Elevated Nutrition
Clinical Health Benefits
Speed to Market
Extended Shelf Life
Operational Efficiencies
Channel Diversification
Cleaner Labels
Improved Taste
Process Improvement
Enhanced Sustainability
New Innovation Platforms
Novel Taste Experiences
Local Cooking Taste
Regulatory Support
What We Focus On
Food + Beverage + Pharma Markets
Strategic Priorities:
Taste
Nutrition
Emerging Markets
Financial
Growth in revenue,
profit and cash flow
Manufacturing
A broad portfolio of
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 LGBTIQ+
Equality (PGLE),
the UN World
Food Programme
and Women's
Empowerment
Principles (WEPs)
Natural
Responsible
consumption and
production with
sustainable sourcing,
emissions reduction
and waste recovery
Financial
Funding available
to the Group
Manufacturing
137 manufacturing
locations and global
supply chain
infrastructure
Intellectual
Consumer insights,
technology,
know-how and
R&D capabilities
Human
21,000+ talented
employees across
50+ countries
Social and
Relationships
Global brand and
relationships with
local communities,
regulators and
industry bodies
Natural
A global network
of raw material
suppliers across
almost 80 countries
Strategic Report / Our Business Model
OUTPUTS
The Value
We Create
Financial
Growth in revenue,
profit and cash flow
Manufacturing
A broad portfolio of
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 LGBTIQ+
Equality (PGLE),
the UN World
Food Programme
and Women's
Empowerment
Principles (WEPs)
Natural
Responsible
consumption and
production with
sustainable sourcing,
emissions reduction
and waste recovery
The Impact We Deliver
Supporting our customers in creating great tasting
products, with improved nutrition and functionality,
while ensuring a better impact for the planet.
Who We Benefit
Employees
Customers and
Consumers
Suppliers
Shareholders
Community
Government
How We Contribute
Core SDGs
Linked SDGs
Kerry Group Annual Report 2023
25
Strategic Report / Our Markets
OUR MARKETS
Value-Add Ingredient Solutions
Kerry’s strategic focus is on the value-
add ingredient solutions market
across food, beverage and pharma.
This market has strong fundamentals
due to macro trends and evolving
consumer demands and as a result,
is more dynamic then ever. These
increased customer and consumer
demands need innovation support.
Kerry’s unique capabilities help to
solve our customers’ challenges with
differentiated solutions.
INNOVATING
FOR A DYNAMIC
AND EVOLVING
CONSUMER
26
26
Kerry Group Annual Report 2023
Strategic Report / TitleKerry Group Annual Report 2023 Strategic Report / Our Markets
MACRO TRENDS
GROWING WORLD POPULATION
World population is expected to reach 9 billion within the next 15 years, led by emerging
markets1. This trend will drive growth in global food consumption and will also further
necessitate sustainability throughout the value chain.
RISING GLOBAL INCOMES
A further 1 billion people are expected to enter the ‘consumer class’ over the next 8 years,
the fastest pace ever2. We expect that these new consumers will add significant dynamism,
particularly in emerging markets.
KEY CONSUMER DEMANDS
HEALTH &
WELLBEING
All consumers want health & wellbeing through food. This area is vast in
opportunity, including salt, sugar, fat reduction and added science-backed
health benefits. It has been one of the defining trends of our industry over
the past decade and this will continue over the coming decades.
SUSTAINABLE
NUTRITION
Consumers are becoming increasingly purpose-driven and for them,
sustainability is a key priority. They want to know that the food they
consume has been sustainably sourced and ethically processed,
and that the producer brings benefits to wider society.
AUTHENTIC,
LOCAL TASTE
Consumers want novel twists on familiar local taste profiles, exciting
multi-sensorial taste experiences and guilt-free indulgence. The key
challenge and opportunity is that they want this delivered through
authentic taste methods and practices, with a story behind the flavour.
CLEANER
INGREDIENT
DECLARATIONS
VALUE
EQUATION
Consumers today want their food to be free of artificial additives and
made from a short list of sustainably sourced ingredients. Clean label
preferences are shaped by location, culture, age and other factors, can
shift rapidly, and present many unique challenges and opportunities.
In a challenging environment, consumers have become more conscious
of their spending. They want the same great products as before but at a
more affordable price, with no compromise to taste, quality or innovation.
1 United Nations
2 The Brookings Institution and World Data Lab
27
Kerry Group Annual Report 2023 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.
Food + Beverage + Pharma Markets
TASTE
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.
NUTRITION
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.
STRATEGY IN ACTION
STRATEGY IN ACTION
Key Achievements in 2023
Key Achievements in 2023
Strong performance of our
taste technologies across dairy,
salt modulation and barbeque.
Good business development in the
low / no-alcohol space, driven by
our citrus, sweet modulation and
botanicals portfolio.
Successful launch of TastesenseTM
Advanced, which delivers 50-100%
sugar reduction.
Strong growth in Kerry AccelTM,
our solution providing a natural
cure for meat.
Launched world's first probiotic-
fortified UHT Lactose Free Milk
with BC30™.
Kerry Health and Nutrition
Institute® (KHNI) achieves the
number one organic Google search
ranking for ‘nutrition trends’, with
almost 100,000 engaged website
sessions across the year.
28
Kerry Group Annual Report 2023
Strategic Report / Our Strategy
A CLEAR,
CONSISTENT
STRATEGY
EMERGING MARKETS
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%+.
STRATEGY IN ACTION
Key Achievements in 2023
Continued strong growth and business
development across the Middle East,
building on recent investments and
footprint expansion in the region.
Inauguration of our state-of-the-art
Taste facility in Karawang, Indonesia,
further enhancing our capability to
work with customers to develop locally
inspired, authentic taste solutions to
serve the Southeast Asia market.
Continued expansion of our presence
in emerging markets with the
acquisitions of Proexcar, Colombia,
and Greatang, China.
DAIRY IRELAND
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.
STRATEGY IN ACTION
Key Achievements in 2023
Expanded Cheestrings capacity to
serve kids cheese snacking market.
Continued good progress in the
deployment of the Evolve Dairy
Sustainability Programme, assisting
our Irish dairy suppliers accelerate the
adoption of science-based sustainable
actions and best practice on their farms.
Kerry Group Annual Report 2023
29
Strategic Report / Our Technologies
SCIENCE-BACKED SUSTAINABLE
NUTRITION SOLUTIONS
1,100+
Scientists
22
Core
Technologies
33
End Use Market
Development and
Application Centres
60+
University
Partnerships
1,200+
Patents and
Patents Pending
350+
Clinical
Studies
70+
Technology
and Innovation
Centres Globally
Our unique global infrastructure is supported
by partnerships and collaboration and a broad
technology ecosystem connecting academia,
start-ups, suppliers and research bodies.
Global Innovation Centre
Regional Technology & Innovation Centre
Customer Co-Creation Centre
Technology Hub/Centre
Technical and Commercialisation Support
Biotechnology CentreGlobal Innovation Centre
Regional Technology & Innovation Centre
Customer Co-Creation Centre
Technology Centre
Technical and Commercialisation Support
Biotechnology Centre
30
Kerry Group Annual Report 2023
Strategic Report / Our Technologies
OUR SCIENCE AND
TECHNOLOGY STRATEGY
TASTE
TASTE
Proteins and
Protein Hydrolysates
Modulation
Natural Extracts
Microbial
Fermentation
Science-backed
Sustainable
Nutrition
Solutions
Smoke and Reaction
Dairy and Non-Dairy
Encapsulation and
Delivery Systems
Natural Extracts
Fermentation
N
O
I
T
I
R
T
U
N
BIOTECHNOLOGY
PHARMA
Systems
Excipients
Enzymes
and Growth
Factors
Protein
Hydrolysates
and Yeasts
Extracts
E
M
E
R
G
I
N
G
M
A
R
K
E
T
S
Kerry Group Annual Report 2023
31
Strategic Report / Strategy & Targets
STRATEGY & TARGETS
Kerry’s key performance measures
include a combination of growth,
return and sustainability metrics.
32
Kerry Group Annual Report 2023
Strategic Report / Strategy & Targets
Our Performance Measures
GROWTH
Volume Growth
EBITDA Margin
4-6%
Average Target
18%+
RETURN
Cash
80%+
Cash Conversion
Return
10-12%
ROACE
SUSTAINABILITY
Nutritional Reach
Carbon
Reach over
2 billion people
with sustainable
nutrition solutions
55% reduction
in Scope 1 & 2
carbon emissions
Food Waste
50% reduction
in food waste
Note 1: Financial targets are for the period 2022-2026
Note 2: Volume growth target assumes 2% above market growth rates
Note 3: EBITDA Margin 18%+ by 2026
Note 4: 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 46-69.
Full definitions can be found on pages 269-272.
Kerry Group Annual Report 2023
33
Strategic Report / Key Performance Indicators
KEY PERFORMANCE INDICATORS
Kerry’s key performance measures include a
combination of growth, return and sustainability
metrics, which have helped the Group achieve its
track record of long-term value creation.
GROWTH
Metric
Performance
6.1%
2022
Volume Growth
(0.9%)
(2.9%)
2021
2020
2023
2022
2021
8.0%
+8.0%
2022
2021
2020
(0.9%)
+6.1%
13.9%
€1,216m
EBITDA Margin
€1,077m
+60bps
€998m
14.4%
14.7%
2022
2021
2020
10.3%
10.5%
10.4%
2022
2021
2020
€640m
82%
€566m
84%
€412m
67%
2023
2022
2021
€1,165m
14.5%
€1,216m
13.9%
€1,077m
14.7%
2023
2022
2021
10.0%
10.3%
10.5%
2023
2022
2021
€701m
92%
€640m
82%
€566m
84%
Commentary
Group volumes decreased in the year as solid
overall growth in Taste & Nutrition against strong
comparatives was more than offset by the impact
of challenging market dynamics in dairy.
Group EBITDA margin increased as benefits from our Accelerate
Operational Excellence programme and portfolio developments
were partially offset by the net effect from pricing.
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:
-8.6% (2022: +19.3%).
Operating profit:
€874.8m +14.3% (2022: €765.6m -13.6%).
For more information see the Supplementary Information section – Financial Definitions on pages 269-272.
SUSTAINABILITY
Metric
Nutritional Reach
1.25 billion
Carbon Reduction
48%
2023
2022
2021
1.25 billion
1.2 billion
1.10 billion
Performance
2023
2022
1.25 billion
1.2 billion
Commentary
1.10 billion
2021
Nutritional Reach is a measure of the global
population who consume our positive and
balanced nutrition solutions as we strive to
be Better for People.
2023
2022
2021
48%
45%
2023
2023
2022
2022
29%
2021
2021
29%
41%
2023
2022
2021
39%
41%
41%
Scope 1 & 2 Carbon Reduction is a measure of
progress towards Kerry's environmental targets,
as part of its Better for Planet ambition.
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.
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.
Further definitions, calculations and detail for these are set out above and within the Sustainability Review on pages 46-69.
34
Reduction in Food Waste
39%
48%
39%
45%
41%
Food Waste Reduction measures food loss and
waste across our operations, and aligns with UN
SDG 12 and our Better for Planet ambition.
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.
Kerry Group Annual Report 2023 Strategic Report / Key Performance Indicators
We use a number of financial and non-financial key
performance indicators (KPIs) to measure performance
across our business.
These KPIs help inform decision making, assist
effective goal setting and track progress in achieving
our strategic objectives.
RETURN
Return on Average Capital Employed
Free Cash Flow Conversion
84%
84%
82%
82%
92%
92%
€566m
€566m
€640m
€640m
€701m
€701m
10.0%
2023
2023
2022
2022
2021
2021
10.0%
10.0%
10.3%
10.3%
10.5%
10.5%
92%
2023
2023
2022
2022
2021
2021
GROWTH
Metric
Volume Growth
Performance
(0.9%)
2023
2023
2022
2022
2021
2021
EBITDA Margin
+60bps
(0.9%)
(0.9%)
2023
2023
€1,165m
€1,165m
14.5%
14.5%
+6.1%
+6.1%
2022
2022
€1,216m
€1,216m
13.9%
13.9%
+8.0%
+8.0%
2021
2021
€1,077m
€1,077m
14.7%
14.7%
of challenging market dynamics in dairy.
Strategic
Volume growth is an important metric as it
EBITDA margin expansion is a key measure of
Importance /
is a key driver of organic top line business
profitability. It is a metric in the short-term incentive
Link to
improvement. It is a metric in the short-term
plan and is a key driver of adjusted EPS growth on
Remuneration
incentive plan and is a key driver of adjusted
a constant currency basis, which is a metric for the
EPS growth, which is a metric for the long-term
long-term incentive plan.
incentive plan.
For more information see the Supplementary Information section – Financial Definitions on pages 269-272.
SUSTAINABILITY
Metric
Nutritional Reach
1.25 billion
Carbon Reduction
48%
2023
2022
2021
Performance
1.25 billion
1.2 billion
1.10 billion
2023
2022
2021
48%
45%
29%
Commentary
Nutritional Reach is a measure of the global
Scope 1 & 2 Carbon Reduction is a measure of
population who consume our positive and
progress towards Kerry's environmental targets,
balanced nutrition solutions as we strive to
as part of its Better for Planet ambition.
be Better for People.
Strategic
Importance /
Link to
Remuneration
As consumers seek healthier more sustainable
At Kerry, we are addressing our operational
diets, Kerry is ideally placed to support
emissions as part of our total carbon footprint
customers in the development of products
and are committed to achieving Net Zero before
that deliver sustainable nutrition. This is a
2050. This is a sustainability performance metric
sustainability performance metric within the
within the long-term incentive plan.
long-term incentive plan.
Further definitions, calculations and detail for these are set out above and within the Sustainability Review on pages 46-69.
Commentary
Group volumes decreased in the year as solid
Group EBITDA margin increased as benefits from our Accelerate
overall growth in Taste & Nutrition against strong
Operational Excellence programme and portfolio developments
comparatives was more than offset by the impact
were partially offset by the net effect from pricing.
Group ROACE decreased in the year reflecting a
greater adverse translation currency impact on
profits than on average capital employed.
Free cash flow and cash conversion increased in the year
due to a strong improvement in working capital.
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.
Comparable
IFRS measure
Reported revenue growth:
-8.6% (2022: +19.3%).
Operating profit:
€874.8m +14.3% (2022: €765.6m -13.6%).
There is no IFRS measure
comparable to ROACE.
Net cash from operating activities:
€1,037.8m (2022: €721.8m).
Reduction in Food Waste
39%
2023
2022
39%
41%
2021
Food Waste Reduction measures food loss and
waste across our operations, and aligns with UN
SDG 12 and our Better for Planet ambition.
41%
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.
Long-term Value Creation
Total shareholder return (TSR) for the year
decreased by 5% in line with the median
performance of Kerry’s peer group, which saw
mixed share price performances across the
year, driven by a number of macroeconomic
and sector dynamics. Kerry's TSR has grown
at a compound annual growth rate of 9% over
the past 20 years.
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.
35
Kerry Group Annual Report 2023
Strategic Report / Financial Review
FINANCIAL REVIEW
The Financial Review provides an overview of the
Group’s financial performance for the year ended
31 December 2023 and the Group’s financial position
at that date.
The group had a solid performance through
2023 with good margin growth and strong cash
conversion. Good strategic progress was made with
the completion of the Sweet Ingredients Portfolio
divestment and strategic acquisitions which expand
our offering in the foodservice channel and further
builds on our biotechnology capabilities. The Group’s
consolidated balance sheet and cash flow remain
strong which will support the continued strategic
development of the business. A share buyback
programme was initiated, which is underpinned by
the strong balance sheet position and aligned to
Kerry’s Capital Allocation Framework.
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 of delivery and a disciplined financial
approach of targeting continued growth while
meeting return on investment objectives.
A YEAR OF STRONG
CASH DELIVERY, GOOD
MARGIN PROGRESSION
AND COMMENCEMENT
OF A €300M SHARE
BUYBACK PROGRAMME
36
Kerry Group Annual Report 2023 Strategic Report / Financial Review
Key Financial Indicators
GROWTH
Group
Revenue
Group
EBITDA
Margin
Constant
Currency
Adjusted EPS
RETURN
Return on
Average
Capital
Employed
Free Cash
Flow
SUSTAINABILITY
Scope 1 & 2
Carbon
Reduction
€8.0bn 14.5% 430.1 c
10.0% 92%
48%
+60bps
+1.2%
2022: €8.8bn
2022: 13.9%
2022: 440.6c +7.3%
2022: 10.3%
2022: 82%
2022: 45%
Further detail is set out within the Key Performance Indicators section on pages 34-35 and within supplementary information section
– Financial Definitions on pages 269-272.
Growth
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)
Adjusted earnings after taxation
Brand-related intangible asset amortisation
Non-trading items (net of related tax)
Profit after taxation
Basic EPS
Brand-related intangible asset amortisation
Non-trading items (net of related tax)
Adjusted EPS
Impact of exchange rate translation
Adjusted EPS growth in constant currency
Revenue
%
change
(8.6%)
(4.2%)
20.0%
(2.4%)
3.6%
1.2%
2023
€’m
8,020.3
1,165.1
14.5%
(219.6)
(27.2)
(50.3)
(1.9)
866.1
(103.1)
763.0
(52.3)
17.4
728.1
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
EPS Cent
410.4
EPS Cent
341.9
29.5
(9.8)
430.1
28.7
70.0
440.6
Reported Revenue of €8,020.3m (2022: €8,771.9m) was 8.6% lower than the previous year mainly driven by
the adverse impact of the disposals and foreign currency in the year.
EBITDA & Margin %
Reported EBITDA of €1,165.1m (2022: €1,216.1m) with organic growth more than offset by the impact of
disposals and adverse currency translation. Reported EBITDA margin of 14.5% (2022: 13.9%), representing
an increase of 60bps, primarily reflecting benefits from our Accelerate operational excellence programme
and portfolio developments.
37
Kerry Group Annual Report 2023
Strategic Report / Financial Review
Computer Software Amortisation
Computer software amortisation decreased by €4.6m to €27.2m (2022: €31.8m) reflecting the timing of spend.
Brand-Related Intangible Asset Amortisation
Brand-related intangible asset amortisation increased to €52.3m (2022: €50.9m), which is reflective of recent
acquisition activity.
Finance Costs
Net finance costs for the year decreased by €15.9m to €50.3m (2022: €66.2m) primarily due to deposit interest
earned on cash generated and reflecting the interest receivable on the third-party vendor loan note arising on
the divestment of the Sweet Ingredients Portfolio. The Group’s average cost of finance for the year was 2.4%
(2022: 2.3%).
Taxation
The tax charge for the year before non-trading items was €103.1m (2022: €114.5m) representing an effective
tax rate of 12.7% (2022: 13.5%) and the timing of in-year recognition of deferred tax assets.
Non-Trading Items
During the year, the Group incurred an overall non-trading credit of €17.4m (2022: €124.2m charge) net of
tax. This was made up of a charge of €61.7m net of tax, and offset by a credit of €79.1m net of tax. The charge
primarily relates to investments in the previously announced Accelerate Operational Excellence transformation
programme, which predominantly reflects costs of streamlining operations, project management costs, and
consultancy fees, while we work to enhance our continuous improvement in manufacturing processes and
deliver step-change manufacturing and supply chain excellence across the organisation. The credit of €79.1m
in the year relates to the profit on sale of the business/assets mainly related to the Sweet Ingredients Portfolio
divestment net of transaction costs.
The charge in the prior year, is primarily related to the divestment of the Group’s Russia and Belarus entity and
the first year of the Accelerate Operational Excellence transformation programme.
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 1.09 (2022:
1.05) and 0.87 (2022: 0.85) respectively.
Cash & Returns
Free Cash Flow
In 2023, the Group achieved a strong free cash flow of €701.3m (2022: €640.4m) reflecting 92% 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
2023
€’m
1,165.1
38.4
(13.5)
(65.8)
(119.5)
(315.0)
11.6
701.3
92%
2022
€’m
1,216.1
(201.4)
(15.7)
(62.0)
(80.0)
(254.7)
38.1
640.4
82%
1 Cash conversion is free cash flow expressed as a percentage of adjusted earnings after tax.
The main drivers of the strong Cash Conversion is the improvement in average working capital. The decrease
in working capital levels is attributable to the positive effects of our Accelerate supply chain excellence
program on overall inventory management, the efficient management of receivables enabled by our Global
Business Services centres and the easing of the inflationary environment through the year. The Group's
capital investment aligned to our strategic priorities and tax payments have increased year-on-year. Capital
expenditure was lower in the prior year due to timing of projects.
38
Kerry Group Annual Report 2023 Strategic Report / Financial Review
Returns
Adjusted profit
Average capital employed
Return on average capital employed (ROACE)
2023
€’m
813.5
2022
€’m
847.7
8,172.8
8,236.5
10.0%
10.3%
Further detail is set out within the Supplementary Information section - Financial Definitions on pages 269-272.
The movement in ROACE is primarily due to the translation impact on underlying assets and timing of M&A
activity.
Share Buyback
In October, the Board approved a share buyback programme which will return up to €300 million in cash to
shareholders. The buyback programme commenced on 1 November and is expected to be completed by the
end of April 2024. The buyback programme is underpinned by the Group’s strong balance sheet and cash flow
and is aligned to the Company’s Capital Allocation Framework.
In the period from 1 November 2023 to 31 December 2023 the Company purchased 1,373,261 shares
returning a total of €101.7m to shareholders. Since the year end, and up to 31st of January 2024, the Company
has purchased an additional 749,081 shares returning an additional €58.9m to shareholders.
Maturity Profile of 2023 Net Debt
Net Debt = €1,604m
The weighted average maturity of debt in years is 4.8.
Key Financial Ratios
Our credit metrics are strong with a net debt to EBITDA ratio of 1.5 times and we have a strong balance sheet
which will continue to support the further strategic development of our business.
Net debt: EBITDA
EBITDA: Net interest
2023
1.5
21.8
2022
1.8
18.1
39
Kerry Group Annual Report 2023-800-600-400-200020040060080010001200140016001800(€XXXm)Within 1 year€XXXm€X,XXXm€XXmBetween 1 and 2 yearsBetween 2 and 5 yearsOver 5 years(€881m)Within 1 year€16m€1,496m€973mBetween 1 and 2 yearsBetween 2 and 5 yearsOver 5 years Strategic Report / Financial Review
Net Debt
Net debt at the end of the year was €1,604.1 (2022: €2,217.4 m). The decrease during the year reflects strong
business cash generation and divestment proceeds, offset by acquisition spend and the share buyback
programme.
Movement in Total Net Debt
Free cash flow
2023
€’m
2022
€’m
701.3
640.4
Disposal proceeds (net of acquisitions including payments relating to previous acquisitions)
175.6
(391.2)
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
Purchase of own shares
Exchange translation adjustment
Decrease (Increase) in net debt resulting from cash flows
Fair value movement on interest rate swaps
Exchange translation adjustment on net debt
Decrease (Increase) in net debt in the year
Net debt at beginning of year
Net debt at the end of the year – pre-lease liabilities
Lease liabilities
Net debt at end of year
Financing
(3.0)
147.1
-
(10.4)
(22.6)
-
(99.8)
(85.4)
(191.3)
(173.6)
(101.7)
(14.2)
614.0
1.0
(2.3)
612.7
-
(27.2)
(70.0)
1.4
(29.7)
(98.3)
(2,148.2) (2,049.9)
(1,535.5) (2,148.2)
(68.6)
(69.2)
(1,604.1) (2,217.4)
Undrawn committed facilities at the end of the year were €1,500m (2022: €1,100m) while undrawn standby
facilities were €335m (2022: €343m). In June 2023, the Group increased its revolving credit facility from
€1,100m to €1,500m with a new maturity date of June 2028. The facility contains two one-year extension
options, exercisable on the 1st and 2nd anniversaries of the facility and which, if exercised, would extend the
maturity date of the facility to June 2030.
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,
€50.8m (2022: €70.7m) was on short term deposit under a Sustainable Deposits programme.
40
Kerry Group Annual Report 2023 Strategic Report / Financial Review
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
2023 Performance
In 2023, our performance has continued to trend positively, delivering a 48% (20222:45%) reduction in our
absolute Scope 1 & 2 emissions and a 39% (20222:41%) reduction in our food waste volumes, versus a 2017
baseline for both KPIs.
Emissions (CO2e)
Scope 1 & 2 (Tonnes)
% reduction
2023
469,770
48%
20171
Food Waste
910,229
Tonnes
% reduction
2023
8,048
39%
20171
13,230
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.
2 The prior year movements have also been restated in line with the November 2021 Sustainability-Linked Bond Framework,
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
46 and also our 2023 Sustainability Report at kerry.com.
Financial Risk Management
Within the Group risk management framework as described in the Risk Management Report on page 93,
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 92-105 and in note 24 to the Consolidated Financial
Statements.
Dividend and Annual General Meeting
During the year, the Group paid an interim dividend of 34.6 cent per A ordinary share, which was an increase
of 10.2%. The Board has proposed a final dividend of 80.8 cent per A ordinary share, payable on 10 May 2024
to shareholders registered on the record date of 12 April 2024. When combined with the interim dividend, the
total dividend for the year amounts to 115.4 cent per share (2022: 104.8 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%.
Kerry’s Annual General Meeting is scheduled to take place on 2 May 2024.
41
Kerry Group Annual Report 2023 Strategic Report / Business Review
BUSINESS REVIEW
TASTE & NUTRITION
42
Volume growth of 1.1% reflecting
strong comparatives and challenging
market conditions
Growth led by Food EUM across Dairy,
Snacks and Meat
Pricing +1.1% with inflation in H1
turning to deflation in H2
EBITDA margin 17.0% with +50bps
expansion driven by cost efficiency initiatives
and portfolio developments
Taste & Nutrition reported revenue of €6,975m
reflected volume growth of 1.1% and positive pricing
of 1.1%, more than offset by adverse translation
currency of 3.4% and the effect of disposals net of
acquisitions of 4.8%.
The division achieved solid overall volume growth
against the backdrop of industry destocking and
pricing dynamics. Foodservice achieved strong
volume growth of 9.3% supported by innovation with
quick service restaurants, fast casuals and coffee
chains in particular, while lower volumes in the
retail channel of 2.2% reflected customer inventory
management and softer market dynamics.
From an end use market (EUM) perspective, Food
achieved good growth led by Dairy, Snacks and
Meat. This was supported by strong performances
in savoury and culinary taste solutions, as well as
Tastesense® salt and sugar-reduction technologies.
Business volumes in emerging markets increased by
4.1% with strong growth in the Middle East.
Within the global Pharma EUM, volume growth was
led by good performances in cell nutrition and in
Kerry’s clinically-backed branded botanical extracts.
VOLUME GROWTH DRIVEN
BY STRONG FOODSERVICE
PERFORMANCE
Kerry Group Annual Report 2023 Strategic Report / Business Review
Americas Region
Europe Region
Overall volumes -1.8% reflected
challenging market conditions
Retail channel saw softer market
conditions while foodservice
performed well
Within the Food EUM, good volume
growth was achieved in Snacks and Dairy
LATAM delivered overall growth despite
softer H2 market conditions
Overall volume growth of 2.9%
Dairy, Snacks and Meals
performed very well
Foodservice delivered
strong growth
Reported revenue in the Americas region of
€3,772m reflecting volume and pricing reductions
of 1.8% and 0.1% respectively, adverse foreign
currency of 2.6% and the effect from disposals
net of acquisitions of 4.9%.
Performance in the region reflected strong
comparatives, customer inventory reductions and
softer than expected market conditions, which
continued to be a feature through to the end of
the year. Performance in the retail channel was
particularly impacted within the Beverage, Bakery
and Meats markets, while growth in foodservice
was supported by continued menu enhancement
and back-of-house efficiency solutions. In North
America, Snacks and Dairy achieved good growth
driven by authentic taste-led innovations with
global leaders, emerging brands and private label,
while performance in Meat included a number of
successful new launches incorporating Kerry’s clean
label preservation systems.
LATAM achieved overall volume growth led by
Mexico with good performances in the Snacks and
Meat EUMs, while Brazil experienced softer market
conditions in the second half of the year.
Reported revenue in the Europe region of €1,517m
reflected volume growth of 2.9% and positive pricing
of 6.4%, more than offset by adverse foreign currency
of 1.4% and the effect from disposals of 10.0%.
Growth within the region was led by strong
performances in the UK and Ireland. Dairy
achieved good growth led by performances in dairy
applications for the foodservice channel. Snacks
delivered strong growth through savoury taste
and Tastesense® salt reduction technologies, while
Meals performance was supported by nutritional
enhancements and authentic taste solutions in stocks
and broths. Beverage also performed well, with good
business development in the low and no alcohol
category with our citrus range, sugar reduction
technologies and botanicals portfolio.
The region achieved very strong growth in the
foodservice channel driven by menu enhancement
activity, seasonal products and ongoing nutritional
profile improvements. As expected, performance in
the retail channel softened through the year, reflective
of constrained market demand given the recent
inflationary environment.
AMERICAS PERFORMANCE
REFLECTED STRONG
COMPARATIVES AND
CUSTOMER INVENTORY
MANAGEMENT
43
Kerry Group Annual Report 2023 Strategic Report / Business Review
APMEA Region
Volume growth of 6.2%
Growth led by Bakery, Meat and Meals
Foodservice delivered very strong growth
Reported revenue in the APMEA region of €1,647m
reflected volume growth of 6.2%, lower pricing
of 1.0%, favourable transaction currency of 0.1%,
adverse translation currency of 6.6% and the effect
from disposals net of acquisitions of 0.2%.
Overall growth in the region was led by a strong
performance in the Middle East across the year. China
delivered good growth considering local market
dynamics, while performance in Southeast Asia was
impacted by challenging market conditions through
the second half of the year.
Strong growth was achieved in the foodservice
channel through the year. This was led by Bakery with
a number of new taste and texture innovations. Meat
achieved strong growth, driven by local authentic taste
launches with global and regional leaders, while Meals
performed well through culinary taste systems and
Tastesense® salt reduction technologies. Growth in the
retail channel was supported by strong local authentic
taste and probiotic innovations across Kerry’s Food end
use markets.
During the year, good progress was made in enhancing
the Group’s presence within the region. This included
the expansion of Kerry’s footprint in East Africa and the
opening of its new authentic taste facility in Karawang,
Indonesia to further support customers in key end use
markets across Southeast Asia.
44
OVERALL GROWTH IN
THE REGION WAS LED BY
A STRONG PERFORMANCE
IN THE MIDDLE EAST
Kerry Group Annual Report 2023 Strategic Report / Business Review
BUSINESS REVIEW
DAIRY IRELAND
Volumes -6.5% reflected challenging
market environment and constrained
supply conditions
Pricing -9.3% with reduced pricing
reflective of dairy markets
EBITDA of €53m with margin reduction
driven by the significant impact of
changes in dairy market prices
Reported revenue of €1,283m and overall EBITDA
of €53m in Dairy Ireland were lower in the year due
to constrained supply conditions as well as elevated
input costs impacting market demand dynamics.
Within Dairy Ingredients, overall performance was
impacted by the sharp fall in dairy market sales
prices particularly across the middle part of the year.
Dairy Consumer Products performed well given
the market context, supported by good growth in
branded cheese.
PERFORMANCE REFLECTED
SIGNIFICANT REDUCTION
IN DAIRY MARKET PRICES
45
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
SUSTAINABILITY REVIEW
Delivering Sustainability Impact
In an era characterised by increasing
environmental awareness and
a pressing need for sustainable
practices, the food industry is facing
significant challenges.
With issues such as obesity and malnutrition, climate
change, deforestation, food waste and plastic pollution
among the most prevalent, we continue to play our
part to bring about positive social and environmental
outcomes that contribute to a more resilient food system.
Kerry has a pivotal role to play in enabling change. We
are uniquely placed to influence the impact of food
and beverage products and we partner with customers
to co-create solutions that provide positive and
balanced nutrition to consumers, while reducing their
environmental impact. This is sustainable nutrition.
CREATING
SCIENCE-BACKED
SUSTAINABLE
NUTRITION
THAT DELIVERS
GLOBAL IMPACT
46
46
Kerry Group Annual Report 2023
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
Our Beyond the Horizon strategy is built on the
framework of three pillars; Better for People, Better
for Society and Better for Planet, and sets out our
commitment to deliver better nutrition for consumers,
manage our business and source our materials
responsibly, whilst reducing our environmental
footprint and that of our customers. We look to a
future of sustainable nutrition; where consumers are
offered sustainable choices, without compromise on
taste or quality; a future where farmers are supported
to produce in harmony with nature, employing
practices that are regenerative; a future where all
companies produce and consume while respecting
the principles of the circular economy.
Core to our strategy is our ambition to reach over two
billion people with sustainable nutrition solutions by
the end of 2030. We will achieve this by innovating
to create products and solutions that maintain good
health, while protecting people and the planet.
Sustainable Nutrition Spectrum
The first aspect of sustainable nutrition is about
creating food that supports good health. Kerry has
been working with customers for decades, to enhance
the nutritional profile of their products, including the
reduction of fat, salt and sugar, but more recently
there is a growing emphasis on the positive wellbeing
that can be derived from food products and a growing
demand for products that offer health benefits
beyond basic nutrition.
As a world leader in Taste and Nutrition, we create
solutions that help our customers to respond to
these evolving consumer demands. Across our own
portfolio, we have made significant progress profiling
our nutritional impact, as outlined in our Better for
People section.
The second aspect of sustainable nutrition is
producing food in a way that minimises negative
impacts on people, society and the planet. This
includes upholding the rights of workers, reducing
carbon emissions, reducing food waste, water usage
and more.
For Kerry, this means a holistic approach to health and
wellbeing, with sustainable nutrition choices that are
designed to enhance health whilst also fostering a
more balanced relationship with the planet.
This sustainable nutrition strategy is made possible by
partnering with our customers to guide, inform and
support them on their journey along the spectrum
of sustainable nutrition. As a trusted partner to the
world’s leading food and beverage brands, we are
helping create a more balanced food system that
produces better food for consumers with a lower
impact on the planet.
Sustainable Nutrition Spectrum
Kerry's Beyond the Horizon strategy is focused on enabling our customers overcome key challenges as they move
across the sustainable nutrition spectrum.
Positive &
Balanced Nutrition
Clean
Label
Proactive
Nutrition
Food Safety
& Security
Personalised
Nutrition
Nutrition
Climate
Positive
Environmental
& Social
Customer
Social
Impact
Regenerative
Agriculture
Circular
Solutions
Sustainable
Nutrition
Kerry Group Annual Report 2023
47
Strategic Report / Sustainability Review
Supporting the UN Sustainable Development Goals
Kerry supports the UN Sustainable Development Goals. In particular, our business is focused
on making the greatest contribution to goals 2, 3 and 12.
GOAL 2:
Zero Hunger
GOAL 3:
Good Health & Well-being
An example of our efforts in supporting this goal
is our partnership with Concern Worldwide to help
alleviate hunger and provide greater access
to nutrition to people in parts of Kenya. Through our
partnership, we help farmers adapt to the impacts of
climate change and provide increased food security
in the region. For more information, see page 60.
An example of our efforts in supporting this goal is
our investment in Kerry’s clinically-backed Sensoril®
ashwagandha root-and-leaf extract which has become a
preferred ingredient in the North American supplement
market. It offers one of the lowest clinically substantiated
doses of ashwagandha at 125mg per day, which has been
shown to manage symptoms of everyday stress.
GOAL 12:
Responsible Consumption
and Production
An example of our support towards this goal is the opening
of Kerry's new Food Protection and Preservation Technology
Hub in Wageningen University, Netherlands, to provide
accelerated and differentiated solutions and food safety
validation studies to address food loss and reduce food
waste across the entire supply chain.
Power of Partnership
Kerry recognises the need to intensify our collective
efforts and we consider there to be power in
partnerships. We support the United Nations’
Sustainable Development Goals (SDGs), which
unites us on a common path to more sustainable
development by 2030 with governments, like-
minded businesses and communities. We continue
to invest significant effort and resources to increase
our positive impact across multiple SDGs, and in
particular, Kerry’s business is focused on making the
greatest contribution to goals 2, 3 and 12.
Materiality Assessment
Our materiality assessment process enables
us to identify and prioritise the most relevant
sustainability topics for Kerry and thus to direct
action and resources, through our policies and
programmes appropriately. Our material topics are
defined through a structured process that assesses
impacts, risks and opportunities across our value
chain. We typically complete a comprehensive
review of material topics every three years, with an
annual update in interim years. The last detailed
assessment was conducted in 2021.
During 2023, we initiated a detailed assessment;
enhanced for the European Sustainability Reporting
Standards’ double materiality requirements, in
preparation for disclosure under the Corporate
Sustainability Reporting Directive (CSRD). Double
materiality has two dimensions, namely: impact
materiality and financial materiality. Impact
materiality relates to the impact Kerry has on
Environmental, Social and Governance (ESG) issues
(inside-out), while financial materiality relates to the
impact that ESG issues have on Kerry (outside-in).
The outputs from this assessment will determine
the materiality of a range of relevant topics for Kerry
helping to inform the continued evolution of our
Beyond the Horizon strategy, as well as providing the
basis for future sustainability-related disclosures.
As part of our updated approach, we conducted
contextual research to inform our material topics.
We have consulted on these topics with functional
leadership and subject matter experts to establish
a long list for assessment. Using surveys, in-depth
interviews and workshops, we have garnered
insight from stakeholders including employees,
investors, customers, suppliers, NGOs, and others
48
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
Our Materiality Process:
UNDERSTAND
THE CONTEXT
TOPIC
SELECTION
STAKEHOLDER
ENGAGEMENT
MATERIALITY
ASSESSMENT
REVIEW
& REPORT
Assessment of
the external
environment
to determine
universe
of topics
Refined topic
list developed
with reference
to ESRS and
definitions
agreed
Detailed
feedback
received across
stakeholder
groups
Qualitative and
quantitative
inputs assessed
to determine
material topics
Topics validated
through internal
governance
process
and disclosed
across key stakeholder groups. These insights
are helping to inform the materiality of specific
impacts, risks and opportunities using thresholds
which have been aligned with our enterprise risk
management framework. This process is supported
by a core group of senior leaders and overseen by an
Executive-led steering committee.
The provisional outputs from the double materiality
process indicate broad alignment with topics in the
following matrix, which were identified under our
previous assessment. We will finalise our approach
to double materiality in 2024, incorporating any
additional insights within the final implementation
guidance from the European Financial Reporting
Advisory Group (EFRAG), as necessary.
Our material topics are incorporated as part of the
broader risk assessment process, and further details
of Kerry’s principal risks are outlined in the Risk
Management Report on pages 92-105. We respond to
these issues through our Beyond the Horizon strategy
and have a comprehensive governance framework in
place to support our efforts, as outlined on page 119.
Materiality Matrix
Identifying the material topics for Kerry
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
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
49
Kerry Group Annual Report 2023
Strategic Report / Sustainability Review
External Recognition
We are pleased with continued external recognition of our efforts by independent
observers, particularly the World Benchmarking Alliance’s ranking of Kerry among the
top ten most influential companies taking action on food systems transformation.
Other notable achievements are outlined below.
World Benchmarking Alliance:
Kerry is proud to be recognised by the World Benchmarking Alliance,
in their 2023 Food and Agriculture Benchmark, as one of the world’s
top 10 organisations, for demonstrating a leading role across multiple
sustainability areas and for our contribution towards the UN Sustainable
Development Goals.
ISS:
Kerry has achieved ‘Prime’ status according to the ISS ESG rating
methodology, following an assessment in October 2023. Our rating
places us in the top decile relative to our industry group. Kerry’s
ISS QualityScore also attributes the lowest risk score (1 out of 10)
to Kerry in the areas of Social and Environment, as of their latest
assessment for December 2023.
FTSE4GOOD:
Kerry is a constituent of the FTSE4GOOD, which measures the
performance of companies demonstrating strong Environmental,
Social and Governance practices.
MSCI:
Kerry has maintained its MSCI ESG Rating of AAA for its performance
on Environmental, Social and Governance issues in 2023.
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:
Key metrics within this Sustainability Review,
including 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 for sustainability KPIs, see our
2023 Sustainability Report at kerry.com.
50
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
BETTER
FOR
PEOPLE
Reaching more people with
sustainable nutrition is not just
a goal; it is a global imperative to
ensure a thriving and healthy world.
Creating a World of Sustainable Nutrition
At the heart of our Beyond the Horizon strategy
is our goal to reach over two billion people with
sustainable nutrition solutions by the end of 2030.
We understand that this is not a journey we can
undertake alone and we are committed to working
with our customers to co-create and innovate for
more sustainable consumer diets. Supporting
our customers in discovering new and innovative
formulations, is a pivotal way for Kerry to contribute
to the achievement of several UN Sustainable
Development Goals and most notably Goal 3
‘Good Health and Well-being.’
Nutritional Impact
Nutritional concerns from customers and their
consumers have evolved from food safety and
security to the increasing desire for more clean-
label, proactive nutrition. Governments worldwide
continue to introduce legislation that encourages
healthier diets, which is expediting the pace
of change within the food industry to produce
healthier products. These regulations vary by
region and include a tax on added sugar
in beverages, a UK ban on marketing of foods
high in saturated fat, salt or sugar (HFSS),
along with the introduction of easy-to-read,
front of pack labelling.
51
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
Equally the World Health Organisation continues to
call on businesses and governments to reduce the
risk of non-communicable diseases, malnutrition
and obesity, including a reduction in consumption
of salt and a reduction of saturated fats, sugars,
and calories.
At Kerry, we utilise our expertise in nutritional
profiling to support our customers in reaching
their own sustainable nutrition goals leveraging
the KerryNutri Guide tool which was developed
and launched in 2022. The tool measures the
nutritional impact of our customers’ products across
11 different, Government-endorsed, front-of-pack
nutrition labelling systems and national legislation
requirements representing Europe, UK, Australia,
New Zealand, USA, Singapore, Brazil and Mexico.
Measuring the Impact of our Portfolio
In the absence of an existing measurement
framework to evaluate the nutritional profile of
food ingredients, we have developed and published
a methodology to assess our portfolio. Our
industry-leading approach assesses the nutritional
contribution of our ingredients to a final consumer
product. As an industry leader, we have documented
this methodology in a whitepaper, making it easier
for others in the industry to assess and report upon
their own impacts. For more, see Kerry’s nutrition
profiling methodology whitepaper at kerry.com.
OVER THE COURSE OF 2023, KERRYNUTRI GUIDE HAS BEEN
WIDELY UTILISED BY OUR RD&A SCIENTISTS AS A TOOL TO
SUPPORT NUTRITION SIGNPOSTING FOR BRANDS COMMITTED
TO PUBLIC NUTRITION TARGETS AND THOSE CARRYING
FRONT-OF-PACK NUTRITION LABELLING IDENTIFYING
OPPORTUNITIES FOR PRODUCT REFORMULATION
KerryNutri Guide
GLOBAL VIEW OF THE FOOD MODEL
These results are for information purposes only, and do not indicate legal permission of use on your product(s).
HFSS Rating (UK)
Traffic Light Rating (UK)
1.Select Region and Models
2. Food Categorisation Questions
3. Nutritional Information
HFSS
8
UK food score
Fat
Sat Fat
Sugars
Salt
MED
MED
MED
LOW
Ensure Q4 is answered correctly
Nutri-Score Rating (Europe)
EU Nutritional Claims
No
claim
for
‘Low
Fat’
No
claim
for
‘Low
Sugars’
Low
Salt
High in
Fibre
No
claim
for
‘Protein’
Enter nutrition information as sold or as prepared as per manufacturer’s instructions if declared as so
Mexico Warning Labels
Brazil Warning Labels & Nutritional Claims
Energy (kj per 100g)
Energy (kcal per 100g)
Fibre (g per 100g)
1665
0
7.0
Total Fat (g per 100g)
Protein (g per 100g)
8.50
6.4
Saturated Fat (g per 100g)
Fruit & Veg (% per 100g) – UK HFSS
Non
required
Sat Fat
EXCESS
ADDED
SUGAR
Non
required
Sodium
EXCESS
ENERGY
Non
required
Trans Fat
ALTO EM
Non required
Sat Fat
AÇÚCAR
ADICIONADO
Added Sugar
Non required
Sodium
4.20
0.0
Health Star Rating (AU/NZ)
Trans Fat (mg per 100g)
Fruit & Veg (% per 100g) – Nutri Score
0
0.0
Total Sugar (g per 100g)
Fruit & Veg (% per 100g) – HSR
21.00
0.0
Added Sugars (g per 100g)
Salt (g per 100g)
Sodium (mg per 100g)
15.0
0.230
0
Press before you charge unit for energy salt/sodium
Export Information
US Nutritional Claims
52
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
Expanding our Nutritional Reach
Our Sustainable Nutrition Spectrum, see page 47,
integrates nutritional, environmental, and social
measures, enabling us to act in key impact areas
and strategically evolve our portfolio to support
our customers in reaching their own sustainable
nutrition goals. In 2023, we expanded our reach
with positive and balanced nutrition solutions to
1.25 billion people, via geographical expansion
into new markets and developing regions, through
acquisitions, customer partnerships and the
availability of new technologies within our portfolio.
We also continue to maintain a Taste and Nutrition
portfolio of more than 80% positive and balanced
nutrition solutions.
Our ‘nutritional reach’ is a measure of the global
population who consume our positive and balanced
nutrition solutions and the calculation is based on
a model that tracks and monitors performance
at a product category and geography level. The
calculation involves applying our nutritional profiling
framework to our portfolio, to identify all solutions
with a positive or balanced nutritional rating. Kerry’s
revenue associated with positive or balanced nutrition
is then translated into the amount of people reached
using data by country and end use market. Finally,
statistical methods eliminate double counting.
1.25 BILLION PEOPLE
REACHED WITH
POSITIVE AND BALANCED
NUTRITION SOLUTIONS
Environmental Impact
The proliferation of eco-labelling and increased
regulatory scrutiny of green claims, alongside
a significant momentum from Net Zero carbon
commitments, has led to the requirement for robust
environmental data at product level. In 2023, we
embarked on the development of a digitally-enabled
approach to product carbon footprinting (PCF), which
will calculate a carbon value for products within the
Kerry portfolio. The methodology has been developed
in partnership with an independent third-party,
aligning with internationally recognised standards
(ISO 14040/44) and industry best practice. Alongside
this development, we have been piloting third-party
life-cycle assessment platforms, which offer the
potential to look at a greater range of environmental
impact categories, beyond climate. This work will
accelerate our innovation on lower-carbon products,
support our customers on reformulation and provide
them with enhanced Scope 3 data, enabling them to
deliver on their own Net Zero commitments. Ahead
of deployment, several independent Product Carbon
Footprints have also been conducted on strategic
categories within the portfolio.
Another proprietary tool and enabler that Kerry
offers our customers, to progress their journey
along the sustainable nutrition spectrum includes
the KerryFood Waste Estimator, which allows
consumers and manufacturers to quantify and
understand the financial and environmental impact
of reducing food waste either in the food chain or
in the home.
53
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
Science, Technology and Innovation
Science, technology and innovation is a critical
enabler for the urgent transformation of our
food system. Innovation comes in the form of
new product launches, reformulations, menu and
product labelling, improved food safety as well
as smarter production and commercialisation
techniques.
Our capabilities in this area are among the most
advanced in the industry, with an innovation
ecosystem spanning over 70 Technology and
Innovation Centres globally, more than 1,100
scientists and 200 PhDs and Masters, as well as
our independent Scientific Advisory Council, Kerry
Health and Nutrition Institute®, Kerry’s Insights Team
and over 60 University and external partnerships,
designed to pioneer sustainable solutions and bring
cutting-edge innovation to our customers. During
2023, we invested €301.3m in RD&A (2022: €303.2m).
For more on the breadth of our science ecosystem,
and technology portfolio and expertise, see Our
Technologies on page 30.
Science Inspiring Sustainable Impact
A PROBIOTIC ISOLATED
FROM HUMAN BREAST
MILK TO SUPPORT
LACTATING MOTHERS
Kerry has a leading portfolio of science-
backed ingredients from natural origin
to support women’s health. This portfolio
addresses unique, women’s health
concerns across various life stages and
need states; maternal health, hormonal
balance, fertility, menopausal symptoms,
digestive health and skin health to name
a few. Kerry’s patented LC40® Breastcare
is a natural probiotic, derived from
breast milk which supports women
who are breastfeeding.
54
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
HYDRATION
WITH FUNCTIONAL
HEALTH BENEFITS
During the year Kerry partnered with a
customer to create a unique, functional
beverage to support long-term health and
wellbeing for an ageing world population.
With the benefit from Kerry’s proprietary
circadian and functional research and a
co-manufacturing partnership, the result
was a powdered beverage product line,
featuring functional benefits from Ayuflex®
and Capros®. Kerry’s patented Ayuflex
extract provides healthy joint support whilst
Capros is the only natural botanical extract,
derived from edible fruits of Amla, which has
scientific backing in cardiovascular health,
and is recognised as a super antioxidant
that supports heart health.
Food Safety
The quality of the food we produce is a priority
and a prerequisite for Kerry achieving our vision
of becoming our customers’ most valued partner,
creating a world of sustainable nutrition.
Safety First, Quality Always reflects our collective and
company-wide commitment to never compromise
on the safety of our people as well as the safety and
quality of our products. Food safety and quality are
embedded in Kerry’s culture and are a cornerstone
of our shared values. Our customers and consumers
trust that we ensure food safety throughout our
supply chain from the ingredients we source, the
processes we follow to the products we manufacture
and distribute.
We approach food safety holistically, recognising
its impact on supporting reliable food systems,
ensuring more people have greater access to
nutritious, sustainably-made food. In 2023,
we had zero recall notifications (2022: two).
For information on our food safety standards,
please see our 2023 Sustainability Report.
PRESERVING FOOD
SAFETY WHILST
REDUCING WASTE
Kerry’s IsoAge patented antimicrobial
technologies recently supported a
customer by extending their fresh
chicken shelf life by three additional
days, while also protecting against
pathogenic microorganisms. The
clean label extract and vinegar-based
antimicrobial technologies provide
natural solutions for food safety
and preservation, while maintaining
a balanced sensory profile and
reducing food waste.
55
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
BETTER
FOR
SOCIETY
Our work supports the broader
sustainable development agenda,
ensuring no one is left behind.
Strengthening Communities
Access to the right nutrition is a foundational
element for all communities, helping to improve
outcomes for healthcare, education and equality.
Beyond nutrition, we know we have an impact
on society through the way in which we operate
our business and the values we display in our
daily interactions.
At Kerry, we deliver on our commitment to society
by conducting business with integrity. We are
dedicated to upholding our values and enhancing
the lives of all those we work with, including
employees, those in our extended value chain,
and the communities in which we operate.
Our partnerships with Non-Governmental
Organisations (NGOs) serve as an important
means to broaden our reach and positively
impact on some of the world’s most vulnerable
communities. Furthermore, our partnerships with
farmers are central to the creation of positive
long-term impacts, namely improving yields and
providing greater economic security for these
rural communities.
In this section, we outline some of the important
areas where Kerry is making a positive
contribution to the societies we operate in.
56
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
Operating Responsibly
Kerry’s Code of Conduct is intended to embody our
purpose and act as a guide to help us live our values,
obey the law and behave in an ethical manner. It
defines the expectations of all Kerry colleagues,
outlining the standards that must be upheld in
important areas including human rights, business
integrity and environmental compliance. It is based
on the principles of protecting our people, working
with integrity, safeguarding our information and our
assets while caring for our communities. The Code
of Conduct is available in 26 languages, ensuring
every employee regardless of role, seniority or
location can understand and adhere to the code.
By the end of 2023, over 80% of required colleagues
had completed this training (2022: >88%).
We make it clear to colleagues that any breach
or suspected breach of our Code of Conduct
should be raised through the available grievance
channels. Our Speak Up Policy provides guidance
for individuals on how to raise a concern, and our
dedicated Speak Up facility is available via our
website to colleagues and external parties who
wish to do so anonymously. Any data related to
such breaches is reviewed by the Business Integrity
Committee, who provide oversight on all areas of
ethical compliance across the Group. For more on
our approach to business ethics and reporting of
potential issues, see our 2023 Sustainability Report.
Kerry Group Annual Report 2023
57
Strategic Report / Sustainability Review
Kerry works directly at farm level supporting programmes
that ensure better community outcomes.
Protecting Human Rights
Kerry is committed to upholding internationally
recognised human rights and we set clear
expectations for all colleagues in our Code
of Conduct and Human Rights Policy.
Kerry plants register with Sedex (Supplier ethical
data exchange) which helps us understand potential
risks and performance within our operations.
Additionally, many plants undergo an independent
Sedex Members Ethical Trade Audit (SMETA), or
equivalent (based on customer requirements), which
provides an independent assessment of our sites
and the systems they have in place to control any
risks identified. In 2023, 11 (2022: 38) of our sites
underwent a SMETA audit.
Across our supply chain, our Supplier Code of
Conduct is explicit in setting out our expectations
of suppliers. We continue to monitor supplier
compliance, taking a risk-based approach to this
evaluation. In 2023, we conducted supplier seminars
in APMEA and LATAM to highlight our requirements
on social compliance and the benefits of Sedex and
SMETA. We completed an annual high-risk country
assessment to identify any changes to countries in
scope for 2024. 88% (2022: 71%) of our suppliers in
high-risk countries1 were enrolled on Sedex and 65%
(2022: more than half) of these have undergone a
Sedex Members Ethical Trade Audit (SMETA).
At Group level, we carried out an independent
Human Rights Assessment with an expert third-
party, to evaluate our policies and processes and
identify further opportunities for improvement
both within our own operations and across our
value chain.
Through this process, we identified several
opportunities to strengthen Kerry’s operational
engagement and facilitate an improved escalation
and risk management process. An immediate action
resulting from this work has been the prioritisation
of human rights within the established Social
Sustainability Council.
Safety at Work
At Kerry, we reinforce a culture of safety at work and
we strive for zero safety incidents. We believe our
employees are our most important asset, and their
wellbeing is our top priority.
During 2023, we sadly lost a Kerry colleague to
a workplace fatality at one of our manufacturing
facilities. We extend our deepest sympathy to
their family, friends and colleagues. A full and
comprehensive investigation was immediately
initiated following the accident. This investigation
involved Kerry teams working in close partnership
with all relevant third-party authorities and external
experts. Learnings from this investigation have been
shared across our manufacturing network.
Our determination to uphold a safe and secure
working environment has been further reinforced.
In recent years, we have transformed our approach
and our enhanced safety programmes are a critical
enabler as we strive to become an industry leader.
We foster a Safety First, Quality Always culture
within the organisation, and through targeted
communication, workshops, and various leadership
initiatives, we have seen a step change within our
safety performance in 2023.
We continue to strengthen our safety programme
focusing more on proactive activities, leading
indicators, elevated safety standards, stronger
audits, and focused risk reduction. As part of our
transformation, we continue to engage our people
and empower them to share the responsibility for
their personal safety, as evidenced by the launch of
our inaugural Environmental, Health and Safety and
Food Safety Quality Learning Academy, an initiative
that helps identify learning and development
opportunities for employees and supports them to
grow their career in this area.
Regular townhalls continue to reinforce the
importance of safety in the workplace and recognise
employees who exemplify the highest health and
safety standards, which helps make our employees
feel engaged and enthusiastic about safety and
participate proactively.
1 This is measured as a percentage of total direct raw material spend.
58
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
In 2023, we have focused heavily on items such as
employee risk assessments, hazard recognition,
training and education and leadership commitment.
As we grow our employee engagement, we
continue to encourage transparency and create an
environment for continuous improvement.
At year end, our total incident rate has reduced to
0.91 (2022: 1.26), representing continued progress
in the reduction of injury. For more detail on our
health and safety performance, see our 2023
Sustainability Report.
Sustainability Essentials
Every employee at Kerry has a role to play in
creating a world of sustainable nutrition. To support
them in understanding our commitments and
the role they can play, we launched an award-
winning development programme in 2023 called
‘Sustainability Essentials’.
This voluntary online training is designed to elevate
company-wide knowledge, confidence, capability
and engagement in this crucial area, 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 were launched on a phased
basis from April 2023 onwards and received an
industry award from the Irish Institute for Learning
and Development.
Employee feedback has been extremely positive
with almost 90% of participants confirming they
understand the role they can play in supporting
Kerry’s vision for a world of sustainable nutrition. In
2024, we will launch the next phase of the programme
to a more targeted audience, providing them with
deeper and more practical insight on specific topics
directly related to their roles, to ensure adoption of
best practice and improve decision-making.
Diversity, Inclusion and Belonging
Our people are central to co-creating a world
of sustainable nutrition with our customers, so
ensuring the workplace is a safe environment, where
they can bring their full self to work, is paramount.
Kerry’s global footprint and access to local markets
gives us incredible exposure to diverse thinking,
cultural perspectives and different experiences.
Today we have a presence in over 55 countries with
119 different nationalities in our global workforce.
Our Diversity, Inclusion and Belonging team,
employee network groups and our leaders across
the business continue to champion and celebrate
the many different attributes among Kerry’s
employee community, fostering an inclusive
environment that enables our people to be at their
best and continue to drive positive change.
In 2023, to elevate our strategic focus across
the Group, we appointed a Global Director of
Diversity, Inclusion and Belonging. We engaged an
independent partner to review our overall progress
to date and the results were shared with the
Global Diversity, Inclusion and Belonging Council,
which is accountable, on behalf of the Executive
Leadership Team, for continuing to evolve our
ambition in this space and ensure achievement of
agreed organisational commitments. As a result
of this review, we will focus on strengthening
inclusive leadership behaviours, promoting
equitable experiences and improving education
and awareness across all aspects of diversity within
Kerry in 2024.
We continue to see positive momentum towards our
goal of building a diverse organisation. We now have
34% (2022: 33%) of women represented in our senior
leadership roles2, and 37% (2022: 36%) represented
in our senior management roles3. In 2023, 83% of
senior management at our significant locations were
hired from within the local community (2022: 84%).
This year, Kerry became a signatory of the Women’s
Empowerment Principles (WEPs), established by
the United Nations (UN) Global Compact and UN
Women, and we will continue to maintain and
further accelerate our progress on improving gender
diversity in 2024. For more detail, see our 2023
Sustainability Report.
For more details on our strategy and performance,
see our People section on page 14 and our 2023
Sustainability Report.
Kerry’s Sustainability Essentials team accepting their
Learning & Development Excellence award.
2 Senior leadership is defined as approximately the top 450 employees.
3 Senior management is defined as approximately the top 1,500 employees.
59
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
Children receiving UHT milk as part of WFP school
feeding programme in Gitega, Burundi.
Photo: © WFP/Irenee Nduwayezu
Increasing Access to Nutrition for
Vulnerable Communities
To support vulnerable communities, we collaborate
with respected international NGOs, to establish
sustainable initiatives which aim to enhance their
long-term health and wellbeing.
Improving dairy farming and access
to dairy in Burundi
In 2023, Kerry’s Project Amata continued to assist
the Gitega community in Burundi with food security,
productive and stable dairy farming and processing
practices, improving access to nutrition in a country
that remains vulnerable to rising international food
prices and drought. With Kerry’s expertise and
financial support, the programme enrolled over
150 additional farmers onto the programme in
2023, helping to provide practical support and best
agricultural practices to make their farms successful.
To improve performance, the project has launched
an animal identification system and a breeding
programme involving almost 500 cows, with calves
due to be born in early 2024. Kerry also shares its
expertise with the local milk processor, Modern
Dairy Burundi, to improve efficiencies and reduce
waste at a milk processing level .
One of the primary objectives of Project Amata
is to raise awareness of the nutritional value of
dairy within communities to support an overall
increase in milk consumption and help alleviate
malnutrition. To deliver on this objective in 2023,
theatrical community plays were produced across
three different project locations, attended by over
1,000 adults and children. Following this, community
discussion sessions were held on the topic,
facilitated by Vétérinaires Sans Frontières (VSF),
our local implementation partner whom Kerry
have trained on dairy’s nutritional components.
60
Improving Food Security
Kerry’s Agricultural Livelihoods Improving Value
Chains and the Environment (ALIVE) Programme
with Concern Worldwide aims to improve access to
nutrition and food security and is aligned to SDG 2:
Zero Hunger. The programme’s core objective is to
help farmers adapt to the impacts of climate change
and provide increased food security in the region.
The programme is creating a regional value chain
for mango production, establishing a new income
stream for families, with a more resilient crop that is
better suited to the regions’ changing climate.
Significant progress has already been made in the
programme’s first year, with over 3,500 farmers
trained in climate resilience and agronomics, and
over 22,600 mothers and young children reached
with nutrition education, malnutrition screening and
self-referral via newly-trained, community health
volunteers. The cumulative agricultural subsidy
has enabled production of over 456,000 kgs of
diversified food crops.
THE CUMULATIVE
AGRICULTURAL SUBSIDY
HAS ENABLED PRODUCTION
OF OVER 456,000 KGS OF
DIVERSIFIED FOOD CROPS
Mwanaesha Haluwa Haji tends to a plot of maize in Makere
village in Kenya’s Tana River County. Photo: Lisa Murray/
Concern Worldwide, 2023
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
Coffee grower in Peru, within Kerry’s Café Femenino programme.
Future-proofing coffee farming in Peru
In 2023, Kerry continued to support communities
in Peru, through our Café Femenino advocacy
programme. Several weather-related events,
including a cyclone and heavier than normal rainfall,
affected the coffee producers and their communities
in the region during the year. Kerry’s financial
support provided emergency food relief for almost
1,000 families who found themselves isolated for
months due to landslides and helped cover other
costs to recover damaged irrigation systems, replace
coffee trees and provide coffee seedlings to help the
producers get back on their feet. We also continue
to support education and training with a particular
emphasis on women growers via special coffee
programmes and workshops, to end the cycle of
poverty affecting women coffee farmers, and ensure
coffee farming is future-proofed in the region.
MyCommunity
Kerry is proud to support local communities where we
operate, via our unique MyCommunity programme,
which offers each employee a paid volunteer day, and
gives our sites the freedom to support community
initiatives that matter most to them.
MyCommunity activities in 2023 included financial
aid to those organisations carrying out disaster
relief efforts in Turkey and Syria; supporting the
Selo Amor Espresso programme in Campinas, Brazil,
which empowers women in vulnerable situations
by providing work opportunities through barista
training; providing funding and volunteering to
support the local community in Mozzo, Italy, who
were affected by deadly floods; packing almost
800,000 meals by over 100 volunteers from our
site in Beloit, US, for children in Zambia, Dominican
Republic and Ecuador; and providing volunteers and
monetary support to Eat Up, a charity in Murrarie,
Australia, that makes and delivers lunches directly
to schools for vulnerable children.
61
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
BETTER
FOR
PLANET
Through innovation, sustainable
practices and a commitment to
a greener future, we are actively
contributing to building a brighter
future for generations to follow.
The third and final pillar within our sustainability
strategy is focused on the impact we can have
in addressing some of the world’s most pressing
environmental concerns.
Food security plays a pivotal role in achieving
global sustainable development objectives.
However, the food and beverage industry, with its
significant environmental impact, requires urgent
transformation.
Addressing these environmental challenges requires
a collective effort from all parts of the value chain
amid growing scrutiny from stakeholders and
a heightened awareness of the interconnected
challenges of climate, water, waste, and biodiversity.
Embedded within our Beyond the Horizon strategy
are our environmental objectives spanning key
impact areas such as climate, water, and waste
extending beyond our operations into our value
chain. These objectives not only support the UN
SDGs but also reflect our vision for a world of
sustainable nutrition.
62
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
ACCELERATING OUR IMPACT
In partnership with other industry leaders,
Kerry is sponsoring a new and ambitious
programme that aims to make Ireland a
leading global platform for innovation in
sustainability. The 2050 Accelerator brings
industry leaders together with start-ups to
achieve our common goal of decarbonisation
across various industries. Through the
programme, Kerry identified viable projects
from innovative start-ups that address
animal health and soil nutrition, which will
be piloted in 2024, with the intention to scale
up, where successful, and provide a feasible
route to market.
Advancing Climate Solutions:
Our Commitment in Action
The global response to the climate crisis has been
too slow, contributing to changes in ecosystems
which we are highly dependent on. Nevertheless,
stakeholders' increasing awareness of the impacts
of climate change and a growing consensus on the
need to act, provides an opportunity for collective
effort across society.
Kerry’s holistic view of the industry, from family
farms to consumer demand and every stage in
between, means we are uniquely positioned to
identify and support our customers in addressing
some of these global challenges. Through our
support for better agricultural practices, developing
products that allow our customers to prevent food
waste and improving processing efficiencies, we
directly contribute to the reduction of our industry's
environmental impact.
We have set a target to reduce our Scope 1 and 2
emissions by 55% by the end of 2030, compared
to our 2017 base year, and this target has been
validated by the Science Based Targets initiative
(SBTi) as aligned with the reductions required to
limit global average temperature increases to 1.5°C
by the close of this century. To help us achieve this
goal, 94% of our electricity purchases across the
Group were from renewable sources or backed
by renewable energy certificates in 2023 (2022:
95%), which makes a significant contribution to
the reduction in the carbon emissions from our
operations. As part of our commitment to the use
of renewable electricity, we are exploring greater
use of direct contractual arrangements and Power
Purchase Agreements (PPAs).
AS PART OF OUR
COMMITMENT TO
RENEWABLE ENERGY,
WE COMPLETED AN ON-
SITE SOLAR GENERATION
PROJECT AT A SITE IN THE
UK AND CONCLUDED A
PARTNERSHIP WITH ONE
OF AUSTRALIA’S GREENEST
ELECTRICITY PROVIDERS,
CONTRACTING WITH
THEM TO ENSURE ALL
OUR AUSTRALIAN
SITES’ ELECTRICITY IS
NOW LINKED TO 100%
RENEWABLE SOURCES
63
Kerry Group Annual Report 2023 100
150
200
250
300
100
200
300
400
500
600
700
800
900
2023
2022
2021
100
150
200
250
300
100
300
500
700
900
KgCO2e tonne
Baseline
Scope 1
Scope 2
Baseline
2023
2022
2021
2023
2022
2021
100
150
200
250
300
Strategic Report / Sustainability Review
Carbon Performance (Scope 1 & 2)
400
250
700
550
100
Tonnes of CO2e (000's)
2023
2022
2021
850
1000
OIL TO GAS CONVERSION
During the year, Kerry invested €1m at one
of our sites in Brazil, to convert the use of
Heavy Fuel Oil (HFO) to liquified natural
gas, a fuel with 30% less carbon intensity,
compared to HFO.
100
150
200
250
300
100
250
400
550
700
850
1000
kgCO2e/tonne
2017 Baseline
Scope 1
Scope 2
2017 Baseline
Notes:
Our waste data reflects waste produced across our
manufacturing facilities.
Landfill volumes include waste sent for incineration
without energy recovery.
For more information on our reported performance,
including boundary and scope, see our 2023
Sustainability Report at kerry.com.
For our Scope 1 emissions, we have driven reductions
over the last decade, through a sustained focus on
carbon efficient production, energy efficiency and
conversion to lower-carbon fuels. These elements
continue to be the primary levers in our reduction
strategy and the means by which we will make
progress towards our 2030 target and longer-term
Net Zero ambition. Examples of projects completed
during 2023 include a shift to cleaner fuel, 30% less
carbon intense than the fuel which was replaced,
at a site in LATAM, while other projects have included
energy efficiency measures in APMEA and a heat
recovery project at a site in Ireland.
By year end we achieved a 48% reduction in Scope
1 and 2 emissions, compared to our 2017 base year
(2022: 45%).
Notwithstanding the progress made towards our
2030 target and longer-term Net Zero ambition,
we are focused on maintaining our efforts for long-
term impact. During 2023, we continued to build a
pipeline of future projects and explore the potential
pathways that will deliver our Net Zero goal. The
scale and speed of implementation will vary as we
continue to learn about which solutions offer the
greatest potential, but each will contribute to the
achievement of our goals. In addition, we have
identified key enablers of our vision, from training
and capability building to enhancing decision
making for capital investment and continuously
refining our carbon measurement.
48% REDUCTION
IN SCOPE 1 & 2 GHG
EMISSIONS SINCE 2017
64
Our Value Chain
Given our from-food-for-food heritage, the most
significant proportion of our carbon footprint derives
from indirect Scope 3 emissions, accounting for
approximately 95% of our total emissions. Kerry has
an approved science-based target of 30% reduction
in Scope 3 emissions intensity by the end of 2030,
compared to our 2017 base year.
Identifying the source of our emissions in more
detail is a crucial step to help us prioritise areas of
improvement, and develop targeted, mitigation
strategies to address the highest-emitting sectors
effectively, as well as helping us to allocate resources
more efficiently.
In 2023, we continued to invest in the development
of our Scope 3 reporting, bringing greater
standardisation to our approach and aligning with the
latest Intergovernmental Panel on Climate Change
(IPCC) guidance. We have also taken actions, which
will continue into 2024, to align our Scope 3 inventory
with Forest, Land and Agriculture (FLAG) guidance
under SBTi, which is applicable for our sector.
Given that dairy is the largest contributor to our
Scope 3 emissions, it is a focus area for engagement,
both in terms of mitigation but also for the sourcing
of more accurate emissions data.
Engagement with our suppliers is key to making
continued progress towards our Scope 3 target and
was a key focus during 2023, enabling identification
of farm-level interventions, areas for collaboration
and improved data access. These activities, along
with lower emissions from dairy and changes in our
product portfolio contributed to the reduction in our
Scope 3 emission intensity of 9% in 2023, compared
to our 2017 base year. (2022: 8%). For more details on
Scope 3 see our 2023 Sustainability Report.
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
CDP
We engage with our stakeholders on key environmental
impact areas through CDP, aiming to continuously
enhance our disclosures. In 2023, Kerry achieved a
CDP Climate score of B.
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.
HARNESSING WASTED HEAT
In 2023, Kerry made a number of investments
in economisers, which capture otherwise
wasted heat from the exhaust gases of boilers
and use this to pre-heat water to the boiler.
These projects will contribute to energy and
carbon reduction.
Adopting a More Circular Economy
Humanity is using the earth’s resources
1.7 times faster than our planet’s ability to
regenerate. That’s the equivalent of using
the resource of 1.75 earths1.
At Kerry, we seek to make the most efficient
use of resources and to minimise all waste.
Globally, we are committed to zero waste to
landfill by the end of 2025, across our sites. We
find new, innovative ways to prevent or reduce
the generation of waste, to recover surplus
materials for re-use and we make a concerted
effort to keep materials in productive use for
longer and capture additional value from what
were previously considered waste streams. We
seek to ensure our own waste streams are put
to productive uses and encourage our teams
to consider how they approach waste, with
a principle of Reduce, Reuse, Repurpose
and Recycle.
In 2023, 93% of our waste volumes went
towards recycling or recovery (2022: 93%)
and 96% of all waste volumes were diverted
from landfill (2022: 95%).
2023 Waste by Destination
Notes:
Our waste data reflects waste produced across our
manufacturing facilities.
Landfill volumes include waste sent for incineration
without energy recovery.
For more information on our reported performance,
including boundary and scope, see our 2023
Sustainability Report at kerry.com.
¹ LPR_2022_Full-Report.pdf (footprintnetwork.org)
2 Landfill volumes include waste sent for incineration without energy recovery
65
Kerry Group Annual Report 2023Diverted WasteLandfill24%96%4%3%93%Recycling/RecoveryLandfill2Incineration (energy recovery) Strategic Report / Sustainability Review
Minimising Food Loss and Waste,
Maximising Impact
Addressing food loss and waste not only provides a
means to lessen the environmental impact of food
production, it also presents a substantial business
opportunity through extended shelf life, which
translates to lower production costs and higher
profitability for customers.
Our commitment to minimising food waste aims to
contribute to a more efficient and sustainable food
chain. We are committed to a 50% reduction in food
waste across our operations by the end of 2030,
aligning with the food waste target under SDG 12.3.
We maintained a strong performance on this issue in
2023, achieving a reduction of 39%, compared to
our 2017 base year (2022: 41%). The divestment of
our Sweet Ingredients Portfolio, during 2023, has
contributed to the reduction in food waste reported
in prior periods.
Our efforts involve 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.
66
Kerry Group Annual Report 2023
Food Protection and Preservation
Our industry-leading portfolio of clean label and
conventional food protection and preservation
technologies is uniquely positioned to reduce food
waste in the value chain, particularly downstream. The
bakery and meat end use markets represent the most
significant categories where food is lost or wasted by
volume and value and Kerry’s technology portfolio
provides an opportunity to make a positive impact.
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 to simulate the prospective advantages of
minimising food waste through shelf-life extension.
For more information, see page 53.
The opening of our new Technology Hub for
Food Protection and Preservation in Wageningen
University, in the Netherlands, enables us to provide
accelerated and differentiated solutions and food
safety validation studies to regional customers to
help combat food loss and reduce food waste across
the entire supply chain.
39% REDUCTION IN
FOOD WASTE SINCE 2017
2021
2020
2019
2.5
3
3.5
4
m3/tonne
2017 Baseline
Strategic Report / Sustainability Review
Addressing Plastic Waste
We support the transition to a more circular
economy for plastics and have set a target to make
all our plastic packaging reusable, recyclable or
compostable by the end of 2025. Through innovative
design and a targeted effort to reduce volumes of
plastic used, while maintaining product safety, we
continue to make progress towards our 2025 target.
At the end of the year, 85% of our plastic packaging
was reusable, recyclable or compostable (2022: 74%).
We are also finding ways to use less virgin plastic.
Our sites in Europe now use 100% recycled plastic
pallets and our team in North America achieved a
significant reduction in the volume of plastic wrap
used through the implementation of new stretch
film technology.
Water Risk
Using the World Resources Institute’s Aqueduct
Tool, we identify manufacturing facilities that may
be more vulnerable to water risk. In these areas,
our focus lies on water availability and/or water
quality and across these locations we are building
on a programme of water audits to identify water
reduction opportunities.
2023 Water Withdrawal by Source
(Megalitres)
18%
Protecting Water Resources
Water plays a crucial role in sustaining our business
operations. As a shared resource, we acknowledge
the importance of responsible water management
and are committed to reducing water withdrawal
intensity, safeguarding water sources, and ensuring
equitable access for other stakeholders.
43%
19,591
Total Water
Withdrawals
Across our operations, we are targeting a 15%
reduction in water withdrawal intensity by the end
of 2025. To achieve this goal, we are focusing on
water efficiencies across our sites and investing in
capital projects at key locations. At our site in Plant
City, Florida, a capital investment is supporting
the transition of our cooling system with an
opportunity to save over one million cubic metres
of water per annum, while an ongoing investment
in Montgomery, Alabama, will be completed in
2024 and is expected to deliver a similar water
reduction impact. Once completed, these projects
will contribute to our overall 15% reduction target
by the end of 2025. In 2023, changes in our product
mix had an impact on performance and we recorded
a reduction of 3% in the Group’s overall water
efficiency, compared to our 2017 baseline (2022:
4%), however, with the projects underway and our
broader focus on continuous improvement we are
confident of delivering against our 2025 target.
We also understand that water discharges from our
sites can have an impact on local water quality and
we have measures in place across our sites to ensure
we protect local water sources. We track and monitor
compliance with relevant water standards on an
ongoing basis. When we become aware of issues at
a site, we take appropriate actions to prevent any
further impacts and may include remediation where
relevant. For more details on our water use, see our
2023 Sustainability Report.
2.5
3.0
3.5
Surface Water
Ground Water
Municipal Water
Water Withdrawal Intensity at Higher
Risk Sites
2023
2022
2021
2.5
3.0
3.5
m3/tonne
2017 Baseline
Notes:
Water withdrawal intensity is a relative measure of metres
cubed (m3) divided by tonnes of finished product produced.
Our data reflects water use at our manufacturing facilities
and is a like for like performance versus our base year.
For more information on our reported performance,
including boundary and scope, see our 2023 Sustainability
Report at kerry.com.
67
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
Protecting Biodiversity
Biodiversity loss is an increasingly material topic for
Kerry and we continue to explore a holistic approach
to preserving the world’s natural resources while
continuing to implement related initiatives through
our operational commitments, deforestation
strategy and dairy accelerator programme. Among
our key initiatives we are committed to eliminating
deforestation and conversion across targeted supply
chains by the end of 2025, focusing on those that are
the leading drivers of forest loss, including palm, soy,
pulp & paper, cocoa and coffee. 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 (SDP) and others. For more on our
evolving approach to preserving biodiversity, see our
2023 Sustainability Report.
Responsible Sourcing1
At Kerry, we are committed to ensuring that 100%
of our priority raw materials are responsibly
sourced by the end of 2030. We use a combination
of certification and verification and where these
mechanisms do not support the best path forward,
we work more directly with supply partners and
expert third parties, including where necessary,
direct programmes at farm level to influence change.
Our responsible sourcing strategy emphasises
transparency, environmental stewardship and ethical
considerations throughout our supply chain, and
we strive to support suppliers who share our values.
Throughout 2023, we continued our engagement
with suppliers to better understand the challenges
and emphasise our criteria related to our
responsible sourcing commitments as outlined
in the examples below:
Kerry Sustainability Priority Area Icons
Palm Oil
Palm Oil
Soy
Dairy
Herbs and Spices
Paper Packaging
Eggs
Coffee
Cocoa
Kerry purchases processed palm oil and derivatives
from refiners and other processors who in turn
purchase crude palm oils from mills, which limits our
direct interaction with plantations and smallholders in
the supply chain. Therefore, supplier engagement is
of paramount importance to understand their action
plans and progress towards our DCF objective.
Vanilla
Kerry’s memberships and partnerships with
representatives from across the industry, strengthen
our contribution to sustainable practices in the palm
oil industry and open opportunities for us to make a
more positive impact.
Throughout 2023 Kerry was actively engaged in the
Palm Oil Collaboration Group (POCG). The POCG
has developed the Implementation Reporting
Framework (IRF) which provides a shared and
consistent view throughout the supply chain of
progress towards No Deforestation, No Peat and
No Exploitation (NDPE) commitments.
In 2023, 24% of our palm volume was certified RSPO
Segregated (SG) or Identity Preserved (IP) (2022:
19%), with an additional 24% DCF compliant through
third-party verified NDPE IRF profiles2.
In addition to multi-stakeholder collaboration within
POCG and RSPO, we have had strong engagement in
the form of meetings and workshops with suppliers
to further increase transparency in our supply chain.
1 For more information on our reported performance, including boundary and scope, see our 2023 Sustainability Report at kerry.com.
2 Calculation uses 2023 volumes with 2022 IRF third-party verified profiles, which are the most up to date profiles available at 31st
January 2024.
68
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
Kerry Sustainability Priority Area Icons
Soy
Palm Oil
Soy
Dairy
Dairy
Herbs and Spices
Paper Packaging
The size and scale of Kerry, the complexity of our
supply chain and our diverse portfolio means
traceability of our soy volumes right back to field
level is challenging.
Vanilla
Eggs
There is a shortage of readily-available DCF certified
soy in the market, which is a challenge the industry
needs to address with urgency. Consequently, we
see industry collaboration and partnerships as a key
enabler to improve traceability of soy and provide
verification that the volumes in our supply chain are
not linked to DCF practices.
In 2023, we continued to make progress in collecting
traceability data, with 31% of the soy products we
purchased identified as originating from countries
with a low risk of deforestation and conversion
(2022: 12%).
During the year Kerry partnered with the World
Wildlife Fund (WWF) to explore the development
of pathways towards a DCF supply chain, to better
understand the challenges we face when sourcing
soybean products, and to identify best practice
solutions to address them. The collaboration
reinforced Kerry’s need for robust supplier
engagement, with the players involved in farming,
transportation and processing to the aggregators,
in particular, whom have the greatest influence in
creating solid traceability systems. In addition, the
collaboration highlighted the importance of taking
an integrated approach to carbon, land conversion
and biodiversity to accelerate DCF progress, given
emissions from land use change represent a
significant proportion of the carbon footprint
of soy products.
Reporting Requirements
Environmental Matters
Social and Employee Matters
Respect for Human Rights
Anti-Bribery and Corruption
Business Model
Non-financial KPIs
Cocoa
Coffee
As a global dairy buyer, we play an important role
in creating value and demand for dairy ingredients
that are produced with a lower environmental
impact. In 2023, 30% of our volumes came from
dairy processors who are members of the SDP,
up from 15% in 2022, with 7% fully meeting the
requirements of SDP stage three. As a relatively
new platform, we continue to engage our suppliers
to overcome challenges and detail the benefits
provided by SDP membership.
Kerry’s Evolve Dairy Sustainability Programme,
launched in 2022, is designed to support the
accelerated adoption of sustainable science-based
actions and best practice within our dairy supply
chain in the Southwest of Ireland. The programme
is underpinned by the Teagasc Marginal Abatement
Cost Curve (MACC), for Irish Agriculture, which sets
out proven, science-based actions that farmers can
take to reduce on-farm carbon emissions.
We support almost 3,000 farmers in the southwest of
Ireland, by sharing 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.
Non-Financial Reporting Statement
We comply with regulations on non-financial reporting
and provide information on required topics across
this report and within our 2023 Sustainability Report.
For environmental metrics, prior years are restated
to provide a like-for-like comparison. 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 92.
Our Policies
Page Reference
Environmental Policy
Page 62-69
Health & Safety Policy; Group
Code of Conduct; Diversity,
Inclusion & Belonging Policy;
Speak Up Policy
Pages 14-23,
pages 56-59,
and 120
Human Rights Policy
Page 58
Anti-Bribery Policy;
Group Code of Conduct
Pages 57-58
Page 24
Pages 34-35
and 46-69
69
Kerry Group Annual Report 2023
Strategic Report / Sustainability Review
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.
According to the World Meteorological Organisation
(WMO)1, the planet is not on track to meet its climate
objectives and scientific findings indicate that we
will not meet the UN Sustainable Development Goals
(UN SDGs). With limited progress in reducing the
emissions required to achieve the temperature goal
of the Paris Agreement, the world needs urgent,
ambitious mitigation measures and large-scale,
systemic transformations.
70
¹ The United in Science 2023 report is a multi-agency report
coordinated by the Meteorological Organisation. United in
Science 2023 (wmo.int) strategic decision-making process.
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
At Kerry, our Beyond the Horizon strategy is aligned
to the ambitions set out by the UN SDGs, to
address economic growth, social inclusion and
environmental protection and we continue to act,
to secure a sustainable future. Sustainability is
embedded in our strategy and vision and we can
play an important role to help transform global food
production through innovation, our technology
portfolio and the integration of climate-change
mitigation strategies into our everyday operations.
The following statement sets out our climate-related
financial disclosures and is consistent with all four
recommendations and 11 disclosures in the Task
Force on Climate-related Financial Disclosures (TCFD)
per the requirements 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.
The Governance, Nomination and Sustainability
Committee (GNS) was established in 2021 and was led
by the Group’s Chairman. During 2023 we established
a standalone Sustainability Committee which was
established to ensure appropriate emphasis is given
to this important and evolving area. 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. For additional information, refer to the
Sustainability Committee Report on page 148. Further
details of Board members experience can be found on
pages 108-111.
Board Oversight of Climate Change Impact
The Board and/or its relevant Committees received
eight 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
Board Level2
Board of Directors
Remuneration
Committee
Audit
Committee
Sustainability
Committee
Executive Level Governance
Sustainability Executive Committee
Functional
Climate
Council
Portfolio
Council
Responsible
Sourcing
Council
Commercial
Council
ESG
Council
Implementation
2 Represents Climate Governance as at 31st December 2023.
71
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
leaders as part of their functional updates, ensuring
that it is increasingly integrated into the broader
strategic decision-making process.
In 2023, 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 Sustainability
Committee engaged with Executive Leadership on
climate-related risks and assessed how these have
been reviewed and reported on as part of the overall
risk management process in 2023.
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 Sustainability
Executive Committee. This committee replaces the
Global Sustainability Council and is chaired by the
Chief Corporate Affairs & Brand Officer and was
formed to steer the company’s investment and
progress towards our 2030 commitments across
people, society and planet, as outlined in our Beyond
the Horizon strategy. The Committee includes Kerry’s
CEO, CFO and other members of our Executive
Leadership Team, who met four times in the year
to align our strategy, review progress and prioritise
activities. This Committee is also the Executive
forum where climate-related risks and opportunities
impacting the Group are discussed.
Given the interdependent nature of climate-related
risks and opportunities, to support the work of
the Sustainability Executive Committee, additional
governance councils are in place at functional and
regional levels throughout the business, including
dedicated fora for our operations, responsible
sourcing, product portfolio and circular economy.
Each council is led by a senior Kerry executive, and
meets at least quarterly to assess progress and
address any challenges in reaching the targets we
have set out for 2030 and in advance of 2050 along
with the associated risks and opportunities facing
our business. For example, the Climate 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 Sustainability
Executive Committee throughout the year.
72
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 161-163.
For further details on Group Governance, see our
Corporate Governance Report on pages 118-134.
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; and
» 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, with a focus on sustainable
nutrition offerings that support a transition to
healthier, lower impact diets. Some examples of
these offerings 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
» 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.
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
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 have also embedded our Beyond the Horizon
commitments into our financing strategy, by
including sustainability performance indicators
as part of our Sustainability-Linked Bond (SLB)
and Revolving Credit Facility (RCF). For further
information, refer to the Financial Review page 36.
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. This work
was 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. During 2023, we updated our quantitative
assessment for acquisitions and disposals and also
reviewed key inputs, which confirmed no material
change to the final 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 79-80.
Climate Risk
Risk Type
No.
Description
Timeframe
Physical
Acute
Chronic
Transition
Policy
Technology
Market
Reputation
1
2
3
4
5
6
7
8
9
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.
Impact of water stress on
key operational sites.
Impact of weather pattern
variability on raw material
supply.
Impact of emissions pricing
on operational costs.
Impact of decarbonisation
on operational costs.
Impact of shifting consumer
demand for low-carbon
alternatives.
Damage to brand and/or
stakeholder relationships due
to action on climate.
Medium – Long-term
Short – Medium-term
Short – Medium-term
Short – Medium-term
Short – Medium – Long-term
73
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
Physical Risk
Our physical risk assessment was conducted using
the help of external partners, with a detailed
assessment in 2021, with annual updates carried out
to incorporate any changes in the Group structure.
Our assessment will continue to evolve as scientific
understanding and climate models improve, 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
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 six
locations across Europe, North America and our
APMEA region with a higher exposure, as a result
of an increased risk of flooding or water stress.
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 will continue to refine
the approach and enhance this quantification.
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.
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.
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
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 sources2
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.
¹ International Institute for Applied Systems Analysis (IIASA) and the Food and Agriculture Organization of the
United Nations (FAO) Global Agro-Ecological Zoning version 4 (GAEZ v4) databases for the period range 1990–2050
2 GreenPrint Business of Sustainability Index
74
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
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 impact
our reputation and damage 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, 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.
THE RISK OF CURRENT
AND EMERGING
REGULATION
IS A KEY CLIMATE
CONSIDERATION
FOR THE GROUP
Opportunity
No. Description
Time horizon
Potential Impact
Resource
Efficiency
1
Impact of energy
efficiency on
operational costs.
Short – Medium
Energy Source
2
Impact of
decarbonisation on
operational costs.
Medium – Long
Markets
3
Impact from growth
of lower-carbon
alternatives.
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.
As we transition to renewable energy
sources, we can potentially benefit
from lower energy costs as fossil fuel
prices remain high due to increased
carbon taxes and non-fossil-based
energy scales and unit costs reduce.
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
emission reduction opportunities
across a range of food and beverage
end use markets.
Scenario Analysis
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.
Methodology
We assess the most material physical and transition
risks identified for Kerry 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 21001. The
second assumes that emissions continue to increase
so that global average temperature increases exceed
four degrees Celsius by the end of the century2.
¹ Aligns with Representative Concentration Pathway (RCP) 2.6
2 Aligns with Representative Concentration Pathway (RCP) 8.5
75
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
<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
Our analysis of physical and transition risk is carried out
by Kerry’s sustainability reporting team in partnership
with functional leads and the support of an expert
third-party. This work draws on proprietary risk models
developed by expert partners 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
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 2023,
these did not have a significant impact on revenue
or costs in the year. As previously noted, three of
our manufacturing sites are subject to EU and UK
emissions trading schemes. We continue to focus
on reducing emissions at these locations as part
of our broader decarbonisation strategy. Extreme
weather events in 2023 have had an impact on some
raw material prices, however, this is just one of a
number of factors, including input cost inflation
and geopolitical events.
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 prices also make 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 the Group’s
enterprise risk management process.
76
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
Inputs and Assumptions
Growth
It is assumed that Kerry will achieve its medium-term growth targets and a global
average growth rate determined by third-parties and aligned to the two temperature
pathways is used thereafter.
Manufacturing
Footprint
It is assumed that the current footprint remains static until 2050 with no impact from
future acquisitions or other portfolio changes included.
Emissions
It is assumed that the Group will achieve its 2030 emissions reduction targets and
reach Net Zero before 2050.
Climate Data
We use climate and economic data provided by expert third-parties to model
potential physical and transition impacts.
Carbon Price
Assumed future changes in carbon prices 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 >4˚C scenario.
Impact
Area
Cumulative Impact
to 2030
Details
Cumulative
Impact
to 2050
<2⁰C
Low
>4⁰C
Low
<2⁰C
>4⁰C
Low Low
Assets
Physical Risks
Risk
Risk Drivers
Physical -
Acute
The potential
impact of acute
climate hazards
such as extreme
wind, flooding, etc.
on manufacturing
sites and
distribution
channels.
Revenue
Low
Low
Low Low
Assets
Medium Medium Low Low
Revenue
Low
Low
Low Low
Physical -
Chronic
The potential
impact of chronic
climate hazards
such as sea
level rise and
water stress on
manufacturing
sites.
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.
77
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
Cost
Low
Low
N/A
N/A
Physical -
Chronic
The potential
impact of chronic
climate hazards
on the availability
of key raw
materials.
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
<2⁰C
Low
>4⁰C
N/A
Cost
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.
Cost
Medium Medium Increased regulatory and stakeholder pressure
Policy
Technology
Introduction of
carbon pricing
to constrain
emissions
intensive
activities.
Adoption
of new
technology
to support our
transition to
a low-carbon
business.
Market
The
opportunity
presented
by shifting
consumer
demand.
Revenue
Growth
High
High
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 technologies.
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.
78
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
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 2023.
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.
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. Financial commitments
for sustainability-related projects at 31 December for
which no provision has been made in the accounts is
€9.0m (2022: €12.5m).
Resilience of Kerry’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 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 67 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.
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 technologies 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 our strategy. Our climate transition plan
will be 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 73.
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 co-ordinated
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 92-105.
79
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
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:
» 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.
» 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 71.
In 2023, 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.
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 Leadership 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 the
end of 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
2023 and 94% of our purchased electricity coming
from renewable sources or backed by renewable
energy certificates.
Climate Change Integration across our Principal Risks
14
1
13
2
12
11
10
1
2
3
4
5
6
7
8
9
Portfolio Management
Geopolitical, Emerging Markets and
Macroeconomic Environment
Business Acquisition and Divestiture
Climate Change and Environment
Legal, Regulatory and Ethical Compliance
People
Food Safety, Quality and Regulatory
Health and Safety
Margin Management
3
5
4
9
8
7
6
10
Information Systems and Cybersecurity
11 Operational and Supply Chain Continuity
Denotes where climate-related issues have
been considered within the risk assessment.
12
13
14
Intellectual Property
Taxation
Treasury
80
Denotes where climate-related issues have
been considered within the risk assessment.
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
We continue to evolve our decarbonisation roadmap
and progress towards our Net Zero ambition. We
report on climate metrics to multiple platforms,
including CDP, and in 2023, we achieved a CDP
Climate score of B. We have completed further work
in 2023 to help identify and quantify our Scope 3
emissions and we engage 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 2023
Sustainability Report on kerry.com.
Carbon Performance1
Key Target Area
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 the end of 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 63-64.
Area of Risk/Opportunity
Physical and Transition Risks (1-7, 9)
Impact Area
Units
2023
2022
Tonnes of CO2e (000's)
Tonnes of CO2e (000's)
Tonnes of CO2e (000's)
Tonnes of CO2e (000's)
420
50
470
449
49
498
8,871
9,866
Change vs 2017
Base Year
-15%
-88%
-48%
-15%
Scope 1
Scope 2
Scope 1 & 2
Scope 3
Energy1
Key Target Area
We have an ongoing focus on energy and increasing the proportion of renewables
within our energy mix. We are members of RE100 under which we set an objective
to have 100% of our electricity to come from renewable sources by the end
of 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 2023 Sustainability Report.
Area of Risk/Opportunity
Transition Risk (6-7)
Impact Area
Units
Total Energy Consumed
GWh
Total Renewable Energy
GWh
Purchased Renewable
Electricity
%
2023
3,235
919
94%
2022
3,487
986
95%
Change vs 2017
Base Year
-8%
270%
N/A
1 For more information on our reported performance, including scope, see our 2023 Sustainability Report at kerry.com
81
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
Water Stewardship1
Key Target Area
We are focused on increasing water efficiency across our business and are
targeting a 15% improvement in water withdrawal intensity by the end of
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 withdrawal intensity at these locations
was 17% lower versus our 2017 baseline. For more on water use across our
operations, see our 2023 Sustainability Report.
Area of Risk/Opportunity
Physical Risk (4)
Impact Area
Units
2023
2022
Water Withdrawals
Megalitres (ML)
19,591
21,566
Water Withdrawal Intensity ML/tonne product
Water Withdrawal Intensity
at higher-risk sites
ML/tonne product
6.56
2.87
6.51
3.06
Change vs 2017
Base Year
-10%
-3%
-17%
Responsible Sourcing1
Key Target Area
In addition to certification and independent carbon footprinting across all Irish
milk volumes, we have launched the Evolve programme to incentivise carbon
reduction at farm level and improve the resilience of farm enterprises. Targeting
a 30% reduction in carbon intensity by the end of 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. For more on
Kerry’s Evolve Programme see our 2023 Sustainability Report at kerry.com.
Area of Risk/Opportunity
Physical and Transition (5, 8, 9)
Impact Area
Units
2023
2022
Change vs 2017
Base Year
Responsible Sourcing:
Dairy (Liquid Milk)
Revenue Opportunity
Key Target Area
Certified Volumes
100%
100%
N/A
Our Taste & Nutrition volumes have increased significantly in recent years,
supported by our technologies, which include a range of lower-carbon solutions
within our portfolio.
Area of Risk/Opportunity
Transition Opportunity (3)
Impact Area
Taste & Nutrition
Revenue Growth
Units
%
2023
2022
Change vs 2017
Base Year
-6.0%
29.4%
N/A
Remuneration Policy
Key Target Area
20% of executive variable remuneration is tied to the achievement of core
sustainability objectives, including the achievement of the Group’s
climate-related targets.
Area of Risk/Opportunity
Physical and Transition Risk (1-6)
Impact Area
Remuneration
Units
%
2023
20%
2022
20%
Change vs 2017
Base Year
N/A
1 For more information on our reported performance, including scope, see our 2023 Sustainability Report at kerry.com
82
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
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 2023
Sustainability Review on page 63.
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.
Table of Concordance
Pillar
TCFD Recommendation
Kerry
Disclosure
(page ref)
Governance
Describe the Board’s oversight of climate-related risks and opportunities
70-71
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
71-72
73-75
75-79
79
Risk
Describe the organisation’s processes for identifying and assessing
climate-related risks
73,79-80
Describe the organisation’s processes for managing climate-related risks
79-80
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
79-80
80-82
Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse
gas (GHG) emissions, and the related risks
81
Describe the targets used by the organisation to manage climate-related
risks and opportunities and performance against targets
81-82
83
Kerry Group Annual Report 2023 Strategic Report / Sustainability Review
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 supplementary
Delegated Regulations were 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 Taxonomy-Eligible (eligible)
and Taxonomy-Aligned (aligned) under the six
environmental objectives.
84
Strategic Report / Sustainability ReviewKerry Group Annual Report 2023 Strategic Report / Sustainability Review
EU Taxonomy
E
L
I
G
I
6
Protection and
restoration of
biodiversity
and ecosystems
1
Climate
change
mitigation
B
L
E
A
N
D
A
L
I
G
N
E
D
1
5
Pollution
prevention
and control
Six
Environmental
Objectives
2
Climate
change
adaptation
4
Transition
to a circular
economy
3
Sustainable use
and protection
of water
and marine
resources
1
2
3
4
5
6
Climate change mitigation
Climate change adaptation
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
In 2022, only the first two climate change objectives;
climate change mitigation (CCM) and climate change
adaptation (CCA), were in scope for eligibility and
alignment. An expansion in the scope of the EU
Taxonomy was introduced in 2023 as set out in
Delegated Regulation (EU) 2023/2486, bringing
the remaining four environmental objectives into
scope (sustainable use and protection of water and
marine resources, transition to a circular economy,
pollution prevention and control and protection and
restoration of biodiversity and ecosystems).
In accordance with the requirements for the financial
year 2023, the Group has outlined the extent to
which the Group’s activities are eligible and aligned
under the EU Taxonomy for the first two objectives
as set out in Delegated Regulation (EU) 2021/2139,
Delegated Regulation (EU) 2022/1214 and Delegated
Regulation (EU) 2023/2485 (Climate Delegated Acts),
and eligible only for all new activities under the six
environmental objectives adopted in 2023 as set
out in Delegated Regulation (EU) 2023/2486 and
Delegated Regulation (EU) 2023/2485.
Economic Activities
The disclosure requirements cover Kerry’s global
activities. Our core business is the manufacture of
food and beverage products, which is not currently
in scope of the EU Taxonomy classification system.
In 2023, we assessed our activities for eligibility
to see whether the Group’s turnover, or Capital
Expenditure (CapEx) corresponded to an economic
activity that is described in the EU Taxonomy
and supplementary Delegated Regulations. Our
assessment determined that our eligible activities
are predominantly related to the climate change
mitigation objective, reflecting activities being
taken in line with our Beyond the Horizon strategy.
Under the EU Taxonomy, the only activity we have
reported aligned spend is under the climate change
mitigation objective. As a result, we avoided double
counting under the six objectives that are in scope.
The Group Operating Expenditure (OpEx) was not
assessed for eligibility or alignment, in accordance
with the exemption allowed per Delegated
Regulation (EU) 2021/2178.
Once we determined the eligible activities, we
assessed each activity for alignment against the
specific technical screening criteria as described
in the Climate Delegated Acts. 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
1 Eligible only for all new activities adopted in 2023, under climate change mitigation and climate change adaptation.
85
Strategic Report / Sustainability ReviewKerry Group Annual Report 2023
across the Group and included a review of Kerry’s
human rights due diligence process, our anti-
bribery/corruption and fair competition procedures
and other elements necessary to confirm the Group
satisfies the requirements of minimum safeguards.
We assessed all our eligible projects against the
specific technical screening criteria for each activity
to assess for alignment and identified three activities
with aligned activities (CCM 7.3, CCM 7.4 and CCM
7.5). For the three aligned activities, we assessed
them under their respective substantial contribution
criteria under climate change mitigation objective.
For do no significant harm (DNSH) for climate
change adaptation, we assessed against the criteria
outlined in Appendix A to the Annex1 including a
climate risk and vulnerability assessment of our
sites. For activity CCM 7.3, we also considered DNSH
under pollution prevention and control, we assessed
against the criteria in Appendix C to the Annex1,
including consideration of the use and presence of
chemicals in the activity.
The evaluation of eligibility and alignment was
conducted by a cross-functional working group,
including the Sustainability Finance, Engineering,
Integrated Operations 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, and CapEx Key
Performance Indicators (KPIs).
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 192. 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 aligned (numerator) and
eligible but not 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. The review showed a
negligible amount of eligible turnover, 0.2%, in 2023
(2022: 0.2%), which is associated with activities which
do not relate to, nor are inputs to, the food and
beverage industry; these being the manufacture of
chlorine (CCM 3.13) and manufacture of organic basic
chemicals (CCM 3.14).
For those activities which were identified as being
eligible, turnover was then assessed for alignment
against the technical screening criteria and
minimum safeguards and no activity was found
to be aligned.
The KPIs calculated and disclosed in the tables below
indicate the proportion of turnover, and CapEx in the
following categories:
EU
Taxonomy -
Turnover
Reference
to Financial
Statements
2023
€m
2022
€m
Revenue
Consolidated
Income
Statement
Turnover
denominator
8,020.3
8,771.9
8,020.3
8,771.9
»
»
»
Taxonomy-aligned (aligned): Activity that is
described in the Climate Delegated Acts and
meets all of the technical screening criteria
(substantial contribution and DNSH) as well as
complying with minimum safeguards.
Taxonomy-eligible but not Taxonomy-aligned
(eligible but not aligned): Activity that is
described in the Climate Delegated Acts and
does not meet the technical screening criteria
or does not comply with minimum safeguards.
Also, all new activities, adopted in 2023, under
the six environmental objectives which were only
assessed for eligibility.
Taxonomy-non-eligible (non-eligible): An activity
that is not described in the EU Taxonomy and
supplementary Delegated Regulations.
We have not completed templates 1 to 5 within
Delegated Regulation (EU) 2022/1214, as following
review, we confirmed the activities listed are not
applicable to Kerry.
1 Delegated Regulation (EU) 2021/2139 and Delegated Regulation (EU) 2023/2485
86
Strategic Report / Sustainability ReviewKerry Group Annual Report 2023 Operating Expenditure
Our core business is the manufacture of food and
beverage products, which is not currently in scope
of the EU Taxonomy classification system. The EU
Taxonomy1 allows for an exemption from disclosure
of the OpEx KPI. Following assessment of our
OpEx denominator, as defined in the EU Taxonomy,
we have determined that the exemption under
Delegated Regulation (EU) 2021/2178 is applicable.
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).
EU Taxonomy – Operating Expenditure
Research and development costs
Short-term leases
Maintenance and repairs2
Other direct expenditures2
Operating expenditure denominator
2023
€m
301.3
3.7
157.9
128.6
591.5
2022
€m
303.2
3.7
161.5
138.2
606.6
1 Delegated Regulation (EU) 2021/2178
2
In 2023, the method for identifying activity to be included in “Maintenance and repairs” and “Other direct expenditures” has
been refined, to provide figures more aligned to the definition within the EU Taxonomy; comparative has also been re-presented,
reported in 2022 as €170.3m Maintenance and repairs and €170.0m Other direct expenditures.
87
Strategic Report / Sustainability ReviewKerry Group Annual Report 2023 Capital Expenditure
The denominator used for the CapEx KPIs in 2023 is
calculated as additions and businesses acquired for
property, plant and equipment (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 219-226. The denominator does not include any
investment property (IAS 40) or agriculture (IAS 41)
assets as they are not applicable for Kerry. As defined
in the taxonomy, goodwill is not included in the CapEx
KPI. In determining the KPIs for CapEx, the share that
is aligned (numerator) and eligible but not aligned
(numerator) is each divided by the denominator.
The Taxonomy-aligned CapEx numerator only consists
of property, plant and equipment additions.
Comparing the aligned and eligible but not aligned
capital additions (numerator) to our additions
and businesses acquired, property, plant and
equipment, right of use assets and intangible assets
(denominator) in 2023, the proportion of aligned
activities is 3.1% (2022: 2.7%), eligible but not aligned
is 18.5% (2022: 21.2%). The small increase in the
proportion of aligned activities in 2023 is due to a
lower amount of businesses acquired included in
2023 denominator, compared to 2022 denominator.
In 2023, the aligned and eligible but not aligned
numerator includes CapEx related to Taxonomy
activities as set out in the CapEx KPI table including:
» production of heat/cool using waste heat
»
»
»
»
»
»
»
(CCM 4.25),
transport by motorbikes, passenger cars
and light commercial vehicles (CCM 6.5),
construction of new buildings (CCM 7.1 / CE 3.1),
renovation of existing buildings (CCM 7.2 / CE 3.2),
installation, maintenance and repair of energy
efficiency equipment (CCM 7.3),
installation, maintenance and repair of charging
stations for electric vehicles in buildings and
parking spaces attached to buildings (CCM 7.4),
installation, maintenance and repair of
instruments and devices for measuring,
regulation and controlling energy performance
of buildings (CCM 7.5), and
acquisition and ownership of buildings
(CCM 7.7).
EU Taxonomy - Capital Expenditure
Reference to
Financial Statements
Property, plant and equipment - Additions
Note 11 i
Property, plant and equipment - Businesses acquired
Note 11 i
Right of use assets - Additions
Right of use assets - Businesses acquired
Intangible assets - Additions
Intangible assets - Businesses acquired -
Brand-related intangibles
Intangible assets - Businesses acquired -
Computer software
Capital expenditure denominator
Note 11 ii
Note 11 ii
Note 12
Note 12
Note 12
2023
€m
273.1
7.1
36.4
2.6
15.9
41.6
2022
€m
213.8
46.1
43.0
0.3
12.2
122.8
-
0.5
376.7
438.7
88
Strategic Report / Sustainability ReviewKerry Group Annual Report 2023 y
r
o
g
e
t
a
C
l
a
n
o
i
t
i
s
n
a
r
t
)
0
2
(
y
t
i
v
i
t
c
a
y
r
o
g
e
t
a
C
g
n
i
l
b
a
n
e
)
9
1
(
y
t
i
v
i
t
c
a
f
o
n
o
i
t
r
o
p
o
r
P
-
y
m
o
n
o
x
a
T
)
.
1
A
.
(
d
e
n
g
i
l
a
)
.
2
A
.
l
(
e
b
g
i
i
l
e
-
r
o
r
a
e
y
r,
e
v
o
n
r
u
t
)
8
1
(
1
-
N
Minimum
Safeguards (17)
Biodiversity (16)
Circular
Economy (15)
Pollution (14)
Water (13)
Climate Change
Adaptation (12)
Climate Change
Mitigation (11)
Biodiversity (10)
Circular Economy (9)
Pollution (8)
Water (7)
Climate Change
Adaptation (6)
Climate Change
Mitigation (5)
Proportion of
Turnover, year N (4)
Turnover (3)
Code (2)
)
1
(
s
e
i
t
i
v
i
t
c
A
c
i
m
o
n
o
c
E
i
)
”
m
r
a
H
y
l
t
n
a
c
fi
n
g
i
S
t
o
N
s
e
o
D
“
(
a
i
r
e
t
i
r
c
H
S
N
D
a
i
r
e
t
i
r
c
n
o
i
t
u
b
i
r
t
n
o
c
l
a
i
t
n
a
t
s
b
u
S
r
a
e
Y
N
r
a
e
y
l
a
i
c
n
a
n
i
F
T
E
%
N
/
Y
N
/
Y
N
/
Y
N
/
Y
N
/
Y
N
/
Y
N
/
Y
;
N
;
Y
L
E
/
N
;
N
;
Y
L
E
/
N
;
N
;
Y
L
E
/
N
;
N
;
Y
L
E
/
N
;
N
;
Y
L
E
/
N
;
N
;
Y
L
E
/
N
%
m
€
t
x
e
T
T
E
%
0
0
.
%
0
0
.
%
0
0
.
%
1
0
.
%
1
0
.
%
2
0
.
%
2
0
.
)
g
(
)
s
e
i
t
i
v
i
t
c
a
d
e
n
g
i
l
a
-
y
m
o
n
o
x
a
T
t
o
n
(
s
e
i
t
i
v
i
t
c
a
e
l
b
a
n
i
a
t
s
u
s
y
l
l
a
t
n
e
m
n
o
r
i
v
n
e
t
o
n
t
u
b
e
l
b
g
i
i
l
e
-
y
m
o
n
o
x
a
T
.
2
.
A
;
L
E
L
E
/
N
L
E
/
N
;
L
E
L
E
/
N
L
E
/
N
;
L
E
L
E
/
N
L
E
/
N
;
L
E
L
E
/
N
L
E
/
N
;
L
E
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
;
L
E
L
E
/
N
L
E
L
E
%
1
0
.
5
7
.
%
1
0
.
.
3
0
1
M
C
C
3
1
3
.
M
C
C
4
1
3
.
1
e
n
i
r
o
h
c
l
f
o
e
r
u
t
c
a
f
u
n
a
M
c
i
n
a
g
r
o
f
o
e
r
u
t
c
a
f
u
n
a
M
1
s
l
a
c
i
m
e
h
c
c
i
s
a
b
%
0
0
.
%
0
0
.
%
0
0
.
%
0
0
.
%
0
0
.
%
2
.
0
%
2
0
.
.
8
7
1
t
u
b
e
l
b
g
i
i
l
e
-
y
m
o
n
o
x
a
T
f
o
r
e
v
o
n
r
u
T
e
l
b
a
n
i
a
t
s
u
s
y
l
l
a
t
n
e
m
n
o
r
i
v
n
e
t
o
n
d
e
n
g
i
l
a
-
y
m
o
n
o
x
a
T
t
o
n
(
s
e
i
t
i
v
i
t
c
a
)
2
.
A
(
)
s
e
i
t
i
v
i
t
c
a
%
0
0
.
%
0
0
.
%
0
0
.
%
0
0
.
%
0
0
.
%
2
.
0
%
2
.
0
.
8
7
1
e
l
b
g
i
i
l
e
-
y
m
o
n
o
x
a
T
f
o
r
e
v
o
n
r
u
T
.
A
S
E
I
T
I
V
I
T
C
A
E
L
B
I
G
I
L
E
-
N
O
N
-
Y
M
O
N
O
X
A
T
.
B
)
2
.
A
+
1
.
A
(
s
e
i
t
i
v
i
t
c
a
%
0
0
.
0
0
.
y
l
l
a
t
n
e
m
n
o
r
i
v
n
e
f
o
r
e
v
o
n
r
u
T
%
0
0
.
%
0
0
.
0
0
.
0
0
.
)
1
.
A
(
)
d
e
n
g
i
l
a
-
y
m
o
n
o
x
a
T
(
s
e
i
t
i
v
i
t
c
a
e
l
b
a
n
i
a
t
s
u
s
l
a
n
o
i
t
i
s
n
a
r
t
h
c
i
h
w
f
O
g
n
i
l
b
a
n
e
h
c
i
h
w
f
O
S
E
I
T
I
V
I
T
C
A
E
L
B
I
G
I
L
E
-
Y
M
O
N
O
X
A
T
.
A
y
l
l
a
t
n
e
m
n
o
r
i
v
n
E
.
1
.
A
s
e
i
t
i
v
i
t
c
a
e
l
b
a
n
i
a
t
s
u
s
)
d
e
n
g
i
l
a
-
y
m
o
n
o
x
a
T
(
%
8
9
9
.
%
0
0
1
.
5
2
0
0
8
,
.
3
0
2
0
8
,
-
n
o
n
-
y
m
o
n
o
x
a
T
f
o
r
e
v
o
n
r
u
T
s
e
i
t
i
v
i
t
c
a
e
l
b
g
i
i
l
e
L
A
T
O
T
.
e
r
u
s
o
l
c
s
i
d
y
m
o
n
o
x
a
T
U
E
2
2
0
2
n
i
l
i
n
s
a
d
e
t
r
o
p
e
r
,
3
2
0
2
n
i
d
e
t
r
o
p
e
r
d
n
a
d
e
fi
i
t
n
e
d
i
y
t
i
v
i
t
c
a
r
o
f
d
e
t
n
e
s
e
r
p
-
e
r
r
e
v
o
n
r
u
t
r
o
f
e
v
i
t
a
r
a
p
m
o
C
1
89
)
N
r
a
e
y
(
3
2
0
2
g
n
i
r
e
v
o
c
e
r
u
s
o
l
c
s
i
d
–
s
e
i
t
i
v
i
t
c
a
c
i
m
o
n
o
c
e
d
e
n
g
i
l
a
-
y
m
o
n
o
x
a
T
h
t
i
w
d
e
t
a
i
c
o
s
s
a
s
e
c
i
v
r
e
s
r
o
s
t
c
u
d
o
r
p
m
o
r
f
r
e
v
o
n
r
u
t
f
o
n
o
i
t
r
o
p
o
r
P
Strategic Report / Sustainability ReviewKerry Group Annual Report 2023
y
r
o
g
e
t
a
C
l
a
n
o
i
t
i
s
n
a
r
t
)
0
2
(
y
t
i
v
i
t
c
a
y
r
o
g
e
t
a
C
g
n
i
l
b
a
n
e
)
9
1
(
y
t
i
v
i
t
c
a
T
T
E
E
E
%
1
0
.
%
1
0
.
%
1
0
.
%
0
0
.
%
2
0
.
%
2
1
.
%
4
1
.
%
5
1
.
r.
o
t
a
r
e
m
u
n
e
h
t
n
i
e
g
n
a
h
c
o
n
s
a
w
e
r
e
h
t
,
l
i
7
8
e
g
a
p
n
o
d
e
n
a
p
x
e
r
o
t
a
n
m
o
n
e
d
e
h
t
n
i
i
e
g
n
a
h
c
o
t
e
u
d
d
e
t
n
e
s
e
r
p
-
e
R
.
e
r
u
s
o
l
c
s
i
d
y
m
o
n
o
x
a
T
U
E
2
2
0
2
n
i
.
%
1
1
s
a
d
e
t
r
o
p
e
r
%
0
0
.
0
0
.
%
0
0
.
0
0
.
%
0
0
1
.
5
1
9
5
%
0
0
1
.
5
1
9
5
M
C
C
5
6
.
M
C
C
3
7
.
d
n
a
e
c
n
a
n
e
t
n
i
a
m
,
n
o
i
t
a
l
l
a
t
s
n
I
y
c
n
e
i
c
ffi
e
-
y
g
r
e
n
e
f
o
r
i
a
p
e
r
1
t
n
e
m
p
u
q
e
i
e
l
b
g
i
i
l
e
-
y
m
o
n
o
x
a
T
f
o
x
E
p
O
t
o
n
(
s
e
i
t
i
v
i
t
c
a
e
l
b
a
n
i
a
t
s
u
s
y
l
l
a
t
n
e
m
n
o
r
i
v
n
e
t
o
n
t
u
b
)
s
e
i
t
i
v
i
t
c
a
d
e
n
g
i
l
a
-
y
m
o
n
o
x
a
T
)
2
.
A
(
i
,
s
e
k
b
r
o
t
o
m
y
b
t
r
o
p
s
n
a
r
T
t
h
g
i
l
d
n
a
s
r
a
c
r
e
g
n
e
s
s
a
p
s
e
l
c
i
h
e
v
l
a
i
c
r
e
m
m
o
c
S
E
I
T
I
V
I
T
C
A
E
L
B
I
G
I
L
E
-
N
O
N
-
Y
M
O
N
O
X
A
T
.
B
)
2
.
A
+
1
.
A
(
s
e
i
t
i
v
i
t
c
a
-
n
o
n
-
y
m
o
n
o
x
a
T
f
o
x
E
p
O
s
e
i
t
i
v
i
t
c
a
e
l
b
g
i
i
l
e
L
A
T
O
T
e
l
b
g
i
i
l
e
-
y
m
o
n
o
x
a
T
f
o
x
E
p
O
.
A
,
.
d
e
t
n
e
s
e
r
p
-
e
r
3
7
M
C
C
r
o
f
e
v
i
t
a
r
a
p
m
o
C
1
;
L
E
L
E
/
N
;
L
E
L
E
/
N
;
L
E
L
E
/
N
;
L
E
L
E
/
N
;
L
E
L
E
/
N
;
L
E
L
E
/
N
)
s
e
i
t
i
v
i
t
c
a
d
e
n
g
i
l
a
-
y
m
o
n
o
x
a
T
t
o
n
(
s
e
i
t
i
v
i
t
c
a
e
l
b
a
n
i
a
t
s
u
s
y
l
l
a
t
n
e
m
n
o
r
i
v
n
e
t
o
n
t
u
b
e
l
b
g
i
i
l
e
-
y
m
o
n
o
x
a
T
.
2
.
A
%
0
0
.
0
0
.
%
0
0
.
%
0
0
.
0
0
.
0
0
.
S
E
I
T
I
V
I
T
C
A
E
L
B
I
G
I
L
E
-
Y
M
O
N
O
X
A
T
.
A
y
l
l
a
t
n
e
m
n
o
r
i
v
n
E
.
1
.
A
s
e
i
t
i
v
i
t
c
a
e
l
b
a
n
i
a
t
s
u
s
)
d
e
n
g
i
l
a
-
y
m
o
n
o
x
a
T
(
M
C
C
3
7
.
d
n
a
e
c
n
a
n
e
t
n
i
a
m
,
n
o
i
t
a
l
l
a
t
s
n
I
y
c
n
e
i
c
ffi
e
-
y
g
r
e
n
e
f
o
r
i
a
p
e
r
t
n
e
m
p
u
q
e
i
y
l
l
a
t
n
e
m
n
o
r
i
v
n
e
f
o
x
E
p
O
s
e
i
t
i
v
i
t
c
a
e
l
b
a
n
i
a
t
s
u
s
)
1
.
A
(
)
d
e
n
g
i
l
a
-
y
m
o
n
o
x
a
T
(
l
a
n
o
i
t
i
s
n
a
r
t
h
c
i
h
w
f
O
g
n
i
l
b
a
n
e
h
c
i
h
w
f
O
%
N
/
Y
N
/
Y
N
/
Y
N
/
Y
N
/
Y
N
/
Y
N
/
Y
;
N
;
Y
L
E
/
N
;
N
;
Y
L
E
/
N
;
N
;
Y
L
E
/
N
;
N
;
Y
L
E
/
N
;
N
;
Y
L
E
/
N
;
N
;
Y
L
E
/
N
%
m
€
t
x
e
T
f
o
n
o
i
t
r
o
p
o
r
P
-
y
m
o
n
o
x
a
T
)
.
1
A
.
(
d
e
n
g
i
l
a
)
.
2
A
.
l
(
e
b
g
i
i
l
e
-
r
o
1
-
N
r
a
e
y
,
x
E
p
O
)
8
1
(
i
)
”
m
r
a
H
y
l
t
n
a
c
fi
n
g
i
S
t
o
N
s
e
o
D
“
(
Minimum
Safeguards (17)
Biodiversity (16)
Circular Economy (15)
Pollution (14)
Water (13)
Climate Change
Adaptation (12)
Climate Change
Mitigation (11)
Biodiversity (10)
Circular Economy (9)
Pollution (8)
Water (7)
Climate Change
Adaptation (6)
Climate Change
Mitigation (5)
Proportion of
OpEx, year N (4)
OpEx (3)
Code (2)
)
1
(
s
e
i
t
i
v
i
t
c
A
c
i
m
o
n
o
c
E
a
i
r
e
t
i
r
c
H
S
N
D
a
i
r
e
t
i
r
c
n
o
i
t
u
b
i
r
t
n
o
c
l
a
i
t
n
a
t
s
b
u
S
N
r
a
e
y
l
a
i
c
n
a
n
i
F
)
N
r
a
e
y
(
3
2
0
2
g
n
i
r
e
v
o
c
e
r
u
s
o
l
c
s
i
d
–
s
e
i
t
i
v
i
t
c
a
c
i
m
o
n
o
c
e
d
e
n
g
i
l
a
-
y
m
o
n
o
x
a
T
h
t
i
w
d
e
t
a
i
c
o
s
s
a
s
e
c
i
v
r
e
s
r
o
s
t
c
u
d
o
r
p
m
o
r
f
x
E
p
O
f
o
n
o
i
t
r
o
p
o
r
P
90
Strategic Report / Sustainability ReviewKerry Group Annual Report 2023
y
r
o
g
e
t
a
C
l
a
n
o
i
t
i
s
n
a
r
t
)
0
2
(
y
t
i
v
i
t
c
a
T
T
T
y
t
i
v
i
t
c
a
)
9
1
(
E
E
E
E
E
y
r
o
g
e
t
a
C
f
o
n
o
i
t
r
o
p
o
r
P
-
y
m
o
n
o
x
a
T
g
n
i
l
b
a
n
e
)
.
1
A
.
(
d
e
n
g
i
l
a
l
e
b
g
i
i
l
e
-
r
o
,
x
E
p
a
C
)
.
2
A
.
(
)
8
1
(
1
-
N
r
a
e
y
i
)
”
m
r
a
H
y
l
t
n
a
c
fi
n
g
i
S
t
o
N
s
e
o
D
“
(
Minimum
Safeguards (17)
Biodiversity (16)
Circular
Economy (15)
Pollution (14)
Water (13)
Climate Change
Adaptation (12)
Climate Change
Mitigation (11)
Biodiversity (10)
Circular
Economy (9)
Pollution (8)
Water (7)
%
N
/
Y
N
/
Y
N
/
Y
N
/
Y
N
/
Y
N
/
Y
N
/
Y
;
N
;
Y
L
E
/
N
;
N
;
Y
L
E
/
N
;
N
;
Y
L
E
/
N
;
N
;
Y
L
E
/
N
Climate Change
Adaptation (6)
;
N
;
Y
/
N
L
E
Climate Change
Mitigation (5)
;
N
;
Y
L
E
/
N
Proportion of
CapEx, year N (4)
CapEx (3)
Code (a) (2)
)
1
(
s
e
i
t
i
v
i
t
c
A
c
i
m
o
n
o
c
E
%
m
€
t
x
e
T
)
d
e
n
g
i
l
a
-
y
m
o
n
o
x
a
T
(
s
e
i
t
i
v
i
t
c
a
e
l
b
a
n
i
a
t
s
u
s
y
l
l
a
t
n
e
m
n
o
r
i
v
n
E
.
1
.
A
S
E
I
T
I
V
I
T
C
A
E
L
B
I
G
I
L
E
-
Y
M
O
N
O
X
A
T
.
A
)
N
r
a
e
y
(
3
2
0
2
g
n
i
r
e
v
o
c
e
r
u
s
o
l
c
s
i
d
–
s
e
i
t
i
v
i
t
c
a
c
i
m
o
n
o
c
e
d
e
n
g
i
l
a
-
y
m
o
n
o
x
a
T
h
t
i
w
d
e
t
a
i
c
o
s
s
a
s
e
c
i
v
r
e
s
r
o
s
t
c
u
d
o
r
p
m
o
r
f
e
r
u
t
i
d
n
e
p
x
e
l
a
t
i
p
a
c
f
o
n
o
i
t
r
o
p
o
r
P
a
i
r
e
t
i
r
c
H
S
N
D
a
i
r
e
t
i
r
c
n
o
i
t
u
b
i
r
t
n
o
c
l
a
i
t
n
a
t
s
b
u
S
r
a
e
Y
N
r
a
e
y
l
a
i
c
n
a
n
i
F
%
4
0
.
%
3
2
.
%
0
0
.
%
0
0
.
%
7
2
.
%
3
2
.
%
4
0
.
%
0
0
.
%
8
0
.
%
9
2
.
%
5
1
.
%
4
4
.
%
6
1
1
.
%
2
1
2
.
%
9
3
2
.
N
Y
Y
Y
Y
Y
Y
N
Y
Y
Y
Y
Y
Y
N
Y
Y
Y
Y
Y
Y
N
Y
Y
N
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
N
Y
Y
Y
Y
Y
Y
N
Y
Y
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
N
Y
Y
%
0
0
.
%
1
3
.
0
0
.
.
5
1
1
.
2
7
M
C
C
.
3
7
M
C
C
%
0
0
.
1
0
.
.
4
7
M
C
C
i
g
n
g
r
a
h
c
f
o
r
i
a
p
e
r
d
n
a
e
c
n
a
n
e
t
n
a
m
i
,
n
o
i
t
a
l
l
a
t
s
n
I
)
s
g
n
d
i
l
i
u
b
o
t
d
e
h
c
a
t
t
a
s
e
c
a
p
s
g
n
k
r
a
p
d
n
a
(
i
s
g
n
d
i
l
i
u
b
n
i
s
e
l
c
i
h
e
v
c
i
r
t
c
e
e
r
o
f
s
n
o
i
t
a
t
s
l
i
t
n
e
m
p
u
q
e
y
c
n
e
i
c
ffi
e
y
g
r
e
n
e
f
o
r
i
a
p
e
r
d
n
a
e
c
n
a
n
e
t
n
a
m
i
,
n
o
i
t
a
l
l
a
t
s
n
I
s
g
n
d
i
l
i
u
b
g
n
i
t
s
i
x
e
f
o
n
o
i
t
a
v
o
n
e
R
Y
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
Y
%
0
0
.
1
0
.
.
5
7
M
C
C
f
o
r
i
a
p
e
r
d
n
a
e
c
n
a
n
e
t
n
a
m
i
,
n
o
i
t
a
l
l
a
t
s
n
I
Y
Y
Y
%
0
0
.
%
0
0
.
%
0
0
.
%
0
0
.
%
0
0
.
%
1
.
3
%
0
.
0
%
1
3
.
%
0
0
.
%
0
0
.
%
0
0
.
%
0
0
.
%
0
0
.
%
0
0
.
%
1
.
3
%
1
3
.
.
7
1
1
l
s
e
i
t
i
v
i
t
c
a
e
b
a
n
a
t
s
u
s
y
l
l
i
a
t
n
e
m
n
o
r
i
v
n
e
f
o
x
E
p
a
C
,
g
n
i
r
u
s
a
e
m
r
o
f
s
e
c
i
v
e
d
d
n
a
s
t
n
e
m
u
r
t
s
n
i
y
g
r
e
n
e
g
n
i
l
l
o
r
t
n
o
c
d
n
a
n
o
i
t
a
u
g
e
r
l
s
g
n
d
i
l
i
u
b
f
o
e
c
n
a
m
r
o
f
r
e
p
)
1
A
.
(
)
d
e
n
g
i
l
a
-
y
m
o
n
o
x
a
T
(
l
a
n
o
i
t
i
s
n
a
r
t
h
c
i
h
w
f
O
g
n
i
l
b
a
n
e
h
c
i
h
w
f
O
;
L
E
L
E
/
N
)
t
(
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
;
L
E
L
E
/
N
)
t
(
L
E
/
N
L
E
/
N
;
L
E
;
L
E
;
L
E
L
E
/
N
L
E
/
N
L
E
/
N
)
t
(
)
t
(
)
t
(
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
L
E
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
L
E
/
N
;
L
E
L
E
/
N
)
t
(
L
E
L
E
L
E
L
E
L
E
L
E
%
3
0
.
%
2
1
.
%
9
9
.
%
8
0
.
%
4
2
.
%
9
3
.
%
0
0
.
%
7
0
1
.
%
0
0
.
%
0
0
.
%
0
0
.
%
5
.
8
1
%
5
8
1
.
1
1
.
4
4
.
.
3
7
3
9
2
.
9
8
.
.
7
4
1
.
3
9
6
%
0
0
.
%
7
0
1
.
%
0
0
.
%
0
0
.
%
0
0
.
%
6
.
1
2
%
6
.
1
2
0
.
1
8
%
4
8
7
.
.
7
5
9
2
%
0
0
1
.
7
6
7
3
.
1
3
E
C
/
1
7
M
C
C
.
.
2
3
E
C
/
2
7
M
C
C
.
s
g
n
d
i
l
i
u
b
g
n
i
t
s
i
x
e
f
o
n
o
i
t
a
v
o
n
e
R
s
g
n
d
i
l
i
u
b
w
e
n
f
o
n
o
i
t
c
u
r
t
s
n
o
C
.
5
2
4
M
C
C
.
5
6
M
C
C
t
a
e
h
e
t
s
a
w
g
n
i
s
u
l
o
o
c
/
t
a
e
h
f
o
n
o
i
t
c
u
d
o
r
P
s
r
a
c
r
e
g
n
e
s
s
a
p
i
,
s
e
k
b
r
o
t
o
m
y
b
t
r
o
p
s
n
a
r
T
s
e
l
c
i
h
e
v
l
a
i
c
r
e
m
m
o
c
t
h
g
i
l
d
n
a
.
3
7
M
C
C
y
g
r
e
n
e
f
o
r
i
a
p
e
r
d
n
a
e
c
n
a
n
e
t
n
a
m
i
,
n
o
i
t
a
l
l
a
t
s
n
I
)
2
.
A
(
)
s
e
i
t
i
v
i
t
c
a
d
e
n
g
i
l
a
-
y
m
o
n
o
x
a
T
t
o
n
(
s
e
i
t
i
v
i
t
c
a
e
l
b
a
n
i
a
t
s
u
s
)
2
.
A
+
1
.
A
(
s
e
i
t
i
v
i
t
c
a
e
l
b
g
i
i
l
e
-
y
m
o
n
o
x
a
T
f
o
x
E
p
a
C
.
A
S
E
I
T
I
V
I
T
C
A
E
L
B
I
G
I
L
E
-
N
O
N
-
Y
M
O
N
O
X
A
T
.
B
y
l
l
a
t
n
e
m
n
o
r
i
v
n
e
t
o
n
t
u
b
e
l
b
g
i
i
l
e
-
y
m
o
n
o
x
a
T
f
o
x
E
p
a
C
.
7
7
M
C
C
1
s
g
n
d
i
l
i
i
u
b
f
o
p
h
s
r
e
n
w
o
d
n
a
n
o
i
t
i
s
i
u
q
c
A
i
t
n
e
m
p
u
q
e
y
c
n
e
i
c
ffi
e
s
e
i
t
i
v
i
t
c
a
e
b
g
i
l
i
l
e
-
n
o
n
-
y
m
o
n
o
x
a
T
f
o
x
E
p
a
C
L
A
T
O
T
91
)
s
e
i
t
i
v
i
t
c
a
d
e
n
g
i
l
a
-
y
m
o
n
o
x
a
T
t
o
n
(
s
e
i
t
i
v
i
t
c
a
e
l
b
a
n
i
a
t
s
u
s
y
l
l
a
t
n
e
m
n
o
r
i
v
n
e
t
o
n
t
u
b
e
l
b
g
i
i
l
e
-
y
m
o
n
o
x
a
T
.
2
.
A
.
e
r
u
s
o
l
c
s
i
d
y
m
o
n
o
x
a
T
U
E
2
2
0
2
n
i
)
.
m
4
4
5
€
(
.
%
4
2
1
s
a
t
r
o
p
e
r
,
s
g
n
d
i
l
i
i
u
b
f
o
p
h
s
r
e
n
w
o
d
n
a
s
n
o
i
t
i
s
i
u
q
c
a
n
i
d
e
d
u
l
c
n
i
d
n
a
l
f
o
t
s
o
c
e
v
o
m
e
r
o
t
d
e
t
n
e
s
e
r
p
-
e
r
s
g
n
d
i
l
i
i
u
b
f
o
p
h
s
r
e
n
w
o
d
n
a
n
o
i
t
i
s
i
u
q
c
a
7
7
M
C
C
r
o
f
e
v
i
t
a
r
a
p
m
o
C
.
1
Strategic Report / Sustainability ReviewKerry Group Annual Report 2023
Strategic Report / Risk Management Report
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
and a turbulent macroeconomic
environment, our performance
continues to highlight the resilience
of our people, our business model
and our proven track record of
delivering through uncertainty.
The diversified nature of our
operations and geographical footprint,
together with our broad portfolio of
technologies, 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
92
Kerry Group Annual Report 2023
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 below.
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 considers 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 of the Audit
Committee reports to the Board on its activities regarding audit matters and risk management. See pages
135-140 for a description of the risk management activities conducted by the Audit Committee in 2023.
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 Leadership Team
The Executive Leadership Team 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 Sustainability Executive Committee and the Food Safety & Quality (FSQ) and
Environmental, Health and Safety (EHS) Leadership Teams.
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
FSQ, EHS, Information & Cyber
Security, Legal and Financial
Control functions.
The 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.
93
Strategic Report / Risk Management ReportKerry Group Annual Report 2023
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.
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 133 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.
Strategic Report / Risk Management Report
Enterprise Risk Management (ERM) Process
R i s k a n d Governance
R i s k Culture
Identify
1
Risk
Management
Framework
A
s
s
e
s
s
2
3
a t e
M iti g
s
u
o
w
u
vie
tin
e
n
R
o
C
5
4
M
o
nito
R
e
p
r a
rt
o
n
d
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 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, discuss and validate these risks, providing
further input where required 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. While our appetite for risk will vary over time,
in general we maintain a balanced approach to risk,
considering our risk appetite across a five-point scale
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.
94
Strategic Report / Risk Management ReportKerry Group Annual Report 2023 Strategic Report / Risk Management Report
Principal and Emerging Risks
The table on pages 97-103 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 28-31. These
risks form the basis of Board and Audit Committee
communications and discussions.
This table presents the Board’s view of the Group’s
principal risks and uncertainties and is not an
exhaustive list of all the risks which may impact the
Group. There are additional risks which are not yet
considered material, or which are not yet known
to the Board, which could become significant in
the future. Likewise, some of the current risks may
reduce in importance as management actions
are implemented or changes in the operating
environment occur.
Climate-Related Risks and Opportunities
The Board recognises the significant risks and
opportunities posed by climate change and the
significant influence that they may have on the
delivery of the Group’s business strategy. During
2023, a standalone Sustainability Committee
was established, to play a lead role in supporting
the Board’s oversight of the Group’s actions on
climate change, as well as its role in governing the
Group’s broader sustainability strategy. Prior to
this, Board oversight of sustainability matters fell
under the remit of the Governance, Nomination
and Sustainability (GNS) Committee. 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.
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 77-78.
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. Modelling
the potential impacts of climate-related risks is
a complex process given that impacts and policy
responses will manifest in different ways and over
different time-horizons. Our ERM process typically
considers risk over a period of up to five years
and in doing so we consider how climate-related
impacts may contribute to other key risk areas in
that timeframe. However, by its nature the physical
impacts of climate risk also requires a longer-term
view and therefore when assessing climate as a
discrete risk we have applied an extended time
horizon using 2030 (medium-term) and 2050 (long-
term) as our reference timeframes. The approach is
integrated with the overall Group ERM process and is
aligned on common definitions of likelihood, impact
and velocity for the assessment of risk.
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. During
2023, we updated our quantitative assessment for
acquisitions and disposals and reviewed key inputs,
which confirmed no material change to the final
analysis. Further detail with regard to the process
and scenarios examined as part of the assessment
are outlined in the TCFD section on pages 70-83.
In 2023, climate risk was considered by the
Board across a range of areas including capital
expenditure, business divestment and acquisition
investment decisions. Climate-related metrics were
also incorporated into the Board’s budget review
process, in conjunction with growth, financial
performance and returns. The need to respond to
climate change is a fundamental component of the
Group’s Beyond the Horizon strategy and progress
against key metrics is outlined in the Sustainability
Review on pages 46-69.
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.
Ongoing conflicts around the world continue to
highlight the impact of geopolitical instability on
areas such as supply chains, raw material costs
and energy pricing and security. In addition,
macroeconomic uncertainty continues as consumers
and governments adapt to higher interest rates.
Whilst the unprecedented inflationary environment
of the previous two years has eased somewhat, there
has been ongoing volatility in input costs which the
Group has continued to manage through its pricing
mechanisms. Our management teams continue to
closely monitor the situation and demonstrate agility
and an ability to take appropriate mitigating actions
to secure raw materials, maintain production and
provide a reliable supply to our customers.
An increasingly-dynamic marketplace and evolving
consumer trends in response to factors such as an
increased focus on health and wellbeing, sustainability
concerns and cost-of-living challenges remain a focus
as the Group’s portfolio continues to evolve. Business
management teams work closely with our customers
to support them in developing their offerings to meet
the needs of a rapidly changing marketplace.
95
Strategic Report / Risk Management ReportKerry Group Annual Report 2023 Strategic Report / Risk Management Report
Changes within the legal and regulatory
environment in which the Group operates are
continuing at pace. This is particularly evident in
areas such as sustainability, consumer health and
food safety. Examples of these changes include the
requirements of the EU Corporate Sustainability
Reporting Directive (CSRD) and UK restrictions
on the marketing of foods high in saturated fat,
salt or sugar (HFSS). As in the case for all global
food companies, the rapid evolution of regulatory
requirements, combined with a lack of harmony in
global regulations, create challenges for the Group.
As a result, we have evolved our Business Ethics
and Social Responsibility risk to encompass these
challenges and have updated this risk to Legal,
Regulatory and Ethical Compliance.
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 consideration and these risks
continue to be monitored as part of our ongoing
risk management processes. Emerging risks
being monitored include the impact of artificial
intelligence and associated threats, business
continuity risks associated with Cloud concentration
and the market effects from higher borrowing
costs. We also continue to monitor the impact of
the current media attention on ultra-processed
foods and the rising popularity of anti-obesity
drugs and how these might influence consumer
behaviours in the markets in which we operate and
the risks and opportunities that this might present.
AN INCREASINGLY
DYNAMIC MARKETPLACE
AND EVOLVING CONSUMER
TRENDS, IN RESPONSE
TO FACTORS SUCH AS AN
INCREASED FOCUS ON
HEALTH AND WELLBEING,
SUSTAINABILITY CONCERNS
AND COST-OF-LIVING
CHALLENGES REMAIN A
FOCUS AS THE GROUP'S
PORTFOLIO CONTINUES
TO EVOLVE
96
Strategic Report / Risk Management ReportKerry Group Annual Report 2023 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
The Group’s future growth
and profitability is determined
by how its portfolio of
technologies, end use markets,
geographies, channels and
customers evolve over time.
The Group’s ability to anticipate
key market trends and evolving
2021 Annual Report
consumer demands and ensure
Risk Icons
the ongoing relevance of its
portfolio is critical to its long-
term performance.
Impact
A failure to
respond to
changing market
dynamics and
make optimal
portfolio
management
decisions may
impact on
the Group's
profitability and
long-term growth.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
How We Manage the Risk
»
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.
» During the year, the Group continued to make
good strategic progress through footprint
expansion and portfolio evolution with the sale
of the trade and assets of its Sweet Ingredients
Portfolio, further enhancing its business in areas
where it can add most value.
2019 Annual Report
Risk Icons
» 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.
Geopolitical, Emerging Markets and Macroeconomic Environment
Description
The Group's global footprint
and acquisitive growth strategy,
exposes it to global market
forces, fluctuations in national
economies, societal unrest,
geopolitical uncertainty and
an increasingly complex legal
and regulatory environment.
Ongoing conflicts around the
world continue to highlight the
potential impact of geopolitical
2021 Annual Report
instability on areas such as
Risk Icons
supply chains, raw material
costs and energy pricing
and security.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Impact
Failure to monitor
and respond
to change and
volatility across
the Group’s
markets may lead
to operational
disruption or have
an impact on the
future growth
and profitability
of the Group.
How We Manage the Risk
»
The Board and Group Executive Leadership
Team closely monitor political and economic
developments to inform decision making and
implement appropriate responses if required.
» 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 - see Legal, Regulatory and Ethical
Compliance risk for further detail.
The breadth of the Group’s portfolio and well-
diversified 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
as they arise.
»
2019 Annual Report
Risk Icons
Taste
Nutrition
Emerging
Markets
Margin
Expansion
97
Strategic Report / Risk Management ReportKerry Group Annual Report 2023 Strategic Report / Risk Management Report
Principal Risks and Uncertainties – Strategic (continued)
Business Acquisition and Divestiture
Description
Impact
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
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.
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Climate Change and Environmental
Description
Impact
Environmental risks
including extreme
weather events,
biodiversity loss and
water scarcity may result
in operational disruption
and increased volatility
in the supply of raw
materials which may
increase costs and have
a negative impact on the
Group’s assets, revenue
and profitability.
Transition risks such as
changes in consumer
demand, carbon pricing
or a failure to remain
compliant with the
continuously-evolving,
regulatory landscape
may have a negative
impact on the Group’s
revenue and profitability
and may damage the
reputation of the Group.
The Group recognises
the significant
environmental
challenges the world
faces, particularly 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
transitioning to a low
carbon economy may
influence costs and/
or demand for our
products.
The geographical
footprint of the Group
coupled with an
escalation in the pace
of change in the ESG
2021 Annual Report
and environmental
Risk Icons
regulatory landscape
has increased the risk
of non-compliance.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
98
How We Manage the Risk
» An experienced and dedicated Mergers and
Acquisitions team is in place and follow a strong
governance process throughout all stages of a
transaction.
» All potential transactions are rigorously assessed
and evaluated to ensure the Group’s strategic and
financial criteria are met. All transactions are fully
reviewed and approved by the Board.
2019 Annual Report
Risk Icons
» 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.
»
How We Manage the Risk
»
The Group’s cross-functional Sustainability
Executive Committee oversees progress in
delivering against the Group’s Beyond the Horizon
sustainability strategy. Regular updates are
provided to the Sustainability Committee, the
Audit Committee and the Board. For further detail
in relation to sustainability risk governance please
see page 71-72 of our TCFD Report.
» Performance versus targets is monitored through
a suite of global KPIs. In addition, sustainability
and climate-related metrics are included as
part of the Long-Term Incentive Plan (LTIP) for
Executive Directors and senior management.
A detailed review of the Group’s sustainability
performance is included in the Sustainability
Review on pages 64-67.
» Consideration of climate-related matters is
embedded in key investment decisions including
capital, innovation and mergers and acquisitions.
» During 2023, the Group has continued to progress
its understanding of sustainability-related risks
and opportunities through the double materiality
approach. Further details are outlined in the
Sustainability Review on pages 48-49.
» During 2023, significant work was completed
to update data systems and processes to meet
upcoming EU CSRD disclosure requirements.
2019 Annual Report
Risk Icons
» Appropriate business continuity and crisis
management plans are in place to deal with
events that arise.
The failure of the
business to meet
our climate and
environmental
targets could result in
reputational damage
amongst customers,
investors and other
stakeholders and
negatively impact our
ability to raise finance.
Margin
Expansion
Strategic Report / Risk Management ReportKerry Group Annual Report 2023 Strategic Report / Risk Management Report
Principal Risks and Uncertainties – Operational
People
Description
Impact
The ability to attract,
develop, engage and
retain a diverse, talented
and skilled workforce
in an increasingly
competitive labour
market is critical if the
Group is to continue
to compete and grow
effectively.
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.
Ongoing geopolitical and
economic uncertainty
as well as competition
for key skills and talent
continues to impact both
the supply and cost of
labour in a number of
markets in which the
Group operates.
2021 Annual Report
Risk Icons
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Food Safety and Quality
Description
Impact
A significant food
safety or regulatory
compliance issue could
result in a product recall,
financial penalties and
costs, impact business
performance and/or
damage the reputation
of the Group.
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 evolving
legal and regulatory
obligations in the areas
of food safety, quality
and labelling.
2021 Annual Report
Risk Icons
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
»
»
How We Manage the Risk
» Robust talent management and succession
planning processes are in place which are
regularly reviewed by the Group Executive and
overseen by the Governance and Nomination
Committee and the Board.
The Group invests in learning and development
programmes to build core capabilities and
leadership expertise aligned to its strategic
objectives.
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 a regular group-wide
employee engagement survey.
The Group continues to advance its diversity,
inclusion and belonging agenda supported by
the Global Diversity, Inclusion and Belonging
Council. Progress towards our ambition to build
a more diverse and inclusive culture is monitored
through both KPIs and an inclusion index which
is a component of our group-wide employee
engagement survey.
»
2019 Annual Report
Risk Icons
» Reward and recognition programmes continue to
be enhanced to ensure they remain competitive
and aligned to delivery of the Group’s strategic
objectives.
How We Manage the Risk
»
Industry-leading food safety and traceability
systems are in place and all manufacturing sites
comply with international food safety and quality
management standards. This is supported by a
strong quality culture through the Group’s Safety
First, Quality Always approach.
» 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, Group 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.
99
Strategic Report / Risk Management ReportKerry Group Annual Report 2023 Strategic Report / Risk Management Report
Principal Risks and Uncertainties – Operational (continued)
Health and Safety
Description
Impact
The nature of the
Group’s operations can
expose employees, sub-
contractors, customers
and other individuals
to potential health and
safety risks.
The Group is also
subject to local safety
regulations in multiple
jurisdictions, compliance
with which is paramount.
2021 Annual Report
Risk Icons
A significant safety
incident or failure
to comply with laws
and regulations could
expose the Group to
legal liability, and/or
significant costs and
damage the Group’s
reputation.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Margin Management
Taste
Nutrition
Emerging
Markets
Margin
Expansion
How We Manage the Risk
» A strong health and safety culture has been
driven by management and employees at all
levels supported by our Safety First, Quality
Always mindset. All employees are empowered to
challenge unsafe work conditions or practices.
» A robust health and safety management system
is in 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, Group
Internal Audit and external assurance providers.
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.
2019 Annual Report
Risk Icons
»
How We Manage the Risk
» A strong commercial focus on procurement,
pricing and cost improvement initiatives is
maintained along with continuous 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
Description
Impact
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.
While the unprecedented
inflationary environment
of the previous two years
has eased somewhat,
there has been ongoing
volatility in input costs,
which the Group must
manage through its
pricing mechanisms.
2021 Annual Report
Risk Icons
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
100
Strategic Report / Risk Management ReportKerry Group Annual Report 2023
Strategic Report / Risk Management Report
Principal Risks and Uncertainties – Operational (continued)
Cyber and Information Systems Security
Description
Impact
A successful cyber-
attack, internal breach
or other systems failure,
either within the Group
or at a third-party service
provider, 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.
How We Manage the Risk
» An appropriate governance structure is in
place including an Executive Information
Security Management Committee and the ROC.
Cybersecurity is a major focus area for the Board
and Audit Committee who this year received
two formal updates from the Chief Information
Security Officer.
» A dedicated 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.
The Group continues to invest significantly to
strengthen its ICT security posture and ensure
it is compliant with all regulatory obligations
such as the EU NIS2 Directive.
»
The Group depends on
a reliable and secure
ICT infrastructure (both
within our network and
in partnership with third-
party service providers)
for its daily business
operations, internal
communications,
controls, reporting and
communications with
customers and suppliers.
Ongoing geopolitical
tensions and
technological
advancements such as
digital enablement and
AI mean that the Group,
similar to other large
global companies is
increasingly susceptible
to sophisticated
cyber-attacks or other
information security
breaches.
2021 Annual Report
Risk Icons
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
2019 Annual Report
Risk Icons
» Business continuity, disaster recovery and crisis
management plans are in place and are tested
on a regular basis.
» Cybersecurity training is mandatory for all
employees. In addition, the Group continues to
invest in simulated phishing and cybersecurity
awareness campaigns to ensure vigilance is
maintained.
» 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
and there were no material information or
cybersecurity breaches noted over the last
three years.
»
101
Strategic Report / Risk Management ReportKerry Group Annual Report 2023 Strategic Report / Risk Management Report
Principal Risks and Uncertainties – Operational (continued)
How We Manage the Risk
» Crisis management and business continuity plans
are in place to enable effective recovery from a
major disruption. The diversified nature of the
Group’s manufacturing footprint facilitates the
transfer of production if required.
»
» Robust inventory management processes are in
place including the maintenance of appropriate
safety stock levels.
Sourcing model includes dual supply for critical
raw materials.
The Group continues to improve its end-to-end
supply chain planning programme to support
improved cross-functional decision making.
» All facilities have insurance cover to mitigate the
»
»
»
impact of significant disruption.
The Group continues to work with third-
party experts to understand climate-related
risks and opportunities. For details on the
scenario analysis, transition plans and our risk
management and materiality assessment refer to
the TCFD Report on pages 70-83.
Experienced customer service teams enable a
responsive and agile operation.
2019 Annual Report
Risk Icons
How We Manage the Risk
» A global centre of expertise exists to provide legal
and technical support in the area of IP protection.
» Policies, procedures and training programmes
»
»
are in place to provide guidance in relation to the
capture, exploitation and protection of IP.
Strong physical and system access controls
are in place to prevent unauthorised access or
download of sensitive data.
The external environment is monitored for
potential IP infringement and appropriate action
is taken when issues are identified.
2019 Annual Report
Risk Icons
Operational and Supply Chain Resilience
Description
Impact
Failure to effectively
respond to a significant
operational or supply
chain disruption could
adversely affect the
Group’s operations and
financial performance.
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.
A turbulent, geopolitical
environment, an increase
in the number of
extreme weather events
and learnings from the
COVID-19 pandemic,
have highlighted the
need to continue to
focus on building a
resilient supply chain
which is responsive to
changing internal and
external pressures.
2021 Annual Report
Risk Icons
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Intellectual Property
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Description
Impact
If IP owned by the
Group is not adequately
protected it may result in
the loss of commercially
sensitive and/or Kerry
proprietary information
which may have an
adverse impact on
revenue and profitability.
The Group’s unique mix
of Intellectual Property
(IP) is created by
combining fundamental
scientific knowledge,
carefully managed
material sourcing,
recipe formulation and
process technology
expertise. The protection
of IP is critical given
it is a key component
of the Group’s value
2021 Annual Report
creation model and
Risk Icons
supports its unique and
differentiated position in
the marketplace.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
102
Strategic Report / Risk Management ReportKerry Group Annual Report 2023 Strategic Report / Risk Management Report
Principal Risks and Uncertainties – Financial and Compliance
Legal, Regulatory and Ethical Compliance
Description
The Group must comply
with a complex and
constantly evolving
framework of local and
international laws and
regulations in such diverse
areas as product safety and
labelling, the environment,
health and safety,
employment law, human
rights, data privacy, ESG,
international sanctions,
anti-bribery and corruption,
competition law, company
law, taxation, corporate
governance and stock
exchange listing rules.
Acting in a legal, ethical
and socially responsible
manner, consistent
with our purpose, the
expectations of customers,
2021 Annual Report
consumers and other
Risk Icons
stakeholders, is essential
for the protection of the
reputation of the Group.
Impact
A material failure to
comply with applicable
legal, regulatory and
ethical standards or
best practices could
result in litigation
or investigations,
the imposition of
significant fines,
sanctions, adverse
operational impact and
reputational damage.
Changes to laws and
regulations could have
a material impact
on the cost of doing
business.
How We Manage the Risk
» Dedicated legal and regulatory teams, supported
by specialised functions and external advisors,
ensure compliance with applicable laws and
regulations and provide support and advice on
upcoming changes.
» A Code of Conduct is in place underpinned by
policies, processes and controls in relevant areas.
» 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 legal function manage the Group's Ethics
and Compliance programme incorporating
a global Speak Up channel with robust
mechanisms in place to ensure issues are
properly investigated and remedial actions taken.
The Business Integrity Committee oversee this
work with regular updates provided to the Audit
Committee.
» A Group-wide mandatory compliance training
2019 Annual Report
programme is in place supplemented with
Risk Icons
regular, targeted training and awareness
sessions.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taxation
Description
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Impact
2021 Annual Report
Risk Icons
Given the Group’s global
network, it is exposed to
an increasingly complex
and evolving international
tax environment.
Risk Trend
Risk is unchanged
Risk has increased
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.
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Treasury
Description
Impact
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.
Failure to manage
these risks could
negatively impact
on the financial
performance of the
Group.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
How We Manage the Risk
» A team of dedicated tax experts responsible
2019 Annual Report
for ensuring compliance with all taxation
Risk Icons
matters globally are employed. A programme of
continuous professional development ensures that
the team is up to date on tax law changes e.g.,
OECD Pillar Two – Global Minimum Tax.
In house expertise is supplemented by external
taxation advisors where required.
»
How We Manage the Risk
»
»
»
2019 Annual Report
Risk Icons
The Group Finance Committee monitors treasury
risk on an ongoing basis.
The Group has a strong investment grade credit
rating 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.
Taste
Nutrition
Emerging
Markets
Margin
Expansion
103
Strategic Report / Risk Management ReportKerry Group Annual Report 2023 Strategic Report / Risk Management Report
Going Concern and Viability Assessment
The Board, taking into consideration the Group’s
principal risks and uncertainties, including emerging
risks, assessed the going concern and longer-term
viability of the Group in line with the requirements
of the 2018 UK Corporate Governance Code and the
Irish Annex. Its conclusions on these assessments
are outlined below.
As a result of this review, the Directors report that
they have satisfied themselves and consider it
appropriate that the Group and the Company is
a going concern, having adequate resources to
continue in operational existence for the foreseeable
future and have not identified any material
uncertainties that cast a significant doubt on the
Group’s and the Company’s ability to continue as a
going concern over a period of at least 12 months.
Going Concern
The Consolidated Financial Statements have been
prepared on the going concern basis of accounting.
Viability Assessment
Assessment of Prospects
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 42-45.
The Group’s 2024 budget was reviewed and
approved at the December Board meeting. The
Directors have also examined the financial position
of the Group, including cash flows, liquidity position,
borrowing facilities, financial instruments and
financial risk management, as described on pages
36-41 and additionally as described in note 24 to
the financial statements.
Viability Assessment Scenarios
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 97-103. 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 36-41.
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, supply chain disruption,
political unrest
– Geopolitical, Emerging Markets & Macroeconomic Environment
– Operational and Supply Chain Resilience
– Legal, Regulatory and Ethical Compliance
– 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
– Legal, Regulatory and Ethical Compliance
– Portfolio Management
– Intellectual Property
– Taxation
– Treasury
* 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 70-83.
104
Strategic Report / Risk Management ReportKerry Group Annual Report 2023 ACTING IN A LEGAL,
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
Strategic Report / Risk Management Report
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.
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 97-103.
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 on the previous page 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.
105
Strategic Report / Risk Management ReportKerry Group Annual Report 2023
Directors' Report
DIRECTORS’
REPORT
Board of Directors 108
Report of the Directors 112
Governance Report
Corporate Governance Report 118
Audit Committee Report 135
Governance and Nomination
Committee Report 141
Sustainability Committee Report 148
Remuneration Committee Report 150
106
Kerry Group Annual Report 2023
Directors' Report
Kerry Group Annual Report 2023
107
Directors' Report / Board of Directors
BOARD OF DIRECTORS
Chairman & Executive Directors
MR. TOM MORAN
(68)(M)
Chairman of the Board
MR. EDMOND SCANLON
(50)(M)
Executive Director
MS. MARGUERITE LARKIN
(52)(F)
Executive Director
Chief Executive Officer
Chief Financial Officer
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 a Masters degree in
Accountancy.
Marguerite was appointed
Executive Director and Group
Chief Financial Officer in
September 2018.
Appointed:
30 September 2018
MR. GERRY BEHAN
(59)(M)
Executive Director
President and CEO
Kerry Taste & Nutrition
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 and Nomination Committee
Remuneration Committee
Sustainability Committee
Indicates Committee Chair
A
G
R
S
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 for 10 years 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 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 was a Board member of
Bord Bia, the Irish Dairy Board,
for 8 years and chaired its
Dairy Subsidiary Board.
Tom joined the Board in
September 2015 and was
appointed Chairman in
April 2022. He is Chairman
of the Governance and
Nomination 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
108
Kerry Group Annual Report 2023 Directors' Report / Board of Directors
Non-Executive Directors
DR. HUGH BRADY
(64)(M)
Senior Independent
Non-Executive Director
DR. GENEVIEVE BERGER
(69)(F)
Independent
Non-Executive Director
MS. FIONA DAWSON
(57)(F)
Independent
Non-Executive Director
DR. KARIN DORREPAAL
(62)(F)
Independent
Non-Executive Director
Experience:
Genevieve is a global
science leader having
served as Director General
of the Centre National de
la Recherche Scientifique,
one of the world’s largest
research organisations, and
who during her executive
career held roles as the
Chief Science Officer at
Firmenich International SA
as well as the Chief Research
& Development Officer and
Chief Science Officer at
Unilever plc. In addition to
being a medical doctor, she
holds two other doctorates,
a PhD in Physics and one in
Human Biology.
Genevieve brings to the
Board expertise in the areas
of human health, nutrition
and food ingredients.
Genevieve is currently a non-
Executive Director of Dassault
Systèmes SE and previously
served on the boards of Air
Liquide SA, AstraZeneca plc
and Smith & Nephew plc.
Genevieve joined the Board
on 1 November 2023.
Appointed:
1 November 2023
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 and Nomination
Committees in 2015. He
was appointed Senior
Independent Director in
April 2021.
Appointed:
24 February 2014
Committee Membership
AG
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. culminating in her
final role as Global President
Food, Customers and
Multisales Markets.
She brings to the Board
a deep knowledge of the
consumer food and beverage
sector, an understanding of
global markets, customers
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 Lego
Group A/S and Marks and
Spencer Group plc where she
sits on the Remuneration and
Nomination Committee. 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 in
February 2022.
Fiona was appointed as a
member and Chairperson of
the Sustainability Committee
on 1 August 2023.
Appointed:
4 January 2022
Committee Membership
R
S
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 the Board and
both the Remuneration and
Governance and Nomination
Committees in 2015. She was
appointed the designated
Workforce Engagement
Director in April 2022 and to
the Sustainability Committee
on 1 August 2023.
Appointed:
1 January 2015
Committee Membership
G R
S
109
Kerry Group Annual Report 2023
Directors' Report / Board of Directors
Non-Executive Directors
MS. EMER GILVARRY
(66)(F)
Independent
Non-Executive Director
PROF. CATHERINE GODSON
(62)(F)
MR. MICHAEL KERR
(64)(M)
Independent
Non-Executive Director
Independent
Non-Executive Director
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 Board in
May 2021 and was appointed
to the Audit Committee in
November 2021 and to the
Governance and Nomination
Committee in August 2022.
Appointed:
3 May 2021
Committee Membership
A G
Experience:
Catherine has an
international reputation in
scientific research gained
through a long and successful
academic career in the US,
Switzerland and at University
College Dublin (UCD).
She brings to the Board
knowledge across human
health and is a global expert
on diabetes as well as
inflammation, cardiovascular
and kidney diseases.
Catherine is the Associate
Dean, Research and
Innovation at UCD’s School
of Medicine as well as being
Director of the Diabetes
Complications Research
Centre at the UCD Conway
Institute and the UCD School
of Medicine. During her time
with UCD she held a variety
of senior management roles
including Vice President,
Innovation. She currently
serves on the board of the
Irish Research Council
and as a Trustee of Barts
Charity, London.
Catherine was appointed to
the Board on 1 November
2023.
Appointed:
1 November 2023
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 Board and 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
110
Kerry Group Annual Report 2023
Directors' Report / Board of Directors
Non-Executive Directors
MR. CHRISTOPHER ROGERS
(63)(M)
Independent
Non-Executive Director
MR. PATRICK ROHAN
(49)(M)
Independent
Non-Executive Director
MR. JINLONG WANG
(66)(M)
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
in January 2023 and
was appointed to the
Sustainability Committee on
1 August 2023.
Appointed:
16 January 2023
Committee Membership
S
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.
Christopher joined the
Board and was appointed
Chairman of the Audit
Committee in May 2018. He
joined the Remuneration
Committee in April 2020
and was appointed to the
Sustainability Committee on
1 August 2023.
Appointed:
8 May 2018
Committee Membership
A
R
S
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
Greater China Region. He also
served as Operating Partner
of Hony Capital Limited and
as Group Chairman and
Chief Executive Officer of
PizzaExpress.
He was previously a
non-Executive Director on
the Boards of Sonova
Holdings AG and Swire
Properties Limited.
Jinlong joined the Board
in January 2021 and was
appointed to the Audit
Committee in May 2021.
Appointed:
5 January 2021
Committee Membership
A
S
111
Kerry Group Annual Report 2023 Directors' Report / Report of the Directors
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
Genevieve Berger
Fiona Dawson
Karin Dorrepaal
Emer Gilvarry
Catherine Godson
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
112
Kerry Group Annual Report 2023
Directors' Report / Report of the Directors
The Directors submit their Annual Report together
with the audited Consolidated Financial Statements
for the year ended 31 December 2023.
The payment date for the final dividend is 10 May
2024 to shareholders registered on the record date of
12 April 2024.
Principal Activities
Kerry is a world-leading taste and nutrition partner
for the food, beverage and pharmaceutical markets
and a leading Irish provider of value-add dairy
ingredients and consumer products. Kerry innovates
with its customers to create great tasting products,
with improved nutrition and functionality, while
ensuring better impact for the planet. 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
137 manufacturing facilities across the world.
Results and Review of the Business
The Directors are pleased to report a good
performance across our financial metrics and
non-financial measures for 2023.
Group reported revenue was €8.0bn (2022: €8.8bn)
and EBITDA was €1.2bn (2022: €1.2bn) reflecting an
EBITDA margin of 14.5% (2022: 13.9%). This resulted
in growth in adjusted EPS on a constant currency
basis of 1.2% (2022: 7.3%). The Basic EPS at 410.4c
(2022: 341.9c) has increased year on year as the Basic
EPS in 2023 benefited from the profit earned on the
sale of the Sweet Ingredients Portfolio. The free cash
flow generated was €701m (2022: €640m) and from
a balance sheet perspective Shareholders equity
increased to €6.5bn (2022: €6.2bn) and Return on
Average Capital Employed (ROACE) was 10.0% (2022:
10.3%). Our main non-financial measures showed our
nutritional reach increased to 1.25bn (2022: 1.2bn).
The absolute carbon reduction was 48% (2022: 45%)
and the food waste reduction was 39% (2022: 41%).
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 46-91. The
Group’s financial and non-financial key performance
indicators are discussed on pages 34-35.
The Chairman’s Statement, the Chief Executive
Officer’s Review, the Business Reviews and the
Financial Review, which are included in the Strategic
Report on pages 8-45, 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 14 February 2024, the Directors recommended a
final dividend totaling 80.8 cent per share in respect of
the year ended 31 December 2023 (see note 10 to the
financial statements). This final dividend per share is
an increase of 10.1% over the final 2022 dividend per
share paid on 12 May 2023. This dividend is in addition
to the interim dividend of 34.6 cent per share paid to
shareholders on 10 November 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 92-105.
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 Innovation Centre, based in Naas,
Ireland, which is supported by Regional Technology
& Innovation Centres and a global knowledge
management infrastructure. Expenditure on research
and development applications and technical support
amounted to €301.3m in 2023 (2022: €303.2m).
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 newly
constituted 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 46-69.
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 70-83.
The 2023 Sustainability Report details the
Group’s progress against its sustainability strategy
and targets with reference to Global Reporting
Initiative (GRI) standards and is available for
review on the Group's website kerry.com.
113
Kerry Group Annual Report 2023 Directors' Report / Report of the Directors
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 175,792,661 shares were in issue as at 31
December 2023.
The A ordinary shares rank equally in all respects.
There are no limitations on the holding of securities
in the Company.
There are no restrictions on the transfer of fully
paid shares in the Company, but the Directors have
the power to refuse the transfer of shares that are
not fully paid. There are no deadlines for exercising
voting rights other than proxy votes, which must be
received by the Company at least 48 hours before the
time of the meeting at which a vote will take place.
There are no restrictions on voting rights except:
» where the holder or holders of shares have failed
to pay any call or instalment in the manner and at
the time appointed for payment; or
the failure of any shareholder to comply with the
terms of Article 14 of the Company’s Articles of
Association (disclosure of beneficial interest).
»
The Company is not aware of any agreements
between shareholders which may result in
restrictions on the transfer of securities or on
voting rights.
The Directors have the authority to issue new shares
in the Company up to a maximum aggregate nominal
value of €7,300,785 (representing approximately 33%
of the A Ordinary Shares in issue as at the date of
the 2023 Annual General Meeting). This authority will
expire on the earlier of the conclusion of the 2024
Annual General Meeting (AGM) and close of business
on 26 July 2024 and it is intended to seek shareholder
approval to renew the authority at the AGM to be held
on 2 May 2024.
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 €1,106,179
(representing approximately 5% of the A Ordinary
Shares in issue) at the AGM held on 27 April 2023.
Shareholders also approved an authority to allot
additional shares up to an aggregate nominal
amount of €1,106,179 (representing approximately
5% of the A Ordinary Shares in issue) 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 authority has been exercised to date and
both authorities will expire on the earlier of the
conclusion of the 2024 AGM and close of business
on 26 July 2024. It is intended to seek shareholder
approval for their renewal at the 2024 AGM.
114
During 2023, 179,441 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 2023 AGM,
shareholders passed a resolution authorising the
Company to purchase up to 10% of its own issued
share capital as at the date of the AGM. On 26
October 2023, the Company announced its intention
to launch a share buyback programme of up to
€300m representing approximately 2.3% of its shares
in issue at that date. The buyback programme is
underpinned by the Company’s strong balance sheet
and cashflow and is aligned to its capital allocation
policy. The buyback programme commenced on 1
November 2023 and is expected to be completed
by the end of April 2024. In the period from 1
November 2023 to 31 December 2023 the Company
purchased 1,373,261 shares returning a total of
€101.7m to shareholders. Since the year end, and
up to 31 January 2024, the Company has purchased
an additional 749,081 shares returning an additional
€58.9m to shareholders. All shares purchased under
the buyback programme are cancelled immediately.
This authority is due to expire on the earlier of the
conclusion of the 2024 AGM and close of business on
26 July 2024 and it is intended to seek shareholder
approval for its renewal at the 2024 AGM.
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
19,701,211
11.3%
8,833,317
5.0%
Apart from the aforementioned, the Company has
not been notified of any interest of 3% or more in the
issued share capital of the Company.
Directors
The Board, at the date of this report, consists of a
Chairman, three Executive and ten independent non-
Executive Directors. The names and biographical
details of the Directors are set out on pages 108-
111. In accordance with the Company’s Articles of
Association and Provision 18 of the Code, each of
the Directors individually retire at the AGM of the
Company and, where appropriate, submit themselves
for re-election.
Kerry Group Annual Report 2023 Directors' Report / Report of the Directors
No reappointment is automatic and all Directors
who intend to submit themselves for re-election are
subject to a full and rigorous evaluation. One of the
main purposes of the evaluation is to assess each
Director’s suitability for re-election. If a Director is
not deemed to be effective in carrying out his or
her required duties, the Board will not recommend
that Director for re-election. Following the individual
performance evaluation of all Directors, as outlined
in the Corporate Governance Report on page 132, 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 178.
Board and Committee Changes
Mr. Patrick Rohan was appointed to the Board on 16
January 2023.
Dr. Genevieve Berger and Professor Catherine
Godson joined the Board on 1 November 2023.
Ms. Liz Hewitt will join the Board and the Audit
Committee with effect from 1 March 2024.
A standalone Sustainability Committee was
established on 1 August 2023. Four independent
non-Executive Directors; Ms. Fiona Dawson
(Chairperson), Dr. Karin Dorrepaal, Mr. Christopher
Rogers and Mr. Patrick Rohan were appointed to the
Committee on the same date.
Following the establishment of the Sustainability
Committee, the Governance, Nomination and
Sustainability Committee was renamed the
Governance and Nomination Committee.
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 and
Nomination Committee Report.
Corporate Governance
The Corporate Governance Report on pages 118-134
sets out the Company’s application of the Principles,
and compliance with the Provisions of the UK
Corporate Governance Code and the Irish Corporate
Governance 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 & 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 46-91, Our Business Model on
pages 24-25, the Risk Management Report on pages
92-105. Information on diversity can be found in the
Governance and Nomination Committee Report on
pages 141-147, Our People on pages 14-23 and the
Sustainability Review on page 59.
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 as
issued by the IASB ('IFRS Accounting Standards') and
International Financial Reporting Standards (IFRS)
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
IFRS Accounting Standards and IFRS 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 Accounting Standards and IFRS 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.
115
Kerry Group Annual Report 2023 Directors' Report / Report of the Directors
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 IFRS Accounting Standards and
IFRS 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.
Each of the Directors, whose names and functions are
listed on page 112, confirms that, to the best of their
knowledge and belief:
»
»
»
the Consolidated Financial Statements for the year
ended 31 December 2023 have been prepared in
accordance with IFRS Accounting Standards and
IFRS 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 IFRS Accounting Standards
and IFRS 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 2023;
the Financial and Business Reviews on pages
36-45 include a fair review of the development
and performance of the business for the year
ended 31 December 2023 and the position of the
Company and the Group at the year end;
116
»
»
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.
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 115-116 with the
responsibilities of the Company’s external Auditors
outlined on pages 184-191.
The Financial Statements on pages 192-268 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.
Kerry Group Annual Report 2023 Directors' Report / Report of the Directors
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 Memorandum and Articles of
Association can be obtained from the Company’s
website kerry.com.
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
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.
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 credit rating
assigned to the notes to below investment grade.
(1)
(2)
(3)
(4)
Interest capitalised
Publication of
unaudited financial
information
Details of small
related party
transactions
Details of long-term
incentive schemes
Statement of
accounting
policies
Supplementary
information
Note 33 to
the financial
statements
Remuneration
Committee
Report
Not applicable
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:
»
»
entered into a definitive agreement to acquire
part of the global lactase enzyme business of
Chr. Hansen Holding A/S and Novozymes A/S
on a carve out basis. See note 34 in the financial
statements for further details;
repurchased 749,081 shares at a cost of €58.9m
up to 31 January 2024; and
» proposed a final dividend of 80.80 cent per A
Ordinary Share.
(5) – (14)
Section 5 - 14 of
Listing Rule 6.1.77
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
Edmond Scanlon
Chief Executive Officer
14 February 2024
14 February 2024
117
Kerry Group Annual Report 2023
Directors' Report / Corporate Governance Report
GOVERNANCE REPORT
Corporate Governance Report
Dear Shareholder,
I am pleased to present the Kerry
Group Corporate Governance
Report for the year ended 31
December 2023.
The Corporate Governance Report describes how
we apply the main Principles of good governance as
set out in the UK Corporate Governance Code and
the Irish Corporate Governance Annex (together 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. For further information
refer to the Compliance Statement on page 122.
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 2023, 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 and decision making. Details of
stakeholder engagement activities during the year,
including the work of the designated Workforce
Engagement Director, are outlined on pages 123-128.
The Board, in conjunction with the Governance and
Nomination Committee, ensures that there are
robust plans in place to facilitate Board, Executive
and senior management succession. During 2023,
following the appointment of Mr. Patrick Rohan in
January, the Board appointed two additional non-
Executive Directors in November; Dr. Genevieve
Berger and Professor Catherine Godson, who bring
skills and experience that are reflective of the Group’s
strategic priorities. Details of the non-Executive
Director and Committee changes that occurred
during the year, are set out in the Governance and
Nomination Committee Report on page 146.
118
The Board recognises its role in providing
guidance and strategic oversight in relation to the
implementation of the Group’s Beyond the Horizon
sustainability strategy. During the year, a separate
Sustainability Committee was constituted. This
Committee monitored how the implementation
of the Beyond the Horizon sustainability strategy is
progressing, reviewed performance achieved versus
agreed sustainability-related commitments and
targets, and together with the Audit Committee,
approved the sustainability-related reporting
disclosures included in the 2023 Annual Report
as well as the 2023 Sustainability Report, which is
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 and Nomination Committee for a
number of years and also continues to be a key
factor when considering Board and Committee
refreshment. During 2023, the Committee also
monitored the progress made against the diversity
targets at senior management level to ensure the
appropriate level of skills and diversity exist, 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. I am pleased to say
that the Board now has 43% female representation
and plans to maintain female representation at a
minimum level of 40% going forward.
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 the Executive
Leadership Team in 2024.
Each year, the Board undertakes a formal evaluation
of its effectiveness and that of its Committees. In
2023, the evaluation was an internal self-assessment
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 132.
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
Kerry Group Annual Report 2023
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
Finance
Committee
(page 41)
Risk
Oversight
Committee
(page 93)
Sustainability
Executive
Committee
(pages 71)
Business
Integrity
Committee
(page 57)
Audit
Committee
(page 135)
Governance
and Nomination
Committee
(page 141)
Sustainability
Committee
(page 148)
Remuneration
Committee
(page 150)
Board Role and Operations
The Board currently comprises 14 members: a non-
Executive Chairman, Chief Executive Officer, Chief
Financial Officer, one other Executive Director, and
ten non-Executive Directors.
The Directors are of the opinion that the composition
of the Board provides the extensive, relevant
business experience needed to oversee the effective
operation of the Group’s activities and that the
individual Directors bring a diverse range of skills,
knowledge and experience, including financial as well
as industry, scientific 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.
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.
»
»
»
»
119
Kerry Group Annual Report 2023
Directors' Report / Corporate Governance Report
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
enable them to fulfil their duties as a Director. All
Directors participate in strategy discussions, trading
updates, financial performance, significant risks
and operational activities, in addition to discussions
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 also
holds informal meetings and calls with non-Executive
Directors without the Executive Directors present 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
The Board collaborated with Executive Management
in the development of the Group’s updated strategy
and associated mid-term financial targets which
were published in late 2021. During 2023, 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 completed during the year. M&A
transactions have been a significant factor in recent
years as the Group evolves its technology portfolio,
investing in businesses more aligned with the
Group’s strategic growth priorities and exiting non-
strategic businesses. As a result of this M&A activity,
the Group has further strengthened its sustainable
nutrition capabilities and has better positioned itself
for long-term organic growth.
Presentations were received from the Company’s
advisors throughout the year on matters such
as digital risks and opportunities, geopolitical,
macroeconomic and emerging markets updates,
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 will
continue to be the key drivers of growth and
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 28-33.
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, and in
particular the values of Ownership, Inclusiveness and
Enterprising Spirit, were very much in mind when we
made the decision to seek shareholder approval to
launch an All Employee Share Plan. Our Purpose of
Inspiring Food, Nourishing Life guided our actions as
we approved acquisitions and divestitures, further
focusing our portfolio and capabilities behind our
sustainable nutrition ambitions. Our purpose also
guided our capital allocation decisions to expand
our Taste capability in Asia and Africa. Further details
of the Group’s purpose and values are outlined on
pages 14-23.
120
Kerry Group Annual Report 2023 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 wishing
to raise concerns, including Leader Pulse Checks,
town halls, the OurVoice employee engagement
survey, the Group’s Speak Up arrangements
and feedback from the designated Workforce
Engagement Director. Arising from the assessments,
the Board agreed to the establishment of an
executive Business Integrity Committee which
now oversees compliance with expected ethical
standards including those set out in the Group’s
Code of Conduct. The Board also determined that
the enhanced Speak Up procedures and channel,
introduced in 2021 continue to operate 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 digital
strategy as well as receiving updates on
cybersecurity risks and on the risks and
opportunities associated with Generative AI
initiatives;
reviewed and approved the Group’s strategy
relating to mergers, acquisitions and divestitures;
and
» monitored the implementation of the Group’s
Beyond the Horizon sustainability strategy.
Operational/Commercial
»
received regular updates from the Executive
Directors on the mitigating actions taken to
counter ongoing input cost inflation and the
impacts of the uncertain and challenging macro-
economic environment;
received updates from the Chief Operations
Officer and FSQ and EHS teams on the structures,
processes and controls in place to ensure that
Kerry operates to the highest standards from
a food safety as well as a health and safety
perspective;
received an update from the Chief Operations
Officer and Head of Supply Chain on process
improvements implemented in response to global
supply chain challenges;
approved M&A transactions 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 uncertain and challenging
macroeconomic environment;
» monitored the progress against the targets
»
»
»
»
»
»
»
included in the Beyond the Horizon sustainability
strategy;
received updates on the progress being made
under the Group’s Accelerate Operational
Excellence programme;
received regular reports from the Chief Financial
Officer on Investor Relations activities and share
price performance;
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 a share buyback programme of up
to €300m;
approved the going concern basis of accounting
and the long-term viability statement; and
approved the Group Budget for the 2024
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.
»
»
»
121
Kerry Group Annual Report 2023 The UK Corporate Governance Code
and the Irish Corporate Governance
Annex – Compliance Statement
Kerry applied the main Principles of the UK
Corporate Governance Code and the Irish
Corporate Governance Annex (together the
“Code”) and complied with all the Provisions
throughout FY23.
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
Pages
Board leadership and
company purpose
119-122
Division of responsibilities 108-111 and 129-130
Composition, succession
and evaluation
131-133 and 141-147
Audit, risk and
internal control
Remuneration
133-140
150-181
Directors' Report / Corporate Governance Report
»
»
»
»
»
»
»
»
»
»
»
»
»
»
Governance and Stakeholders
»
received regular reports from the Chairman
of the Governance and Nomination Committee
on its activities;
approved the appointment of a new Senior
Independent Director and a new designated
Workforce Engagement Director;
approved the appointment of Mr. Patrick Rohan,
Dr. Genevieve Berger and Professor Catherine
Godson as non-Executive Directors;
approved the establishment of a new, dedicated
Sustainability Committee as well as changes to
the composition of other Board Committees;
conducted an internal self-assessment Board
evaluation and considered its outcome;
considered compliance with the UK Corporate
Governance Code and the Irish Corporate
Governance Annex;
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 and training 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;
approved the changes to the new Remuneration
Policy to be put to an advisory vote at the
2024 AGM;
approved the terms of an All-Employee Share
Plan which was adopted by shareholders at the
2023 AGM;
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 128;
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.
122
Kerry Group Annual Report 2023
Directors' Report / Corporate Governance Report
Stakeholder Engagement
The Board acknowledges the importance of considering 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 Group. 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.
How We Engage
The Board ensures it has an effective channel
of communication with existing and potential
shareholders.
The Investor Relations team and Executive Directors
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 2023, meetings were held with over 1,000
investors. Kerry’s Investor Relations team and
Executives participated at 17 investor conferences
and external investor events as well as hosting five
investor events at Kerry facilities. Shareholders
were also invited to participate in Kerry’s updated
materiality assessment, helping to determine
sustainability areas of priority for the Group and
supporting our preparation for disclosures under the
Corporate Sustainability Reporting Directive (CSRD).
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, capital allocation decision making in
light of higher interest rates, share price performance,
marketplace dynamics and industry consolidation, in
addition to sustainability strategy and ESG matters.
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.
The Chairman engaged with various institutional
shareholders across the year to discuss governance-
related matters. When necessary, Committee Chairs
engage with shareholders on specific topics. During
the year, the Remuneration Committee Chairperson
engaged with a number of large institutional
shareholders in relation to Executive Director
remuneration policy. Arising from the matters
discussed, feedback is provided to the Directors to
inform decision making.
The 2023 AGM was held in Tralee Co. Kerry. 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.
The ongoing investor engagement programme
is reviewed throughout the year by the Board.
The programme this year included the hosting of
five tailored investor events at the Group's Global
Innovation Centre in Naas and Regional Technology
and Innovation Centre in Beloit. These immersive
customer-type experiences facilitate investors gaining
a deeper understanding of Kerry’s business model, as
well as its unique positioning within the industry.
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. The Board
approved acquisitions aligned to these priorities
during the year, while overseeing the disposal of the
Sweet Ingredients Portfolio. The Board also approved
the share buyback programme, which commenced in
November. Successful delivery of the Group’s strategy
promotes the long-term success of the Group and
also benefits shareholders, employees and the
communities in which it operates.
123
Kerry Group Annual Report 2023 Directors' Report / Corporate Governance Report
Employees
Why We Engage
Consistently connecting with employees is crucial
for attracting, nurturing, and retaining a skilled,
committed, inspired and diverse workforce. This,
in turn, guarantees the effective execution of our
strategy and the fulfillment of our purpose.
How We Engage
Dr. Karin Dorrepaal, the designated Workforce
Engagement Director, directly interacted with
employees through a variety of channels, including
participation in Kerry employee events and site visits.
Details of these activities are outlined on page 128.
Each year, the Group conducts routine two-way
communication initiatives with our 21,000+ employees,
such as Townhall meetings and discussions on
career development. This included several CEO
specific engagements, fostering a transparent and
communicative culture that extends across all levels
of our organisation. The primary purpose of our CEO
engagements is to align our people with Kerry’s vision,
purpose and values and ensure our people feel part
of our journey towards creating a world of sustainable
nutrition. Furthermore, CEO engagements provide
a platform for our colleagues to voice their ideas,
perspectives and provide feedback. This sets the tone
for a collaborative and inclusive workplace environment
where innovation and continuous improvement can
thrive. Ultimately, these engagements contribute to
a more motivated and connected workforce, working
together to drive the success of Kerry.
Examples of some of these events included sharing
Group results, Inspiring People awards, and strategy
updates. In addition, our CEO takes the opportunity
to meet with a range of employees in-person, when
travelling to sites across our regions.
Kerry’s Speak Up channel enables employees and
other stakeholders to report concerns confidentially
and safely, allowing for timely and suitable actions
to be taken.
In line with our engagement strategy, we completed
a Plant Leader Pulse survey to understand key areas
of focus for this population and continued to provide
ongoing support for people leaders and employees
through our Learning and Leadership Academies.
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 2023, the Group continued to build improved
communication channels with employees through our
dedicated, digital employee communication platform.
In addition, employees provided input on areas of
sustainability impact, risk and opportunities for our
business as part of our materiality assessment process.
Key Outputs from the Engagement
Key topics for employees included Diversity, Inclusion
and Belonging (DI&B) and understanding how
employees’ roles contribute to the Group’s success,
helping to make Kerry a better place to work for
employees at all levels.
124
Our Actions and their Impacts
Continuing in her tenure as designated Workforce
Engagement Director, Dr. Karin Dorrepaal visited two
foundational technology sites to meet with employees
and management, and to get a closer insight into
how our strategy and values come to life as well
as receiving feedback on the onboarding process
for employees who join the Group by way of an
acquisition. Karin consistently shared feedback with
the Board regarding employee engagement initiatives
and overall employee sentiment, contributing
valuable insights to inform decision making.
The Board also received regular updates from the
Chief Executive Officer, Chief Human Resources
Officer and Chief Operations Officer on the health,
safety and wellbeing of employees. In line with
our Safety First, Quality Always ethos, the Board
ensured that appropriate structures, processes and
controls are in place to reinforce a culture of safety
at work particularly given the loss of a colleague
to a workplace fatality during the year. The Board
monitored the level of workplace incidents that
occurred during 2023, and noted the reduction of the
Total Incident Rate to below 1.
The Board again requested and received feedback on
how the Group is supporting employees, in particular
those in lower-paid positions or based in inflationary
economies, through the cost-of-living crisis and took
this into account when approving the 2024 budget.
The Board continues to prioritise DI&B which is a key
imperative, and in 2023, it was pleased to see positive
momentum towards the Group’s commitment to
nurturing a highly-inclusive workplace where all our
people can be at their best, contribute to our success
and excel personally and professionally. The Board
monitors gender representation across leadership
levels and gender pay equity at all levels across the
organisation. It also reviews progress on improving
the number of leaders from diverse backgrounds in
leadership roles. If sufficient progress is not being
made to achieve the agreed DI&B goals, the Board
ensures that corrective action is taken.
During the year, the Board received updates on the
Women in Leadership programme, launched initially
in Europe in 2023, in line with its objective of ensuring
that the Group accelerates the development of female
talent to build a more balanced succession and
future talent pipeline. The Board also approved Kerry
becoming a signatory of the Women’s Empowerment
Principles established by the United Nations (UN)
Global Compact and UN Women.
Finally, 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.
Details of employee engagement activities are outlined
in Our People on pages 14-23, the Sustainability Review
on pages 46-91 and the separate Sustainability Report
which can be found on the Group’s website.
Kerry Group Annual Report 2023 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, custom-designed digital interfaces,
customer and industry conferences as well as tailored
innovation forums and customer engagement
sessions at the Group’s Technology and Innovation
Centres. Kerry also engages with customers through
the annual Voice of Customer Survey, a personal
and anonymous request to customers to indicate
their loyalty (NPS – Net Promotor Score) and provide
constructive feedback, which enables Kerry to identify
opportunities to improve our products, solutions,
service and overall customer experience.
Our market research and consumer insight teams
study consumer behaviours and perceptions and
share these insights with our customers. By way of
example, Kerry’s Left on the Shelf research concluded
that 87% of global consumers are actively trying to
reduce waste, a concern that has intensified over the
past two years, prompting a pressing call to action for
the food and beverage industry.
In 2023, customers across different regions and
channels were invited to share their views on the
most material sustainability topics for Kerry,
helping to inform priority areas within our updated
materiality assessment.
The Kerry Health and Nutrition Institute® shares
Kerry’s scientific expertise with those within the
sector 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, changing consumer needs and
preferences as well as regulatory changes, particularly
in relation to sustainable nutrition and food systems.
Our customers want innovative sustainable nutrition
solutions that enhance health and wellbeing while
reducing the impact that their production activities have
on the planet and in particular on climate change and
food waste. These topics were reinforced through input
received during our materiality assessment process.
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 €301m
on research and development 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 periods of heightened
inflation and enables them to produce food products in
a more environmentally-sustainable manner.
The Board also approved investment in the Group’s
digital strategy, various supply chain function initiatives
and employee training programmes to improve
the overall customer experience through real time
information sharing, automation, reduced product
development and delivery lead times as well as
enhanced service levels. By way of example, the Board
approved an investment in a global customer care
portal which provides real-time visibility of customer
information to safeguard against potential issues and
empower Customer Care Teams to be more proactive
and responsive to deliver customer service excellence.
As a result of these investments, the Group has
improved its fulfillment reliability (as measured by OTIF
- On Time in Full) and has seen an increase in NPS.
During 2023, the Board approved acquisitions with
a total cost of €210m and gross capital expenditure
of €310m. All of these decisions are aligned to
the Group’s strategic priorities and support the
development of our business to best meet our
customer’s needs.
The Board received regular updates on the divestment
process for the Sweet Ingredients Portfolio and was
satisfied that the transfer of the customer base was
completed smoothly and successfully thereby helping
to ensure a successful transition of the business to its
new owner.
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 24-25, Strategy and Financial Targets on pages
32-33, the Sustainability Review on pages 46-91 and
the 2023 Sustainability Report on the Group’s website.
125
Kerry Group Annual Report 2023 Directors' Report / Corporate Governance Report
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, multistakeholder forums and participation
at industry conferences. Suppliers can also raise
matters of concern via the Group’s Speak Up
whistleblowing service.
In 2023, selected suppliers were also invited to share
their views on the importance of key sustainability
topics, as part of the Group’s updated materiality
assessment.
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.
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 directs that the organisation
works with suppliers who provide raw materials to the
required safety and quality standards, produced on a
sustainable basis and with proper consideration of the
fair treatment of workers across the supply chain. In
2023, this included training for suppliers in our APMEA
and LATAM regions relating to the Group’s requirements
on social compliance and focused engagement in
multi-stakeholder platforms, to understand supplier
challenges and develop collaborative solutions to deliver
on our climate objectives.
During the year, the Board approved additional funding
for 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 footprint, in support of targets
set for agriculture by the Irish Government.
Throughout the year the Board received updates
on compliance with the Group’s Code of Conduct
thus ensuring sound decision making in line with
the highest ethical standards including in relation to
responsible sourcing.
Further details on our responsible sourcing strategy
are outlined in the Sustainability Review on pages
46-91 and the 2023 Sustainability Report on the
Group’s website.
126
Kerry Group Annual Report 2023
Directors' Report / Corporate Governance Report
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.
In 2023, a number of these organisations
participated in our materiality assessment,
providing expert input and representing the views
of community stakeholders on important social and
environmental topics.
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 positive and
balanced 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 2023, the Board approved the 2023
MyCommunity programme which provided financial aid
to those carrying out disaster relief efforts in Turkey and
Syria; supported the Selo Amor Espresso programme in
Campinas, Brazil, which empowers women in vulnerable
situations by providing work opportunities through
barista training; provided funding and volunteering to
support the local community in Mozzo, Italy, that were
affected by deadly floods; packed almost 800,000 meals
by over 100 volunteers from our site in Beloit, US, for
children in Zambia, Dominican Republic and Equador;
and provided volunteers and monetary support to
Eat Up, a charity in Australia that makes and delivers
lunches directly to schools for vulnerable children.
The Board also approved funding for Kerry’s Project
Amata in Burundi and Kerry’s ALIVE Programme with
Concern Worldwide.
Further details of these engagements and the Group’s
MyCommunity programme are outlined in the
Sustainability Review on pages 46-91.
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.
127
Kerry Group Annual Report 2023
Directors' Report / Corporate Governance Report
Governance in Action
Designated Workforce Engagement Director –
Activities in 2023
Dr. Karin Dorrepaal continued in the role of
designated Workforce Engagement Director in
2023. Following on the success of her 2022 tenure,
Karin continued her focus on employee-related
matters. In order to assess employee sentiment
at various employee levels, Karin participated
in numerous Kerry employee events and visited
manufacturing plants as follows:
» Attendance and involvement in regional and
global events focused on equality, including
joining the panel for the International Day
of Women & Girls in Science, sharing her
perspective on the ‘Embracing Equity’ theme
during the International Women’s Day webinar
and participating in the graduation of Kerry’s
first Women in Leadership programme;
» Plant visits to Barcelona, Spain and Tiel, the
Netherlands, continuing Karin’s focus on
“Engagement through the lens of a Kerry
Manufacturing Plant”. During these visits,
Karin had the opportunity to meet employees,
understand how the plant is executing Kerry’s
strategy and making progress against their
employee engagement actions for the year;
Joining the annual Inspiring People awards,
which celebrated a diverse representation of
both nominees and winners across functions
and regions; and
»
» Meeting with Kerry’s third-party employee
engagement survey provider, to better
understand Kerry’s progress in the space and
to identify key focus areas ahead of kicking off
engagement activities for 2024.
Global Priorities for Employee Engagement
in 2023
This year we continued to make progress
against our three engagement pillars: ‘Making
it Better, Making it Clearer and Making it Easier’.
These pillars set the foundation for action plans
across Kerry to continue to make Kerry a great
place to work.
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 our global and
regional talent agendas, we have made marked
progress against this pillar in 2023.
Making it Clearer focuses on Kerry’s vision, brand
and strategy. Through our continued efforts to
drive awareness and clarity on our strategy, we
ensure Kerry’s vision and purpose are at the heart
of all decision making.
Our final pillar, Making it Easier, focuses on our
ambition to simplify and optimise our ways of
working. Following the success of our business
transformation activities and focus on digital, we
continue to improve at all levels.
Dr. Karin Dorrepaal held regular meetings with
the Chief Human Resources Officer and the Group
Human Resources Team. The Board received two
scheduled updates from the designated Workforce
Engagement Director during the year on the
activities conducted and the feedback received
from employees. In addition, the Workforce
Engagement Director provided input from an
employee perspective during all Board discussions
and when the Board made key decisions.
128
Kerry Group Annual Report 2023
Directors' Report / Corporate Governance Report
Annual General Meeting
All Directors attend the AGM and are available to
meet with shareholders and answer questions as
required. Notice of the AGM, Form of Proxy 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 matter including
a particular resolution relating to the adoption of
the Directors’ and Auditors’ reports and the financial
statements. Details of the proxy votes received 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 27 April 2023, there were no
material votes cast against any resolutions.
Whistleblowing Arrangement
The Group’s whistleblowing arrangement includes
an externally-facilitated multi-lingual reporting
service “Speak Up” through which all employees and
third parties can raise concerns in confidence about
possible wrong doings in financial reporting and
other matters. These facilities are available 24 hours
a day by phone or online.
All whistleblowing incidents are reviewed by the
Business Integrity Committee as well as by the
Legal and Ethical Compliance team and formally
investigated by the relevant functional heads
depending on the nature of the concern raised.
In 2023, 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.
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 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 and Nomination
Committee on an ongoing basis in accordance with
its Terms of Reference.
All Directors must seek prior approval of the Board
in advance of undertaking any additional external
appointments. Before approving any additional
external appointment, the Board considers the time
commitment required for the role. Each proposed
external appointment is reviewed independently.
129
Kerry Group Annual Report 2023 Directors' Report / Corporate Governance Report
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 judgement and character.
Dr. Hugh Brady has served in excess of nine years as
a Director with effect from 23 February 2023. Having
conducted a rigorous review, the Board unanimously
agreed that Dr. Brady should remain on the Board
until the conclusion of the AGM in May 2024. His
re-election as a non-Executive Director was strongly
supported by shareholders at the 2023 AGM. Dr.
Karin Dorrepaal has served on the Board for nine
years with effect from 31 December 2023. Having
conducted a rigorous review, the Board unanimously
agreed that Dr. Dorrepaal should also remain on
the Board until the conclusion of the AGM in May
2024. The Board is satisfied that Dr. Brady and Dr.
Dorrepaal, given their personal attributes and the
challenges they bring to Board discussions, continue
to apply objective and independent judgement to act
in the best interest of the Company.
As disclosed in note 33 to the Financial Statements,
Mr. Patrick Rohan, in the ordinary course of business
as a farmer, trades on standard commercial terms
with the Group’s Dairy Ireland business. Given the
small quantum involved, the fact that all trading is on
standard commercial terms and Mr. Rohan’s personal
attributes, the Board, having conducted a rigorous
review, is satisfied that Mr. Rohan applies objective
and independent judgement to act in the best
interest of the Company.
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 four Committees, the Audit
Committee, the Governance and Nomination
Committee, the 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 135-181 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.
130
Kerry Group Annual Report 2023 Directors' Report / Corporate Governance Report
A total of 14 Board meetings were held in 2023. Individual attendance at the Board and Committee meetings is
set out in the following table.
Directors
Board
Audit
Committee
Governance and
Nomination Committee
Sustainability
Committee
Remuneration
Committee
Tom Moran
Edmond Scanlon¹
Marguerite Larkin¹
Gerry Behan¹
Hugh Brady
Genevieve Berger2
Fiona Dawson
Karin Dorrepaal3
Emer Gilvarry
Catherine Godson2
Michael Kerr3
14/14
14/14
14/14
14/14
14/14
1/1
14/14
13/14
14/14
1/1
13/14
Christopher Rogers
14/14
Patrick Rohan
Jinlong Wang3,4
14/14
13/14
–
–
–
–
6/6
–
–
6/6
6/6
6/6
–
5/6
6/6
–
–
–
6/6
–
6/6
–
6/6
–
–
–
–
–
–
–
–
2/2
2/2
–
–
2/2
2/2
–
–
–
–
–
–
5/5
5/5
5/5
–
5/5
–
–
1 Executive Directors.
2 Genevieve Berger and Catherine Godson were appointed on 1 November 2023.
3 Karin Dorrepaal, Michael Kerr and Jinlong Wang were each unable to attend one Board meeting due to diary conflicts.
4 Jinlong Wang missed one Audit 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
Mr. Patrick Rohan are included below:
Governance in Action (Example):
New Director Induction
Mr. Patrick Rohan was appointed to the Board on 16 January 2023. Following his appointment, Mr. Rohan
underwent a formal induction programme which was tailored to his individual requirements and included
the following induction activities.
Induction Activities
» provision of a detailed information pack including key corporate governance policies, Board papers,
financial and strategic documents and information on directors’ duties and responsibilities;
» meetings with the Executive Directors;
» meetings with the Chairman, the Senior Independent Director, 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; and
» meetings with business leaders of the Taste & Nutrition and the Dairy Ireland businesses to obtain an
overview of each business.
Future Induction Activities
»
site visits to see first-hand the Group’s operations while engaging with employees and senior management.
131
Kerry Group Annual Report 2023
Directors' Report / Corporate Governance Report
Dr. Genevieve Berger and Professor Catherine
Godson, who were appointed to the Board on 1
November 2023, are in the process of completing a
full, formal, induction programme tailored to their
individual needs.
Throughout the year, the Board 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 enable non-Executive Directors to
further develop their understanding of the Group’s
activities and to meet with local senior management
and emerging talent. In June 2023, the ‘off-site’ Board
meeting took place in Indonesia. During the visit
the Board had the opportunity to meet and engage
with the Asia Pacific Middle East & Africa (APMEA)
Leadership team and emerging talent in both
formal and informal settings. The Board attended
the official opening of the newly built, state of the
art taste manufacturing facility just outside Jakarta,
during which the Board members saw first-hand the
positive impact of the capital investment they had
approved. During the visit, the Board also received
presentations on the dynamics and priorities of
the APMEA market and participated in a customer
immersion experience 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. 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 2023, the Board conducted an internal self-
evaluation of the performance of the Board, Board
Committees, the Chairman and Individual Directors
against a set of pre-defined key criteria. The review
was led by the Chairman of the Board and the Senior
Independent Director and was facilitated by the
Company Secretary. The review was undertaken
using Thinking Board, Independent Audit Limited’s
governance self-assessment process. Independent
Audit Limited, based in the UK, is recognised as a
leading firm of board reviewers, and has no other
connections to the Group.
Topics covered during the Board Performance
Evaluation included development and
implementation of strategy, Board composition,
succession planning at Board and senior
management level, financial oversight, risk
management, people and culture, Board meetings
and papers, Board training, Committee performance
and stakeholder engagement.
The Chairman met each of the non-Executive
Directors individually and appraised their
performance. The key areas reviewed were
independence, contribution and attendance at
Board meetings, interaction with Executive Directors
and other non-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 and included
feedback from all Directors on the Chairman’s
performance during the year.
132
Kerry Group Annual Report 2023
Directors' Report / Corporate Governance Report
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 each Executive Director.
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 2023 performance evaluation included
recommendations relating to Board training, Board
and executive succession planning, stakeholder
engagement and the appropriate time allocation
between strategic priorities and other matters at
Board meetings.
Progress against recommendations from the
previous external 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 2023 evaluation report, and areas for
consideration arising from the Directors’ appraisal
where identified, will be considered during 2024.
In line with the requirements of the Code, the next
externally-facilitated performance evaluation of the
Board will occur in 2025, three years after the last
externally-facilitated evaluation in 2022.
Audit, Risk and Internal Control
Risk Management and Internal Controls
The internal control framework in the 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 135-140.
Full details of the risk management systems
are described in the Risk Management Report on
pages 92-105.
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 97-103. 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 95-96. 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 2023, 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.
133
Kerry Group Annual Report 2023
Directors' Report / Corporate Governance Report
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
two Global 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 137.
134
Kerry Group Annual Report 2023 Directors' Report / Audit Committee Report
GOVERNANCE REPORT
Audit Committee Report
Dear Shareholder,
On behalf of the Audit Committee,
I am pleased to present our report
for the year ended 31 December
2023. The purpose of the report
is to summarise the work of the
Committee during the year and set
out our priorities for the year ahead.
The Committee supports the Board in meeting a
number of its corporate governance responsibilities
including oversight of the Group's external reporting,
reviewing and monitoring the effectiveness of the
Group’s risk management and internal control
processes, overseeing the relationship with the
Group's external auditor and monitoring, reviewing
and assessing the effectiveness of the Group's
internal audit function.
During the year, the Committee supported the
Board in monitoring and assessing the principal
and emerging risks facing the Group. This included
consideration of the impact of climate-related risks
on the Group’s accounting judgements, disclosures
and financial statements. The Committee also
considered an assessment of the Group’s risk
management and internal control systems including
financial, operational and compliance controls
and concluded that the Group’s internal control
environment continues to be effective. Each regular
meeting included deep-dive updates on risk and
compliance related activities and further details with
regard to these matters are set out on page 136.
A key area of responsibility and focus for the
Committee each year is to monitor the integrity
of the Group’s Financial Statements and
announcements relating to the Group’s financial
and non-financial performance.
The Committee reviewed the work completed by
management in respect of the Going Concern and
Viability Statements, including a consideration
of ongoing 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. The Committee, in conjunction
with the Sustainability Committee, also considered
the Group’s readiness to meet more extensive
sustainability reporting obligations, including the
Corporate Sustainability Reporting Directive (CSRD),
which will come into effect from 2024 onwards. The
significant matters that the Committee considered
in relation to the financial statements and how these
were addressed are set out on page 137.
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 2023 external 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 139.
As outlined on page 140, 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.
Looking ahead to 2024, the Committee’s primary
focus will remain consistent with those for the
year under review: providing effective oversight of
the Group’s risk management and internal control
processes, monitoring the Group’s external financial
and non-financial reporting and supporting the work
of the Group’s internal and external auditors. 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 and
informative, and, as ever, I welcome any feedback
from shareholders on the report.
Christopher Rogers
Chairman of the Audit Committee
135
Kerry Group Annual Report 2023 Committee Evaluation
As outlined in detail on page 132, an internal
evaluation of Board effectiveness included a review
by the Committee of its own effectiveness. The
output was discussed by the Committee and it was
concluded that the Committee continued to operate
effectively throughout the year as well as identifying
ongoing areas of focus for the 2024 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
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.
The Committee considered the impact of climate
change on the Group’s Consolidated Financial
Statements and agreed that the disclosures
outlined on pages 70-83 made in response to the
recommendations of the Task Force on Climate-
related Financial Disclosures (TCFD) 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 2023.
Directors' Report / Audit Committee Report
Roles and Responsibilities
The main roles and responsibilities of the Committee,
which reflect the UK Corporate Governance Code
and the Irish Annex and the Guidance on Audit
Committees, are set out in its written Terms of
Reference which are available from the Group’s
website kerry.com or upon request.
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 Committee Chairman, Mr. Christopher Rogers,
is a Fellow of Chartered Accountants England and
Wales and has significant financial experience in
several sectors. Both he and Mr. Michael Kerr are
considered to 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 108-111, 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
131. 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 matters which have been discussed.
136
Kerry Group Annual Report 2023 Directors' Report / Audit Committee Report
SIGNIFICANT AREAS OF FOCUS
Impairment
of Goodwill
and Indefinite
Life Intangible
Assets
Going
Concern and
Viability
Statement
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 €5.0 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.
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 climate-related risks and their
potential impact on future profitability and liquidity. 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
As in previous years, at the request of the Board, the
Audit Committee undertook a review of 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 governance structure and 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 2023
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. The
Committee also received confirmation that the other
Board Committees had signed off on each of its
respective Committee reports and reviewed other
sections for which it has responsibility under its
Terms of Reference.
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 provided assurance to the Board to assist
it in making the fair, balanced and understandable
statement required of it under the Code, which is set
out on page 116.
137
Kerry Group Annual Report 2023 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 92-93.
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 97-103;
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
updates on cyber and information systems
security, portfolio management and supply
chain resilience;
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 and the Group Financial Controller on
fraud investigations or other significant control
matters which occurred during the year and
approved plans to address and remediate the
issues identified;
received updates from the Ethics and Compliance
team in relation to the operation of the Group’s
whistleblowing arrangements;
received updates regarding upcoming regulatory
changes in sustainability reporting and the
Group's readiness to meet more extensive
reporting obligations, including the CSRD, which
will come into effect in the coming years;
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.
138
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
risks particularly in the context of the criticality of
ICT to the business and the ever-evolving nature of
cybersecurity threats. Further detail with regard to
the Group’s information systems and cybersecurity
controls are outlined on page 101 of the Risk Report.
The Audit Committee, having assessed the above
information, is satisfied that the internal control and
risk management framework is operating effectively
and has reported this opinion to the Board.
Internal Audit
The Audit Committee is responsible for monitoring
and reviewing the operation and effectiveness of the
Group Internal Audit function including its focus,
plans, activities and resources. To fulfil these duties
the Committee:
»
»
»
»
»
»
»
»
reviewed and approved the Group Internal Audit
function’s charter 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 2023 plan and
on the principal findings from the work of Internal
Audit and the status of 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;
ensured that the Head of Internal Audit
had access to the Chairman of the Board if
required; and
ensured co-ordination between Group Internal
Audit and the external auditor to maximise the
benefits from clear communication and co-
ordinated activities.
In order to comply with the Chartered Institute of
Internal Auditors (CIIA) requirements, an External
Quality Assessment (EQA) by an independent body
is conducted at least every five years to confirm
conformance with the International Standards for the
Professional Practice Framework (IPPF) of the CIIA.
The most recent EQA was performed in 2022 and the
next review will be completed in 2027. On an annual
basis, to ensure ongoing compliance with the IPPF,
the Group Internal Audit function has an internal
Quality Assurance and Improvement Program (QAIP)
in place, the results of which are reported to the
Audit Committee on a quarterly basis.
Kerry Group Annual Report 2023 Directors' Report / Audit Committee Report
On the basis of the above, the Committee concluded
that for 2023 the Group Internal Audit function
operated effectively and is satisfied that the
quality, experience and expertise of the function is
appropriate for the Group.
External Auditor
On behalf of the Board, the Audit Committee has
primary responsibility for overseeing the relationship
with, and performance of, the external auditor. This
includes making recommendations to the Board on
the appointment, re-appointment and removal of the
external auditor, assessing their independence and
effectiveness and approving the audit fee.
During the year, the Committee met with the
external auditor without management present to
discuss any issues that may have arisen during
the audit of the Group’s Consolidated Financial
Statements. In addition to this, the Committee
Chairman meets with the external auditor quarterly
and additional meetings or private sessions are
available upon request.
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
2023 is Paul Barrie who was appointed in July 2023
following the appointment of the previous partner,
Enda McDonagh, to the role of Managing Partner,
PwC Ireland. Enda was appointed as audit lead
engagement partner in 2021 following the
transition of the previous lead who had completed
his five-year term.
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 2023, 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.
Effectiveness
The Committee is committed to ensuring that
the Group receives a high-quality and effective
external audit. Post completion of the 2022 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
a hybrid working model for the audit 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 2023 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 2023 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.
139
Kerry Group Annual Report 2023 Directors' Report / Audit Committee Report
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.
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 2023, 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 129 and are also
described in our Code of Conduct, which is available
from the Group’s website kerry.com.
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.
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 2024.
The Audit Committee also approved the
remuneration of the external auditor, details of
which are set out in note 3 to the Consolidated
Financial Statements.
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.
140
Kerry Group Annual Report 2023 Directors' Report / Governance and Nomination Committee Report
GOVERNANCE REPORT
Governance and Nomination
Committee Report
Dear Shareholder,
On behalf of the Governance and
Nomination Committee, I am
pleased to present our report
for the year ended 31 December
2023. This report sets out the
Committee’s main areas of focus
over the past financial year.
The Committee is responsible for evaluating the
structure, size, composition and successional needs
of the Board and its Committees. Additionally, the
Committee is responsible for monitoring corporate
governance developments.
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.
Mr. Patrick Rohan joined the Board on 16 January
2023, and he brings a detailed knowledge of the
dairy and agribusiness industry reflective of the
Group’s heritage. To further progress Board diversity
and to enhance the non-Executive Directors’ skills
in the areas of food ingredients, food nutrition,
scientific research and finance, we engaged with an
executive recruitment consulting firm to conduct a
search for new independent non-Executive Directors
with profiles that match the needs identified. This
culminated in the appointment of Dr. Genevieve
Berger and Professor Catherine Godson to the
Board on 1 November 2023 and the announcement
that Ms. Liz Hewitt will join the Board on 1 March
2024. Collectively these new Board members
will bring relevant skills and experience to Board
discussions particularly in relation to the Group’s
strategic growth priorities.
Dr. Hugh Brady and Dr. Karin Dorrepaal, each having
served in excess of nine years, will not seek re-election
and will retire from the Board at the conclusion of
the AGM on 2 May 2024. Hugh will be succeeded as
Senior Independent Director (SID) by Mr. Christopher
Rogers, and Karin will be succeeded as designated
Workforce Engagement Director by Ms. Emer Gilvarry.
On behalf of the Board, I would like to thank Hugh
and Karin for their significant contribution and service
to the organisation over many years.
I will have served nine years as a Director,
including less than three years as Chairman, on
28 September 2024. The Committee is aware of
the Provisions of the Code in respect of Chairman
tenure and a formal succession process will be led by
Christopher as the incoming SID. Having conducted
a rigorous review, the Committee and the Board
have agreed, subject to shareholder approval, that
I continue as Chairman until the AGM in 2026 to
allow appropriate time for the new SID to identify a
successor and to enable an orderly transition to the
role. The Committee also noted the need for stability
given the high level of Board refreshment that
occurred in 2023 and the additional appointments/
retirements that will occur in 2024.
On the recommendation of the Committee, the
Board established a standalone Sustainability
Committee in 2023 which is chaired by Ms. Fiona
Dawson. Other changes to the composition of the
Board Committees are outlined on page 146.
During 2023 the Committee reviewed senior
leadership development and succession plans with
regard to business growth, geographic expansion
and diversity goals below Board level. In addition,
the Committee also reviewed the Company’s
corporate governance policy and processes and
monitored developments in corporate governance
best practice.
An externally facilitated self-assessment review of
the effectiveness of the Board and its Committees
was conducted during 2023 and the outcome of
this review is that the Board and its Committees are
operating effectively.
The Committee’s priorities for 2024 will continue
to focus on Board and Committee refreshment,
including Chair succession, as well as senior
leadership development and succession planning.
Finally, the Committee will also keep up to date
with evolving corporate governance requirements
including upcoming changes to the UK Corporate
Governance Code and to the Listing Rules.
Tom Moran
Chairman of the Governance and
Nomination Committee
141
Kerry Group Annual Report 2023 Directors' Report / Governance and Nomination Committee Report
Roles and Responsibilities
The main roles and responsibilities of the Committee,
which were reviewed and updated during 2023, are set
out in written terms of reference, which are available
in the governance section of the Group’s website
kerry.com or upon request. The Committee reviews
and refers any proposed amendments to its Terms of
Reference to the Board for approval annually.
Committee Membership
The Governance and Nomination Committee currently
comprises four 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 108-111.
The quorum for Committee meetings is two and
only Committee members are entitled to attend. No
Director attends discussions relating to their own
appointment. The Governance and Nomination
Committee may extend an invitation to other persons
to attend meetings or to be present for specific agenda
items as required. The Company Secretary acts as
Secretary of the Committee.
During 2023, the Committee continued to work with
Korn Ferry, an executive recruitment consulting firm,
to assist with Board refreshment. Korn Ferry acted
as the advisor to the Remuneration Committee until
April 2023 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 six times during the year and
attendance at these meetings is outlined on page 131.
Board Refreshment Policy
On an ongoing basis, the Governance and Nomination
Committee reviews and assesses the structure, size,
composition, diversity and overall balance of the
Board and makes recommendations to the Board
regarding refreshment.
Appointments to the Board are for an initial
three-year term, 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, considering 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 each individual Director
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 146-147.
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 at the AGM.
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.
142
Kerry Group Annual Report 2023 Directors' Report / Governance and Nomination Committee Report
Governance in Action (example)
Non-Executive Director Appointment
Dr Genevieve Berger and Professor Catherine Godson
were appointed to the Board with effect from 1
November 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
new non-Executive Directors with
food ingredients, food nutrition
and scientific research skills and
experience, and the capabilities to
align with the Group’s purpose,
values and culture. The Committee
also considered the Board’s
commitment to enhance the gender
profile of the Board in line with
developing best practice and new
regulatory requirements.
3. Search
The Committee instructed Korn Ferry
to conduct a search for appropriate
candidates for appointment to the
Board based on the profile and
skillset agreed by the Committee
4. Screening
The Committee assessed a long list
of candidates identified by Korn Ferry
as having met the criteria.
5. Interview
A shortlist of potential candidates
was interviewed by 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 Dr.
Genevieve Berger and Professor
Catherine Godson as non-Executive
Directors. The Board approved the
appointment of Dr. Genevieve Berger
and Professor Catherine Godson
noting that they had a balance of
skills, knowledge and experience
that matched the requirements set.
Appointment terms were drafted and
agreed with them.
Succession Planning
The Governance and Nomination 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,
challenges and opportunities facing the Group and
the skills, knowledge and experience required of
Board members.
The Committee also reviews succession plans for
senior leadership, 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
key roles, identifying and evaluating candidate pools
and aligning successor development activities with
individual and business needs to ensure leadership
continuity and to strengthen the quality of the
leadership succession pipeline.
This process is fully documented and monitored
throughout the year in conjunction with the
Committee. Details of succession planning activities
during the year are outlined in Our People on page 20.
Sustainability
During 2023, the Committee provided guidance
and oversight on the implementation of the Group’s
Beyond the Horizon sustainability strategy until the
standalone Sustainability Committee was established
on 1 August 2023 and took over this responsibility
from that date.
Details of the Group’s sustainability strategy, targets
and performance, policies and programmes are
outlined in the Sustainability Committee Report on
pages 148-149, the Sustainability Review on pages
46-91 and in the 2023 Sustainability Report that has
been published alongside the Annual Report and is
available for review on the Group's website kerry.com.
Corporate Governance Developments
During 2023, the Committee also continued to keep
up to date with existing and evolving corporate
governance requirements and ensured that Board and
Committee agendas were appropriately drafted to
include same.
Diversity, Inclusion and Belonging Policy
We are proud of our rich diversity at Kerry and strive
to ensure that we reflect the communities in which
we operate, across the globe. We embrace, celebrate
and harness our differences, seeking to foster an
inclusive and supportive work environment which is
positive and productive, and respectful of everyone.
We recognise the value that different perspectives and
cultures bring to Kerry and encourage individuals to
fully participate and contribute meaningfully to the
overall success of the Group.
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.
143
Kerry Group Annual Report 2023 3-5
26%
3-5
26%
6-10
33%
6-10
33%
11-20
8%
11-20
8%
56-60
17%
Directors' Report / Governance and Nomination Committee Report
56-60
17%
TitlTitlee
79%
40-55
25%
Further details of the Group’s approach to Diversity,
Inclusion and Belonging, including our broader
organisational goals focused on building an
inclusive and diverse workplace are outlined in our
Sustainability Report and in Our People on page 19.
TitlTitlee
79%
3-5
40-55
26%
25%
A summary of the Group’s current position relating
to Board and Executive Management diversity, in line
with the new listing requirements, is provided in the
table overleaf:
Executive/non-Executive Split
6-10
33%
11-20
8%
Board Age Profile (years)
Board Tenure Years
Within this, the Group seeks to recruit and retain the
best talent from diverse backgrounds who bring the
skills and experience necessary to drive innovative
thinking to enable Kerry to maintain a sustained
competitive advantage.
56-60
17%
TitlTitlee
79%
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, which was updated
during the year to include reference to the Board
Committees, differences in background, gender,
skills, experiences, nationality, ethnicity and
other attributes are considered in determining
the optimum composition of the Board and its
40-55
Committees with the aim being to balance it
25%
appropriately with different views and perspectives.
All Board appointments are made on merit, with
due regard to diversity. The Board currently has a
43% female representation, and this will increase
to 46% post announced appointments and planned
retirements following the conclusion of the 2024
AGM. Diversity at Board level in terms of gender,
nationality and ethnic background have all improved
in recent years. In line with its diversity policy,
and recommended best practice, the Board is
committed to maintaining a minimum of 40% female
representation on the Board. It has an ambition to
increase the representation of members with
diverse backgrounds such as nationality, ethnicity
and other attributes and to have an appropriate
diverse representation on each of its Committees.
As at 31 December 2023 and the date of this
report, the Company has met the UK Listing Rule
requirements in relation to Board diversity, as at
least 40% of the Board members are women, at least
one of the senior Board positions is held by a woman
and at least one Board member is from an ethnic
minority background.
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, to make appointments
that complement the range and balance of skills,
knowledge and experience on the Board. As part
of the identification process, executive recruitment
consultants present a list of potential candidates
who meet the stated specification and diversity
requirements, for consideration by the Committee.
In 2021, diversity goals were agreed for senior
leadership 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 mix of capabilities and cultural diversity
within the Group. The Group is committed to
achieving the highest levels of inclusion, diversity,
engagement and belonging and has a stated
ambition to achieve equal gender representation in
senior management roles by 2030. The Committee
reviews progress against these diversity goals each
year, whilst taking account of business growth and
geographic expansion within the organisation.
144
Kerry Group Annual Report 2023 Directors' Report / Governance and Nomination Committee Report
Disclosure Table in the Format Prescribed by the UK Listing Rules
Gender identity of sex
Men
Women
Not Specified/prefer not to say
Number
of Board
Members
Percentage
of the
Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
Executive
Management
Percentage
of Executive
Management
8
6
-
57%
43%
-
3
1
-
13
4
-
76%
24%
-
56-60
17%
White British or other White
(Including minority-white
Groups)
Mixed/Multiple Ethnic Groups
Asian/Asian British
Black/African/Caribbean/
Black British
Other Ethnic group,
40-55
including Arab
25%
Not Specified/prefer not to say
Number
of Board
Members
Percentage
of the
Board
13
93%
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
3-5
26%
4
Number in
Executive
Management
Percentage
of Executive
Management
17
100%
-
1
-
-
-
-
7%
-
-
-
-
-
-
-
-
6-10
33%
-
-
-
-
-
-
-
-
-
-
11-20
8%
1. The reference date for the disclosures in this table is 31 December 2023. There has been no change in the data disclosed
since that date.
2. For the purpose of this disclosure Executive Management represents the Executive Leadership Team plus the Company Secretary.
3. The data in the table above was collected on the basis of self-reporting by the individuals concerned. When providing the data,
the individuals were asked to select the gender and ethnicity background applicable to them by selecting from the list in the
table above.
A summary of the non-Executive Directors skills and experiences is provided below:
Non-Executive Directors' Skills & Experience
Corporate Development & M&A
Sustainability
Board & Governance
Financial & Risk Management
Science, Technology & Innovation
International Markets
Food, Beverage, Pharmaceutical Industry
0
1
2
3
4
5
6
7
8
9
10
11
145
Kerry Group Annual Report 2023
Directors' Report / Governance and Nomination Committee Report
Changes to the composition of the Board and its Committees for
the year ended 31 December 2023
Mr. Patrick Rohan
Appointed to the Board on 16 January 2023 and
the Sustainability Committee on 1 August 2023.
Ms. Fiona Dawson
Appointed as Chairperson of the Sustainability
Committee on 1 August 2023.
Dr. Karin Dorrepaal
Appointed to the Sustainability Committee
on 1 August 2023.
Mr. Christopher Rogers
Appointed to the Sustainability Committee
on 1 August 2023.
Dr. Genevieve Berger
Appointed to the Board on 1 November 2023.
Professor Catherine Godson
Appointed to the Board on 1 November 2023.
Ms. Liz Hewitt
To be appointed to the Board and the Audit Committee
with effect from 1 March 2024.
Key Activities
The key activities of the Committee throughout the year are detailed below:
Subject
Committee Activity
Board Size and
Composition
In 2023, as part of its remit, the Committee considered the size and composition
of the Board. On 31 December 2023, the Board comprised 14 members following
the appointment of Dr. Genevieve Berger and Professor Catherine Godson on
1 November 2023. The Board size will increase to 15 on 1 March 2024 with the
appointment of Ms. Liz Hewitt and it will reduce to 13 members following the planned
retirements at the conclusion of the 2024 AGM.
The Committee will continue to consider both Board size and composition during 2024.
Chairman
Succession
During 2023, the Committee, chaired by Dr. Hugh Brady in his role as Senior Independent
Director, recommended to the Board that Mr. Tom Moran continue as Chairman until the
Annual General Meeting in 2026 and this was formally approved by the Board.
Senior
Independent
Director
Board
Refreshment
The Committee will undertake a formal succession process that will be led by Mr.
Christopher Rogers when he assumes the Senior Independent Director role post the
AGM on 2 May 2024.
Dr. Hugh Brady will retire as Senior Independent Director and from the Board at the
conclusion of the AGM to be held on 2 May 2024. The Committee has completed a formal
process and has recommended to the Board the appointment of Mr. Christopher Rogers
as Senior Independent Director at the conclusion of the 2024 AGM.
Dr. Genevieve Berger and Professor Catherine Godson were appointed to the Board
as non-Executive Directors on 1 November 2023, following searches conducted by the
Committee in conjunction with an executive recruitment consulting firm.
The Committee and the Board agreed that both had a balance of skills, knowledge and
experience that matched the requirements set.
Committee
Refreshment
On 1 August 2023, on the recommendation of the Committee, the Board agreed to
establish a standalone Sustainability Committee to assume responsibility for overseeing
the implementation of the Group’s Sustainability Strategy. The composition of the
Committee is outlined overleaf.
There were no other changes to the composition of the Board Committees during the year.
Following the planned retirements of Dr. Hugh Brady and Dr. Karin Dorrepaal as
Directors at the conclusion of the AGM to be held on 2 May 2024, the Board, on the
recommendation of the Committee, has agreed to the following changes in Committee
composition, all of which will take effect at the conclusion of the 2024 AGM:
Mr. Christopher Rogers and Ms. Emer Gilvarry will join the Governance and Nomination
Committee; Mr. Michael Kerr will join the Remuneration Committee; Ms. Fiona Dawson
will join the Audit Committee and Dr. Genevieve Berger and Professor Catherine Godson
will join the Sustainability Committee. Mr. Christopher Rogers will resign from the
Sustainability Committee and Ms. Emer Gilvarry will resign from the Audit Committee.
The Committee will continue to consider Committee refreshment in 2024.
146
Kerry Group Annual Report 2023 Subject
Committee Activity
Designated
Workforce
Engagement
Director
Dr. Karin Dorrepaal will retire from the Board and as the designated Workforce
Engagement Director at the conclusion of the AGM on 2 May 2024.
The Committee completed a formal process and recommended to the Board the
appointment of Ms. Emer Gilvarry as the designated Workforce Engagement Director
effective from the conclusion of the 2024 AGM.
Re-appointment
of non-Executive
Directors
During the year, Mr. Tom Moran, Dr. Hugh Brady, Dr. Karin Dorrepaal and Ms. Emer
Gilvarry each completed terms as non-Executive Directors. Following a rigorous review of
their skills, knowledge, experience and independence, the Board on the recommendation
of the Committee, agreed that they continue to be effective and independent and make a
valuable contribution to the Board, and re-appointed them to serve additional terms.
Board and
Committees
Effectiveness
Senior
Leadership
Development
and Succession
Corporate
Governance
Review
Sustainability
Strategy
As outlined in detail on page 132, an internal evaluation of the Board and its Committees
took place in 2023 in line with the provisions of the UK Corporate Governance Code.
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 2024.
The conclusion from the evaluation process is that the Board and its Committees are
operating effectively.
During the year, the Committee reviewed senior leadership 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.
During 2023, the Committee reviewed and updated the Company’s corporate governance
related policies. In addition, the Committee monitored the Company’s compliance with
the UK Corporate Governance Code and the Irish Corporate Governance Annex and also
reviewed developments in corporate governance best practice.
Prior to the establishment of the standalone Sustainability Committee on 1 August 2023,
the Committee provided guidance and oversight on the implementation of the Group's
Beyond the Horizon sustainability strategy and monitored performance against targets.
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's website kerry.com
147
Kerry Group Annual Report 2023 Directors' Report / Sustainability Committee Report
GOVERNANCE REPORT
Sustainability Committee Report
Dear Shareholder,
On behalf of the Sustainability
Committee, I am pleased to
present Kerry’s first standalone
Sustainability Committee Report.
The Sustainability Committee was established in
August 2023 and is responsible for overseeing the
Group’s sustainability objectives and performance,
including the delivery of the Group’s Beyond the
Horizon sustainability strategy as well as providing
progress updates on sustainability matters to the
Board. The governance of sustainability had been
within the remit of the Governance, Nomination
and Sustainability Committee in previous years. This
standalone Committee was established to ensure
enhanced emphasis is given to this important
and evolving area. Membership of the Committee
includes Board members with deep experience
across food and beverage, as well as other sectors
heavily impacted by climate change.
The Group, through portfolio evolution coupled with
scientific research and strategic capital investments,
has evolved its leadership position in Taste &
Nutrition and continues to invest in its vision of
creating a world of sustainable nutrition.
During 2023 we made further progress versus
the commitments included in our Beyond the
Horizon sustainability strategy. Kerry now reaches
1.25bn people with positive and balanced nutrition
solutions. Our Scope 1 and Scope 2 carbon
emissions have decreased by 48% and we
reduced food waste across our operations by
39% versus our base year.
148
THE COMMITTEE THANKS
ALL OUR PEOPLE FOR
THEIR COMMITMENT TO
OUR SUSTAINABILITY
STRATEGY
As Chairperson of the Sustainability Committee,
I have been impressed with the passion that all
Kerry employees have shown to enable Kerry to
be a leader in sustainability by promoting more
sustainable practices internally and by helping our
customers to address their sustainability needs
through our innovative solutions. In addition, I am
pleased with the continued external recognition of
our efforts by independent observers, particularly
the World Benchmarking Alliance's ranking of Kerry
amongst the top ten most influential companies
taking action on food systems transformation.
Please see the Sustainability Review for more detail
on how Kerry has been recognised externally for its
sustainability-related achievements.
This report sets out how the Sustainability
Committee discharged its responsibilities during
2023. Further details in relation to the Group’s
sustainability strategy, targets and performance are
available in the Sustainability Review on pages 46 to
91 and in the Sustainability Report available on the
Group’s website kerry.com.
On behalf of the Committee, I wish to thank all
Kerry employees for their commitment to our
sustainability strategy. I look forward to further
candid and constructive meetings with my fellow
Committee members in 2024.
Fiona Dawson
Chairperson of the Sustainability Committee
Kerry Group Annual Report 2023 Directors' Report / Sustainability Committee Report
Roles and Responsibilities
The main roles and responsibilities of the Committee
are set out in written terms of reference which were
approved by the Board during 2023. The Terms of
Reference are available in the governance section of
the Group’s website kerry.com or upon request.
The quorum for Committee meetings is two and
only Committee members are entitled to attend.
The Committee may extend an invitation to other
persons to attend meetings or to be present for
specific agenda items. The Company Secretary acts
as secretary of the Committee.
Committee Membership
The Sustainability Committee currently comprises
four independent non-Executive Directors; Dr.
Karin Dorrepaal, Mr. Christopher Rogers. Mr.
Patrick Rohan and is chaired by Ms. Fiona Dawson.
Biographical details for the members of the
Committee are outlined on pages 108-111.
Committee Meetings
The newly formed Committee met twice during
the period and attendance at these meetings is
outlined on page 131.
Key Activities
The key activities of the Committee throughout the period are detailed below:
Subject
Committee Activity
Oversight of
the Group’s
Sustainability
Strategy
Performance
Versus
Sustainability
Commitments
Sustainability
Reporting
CSRD Readiness
The Committee provided guidance and oversight on the continued implementation of
the Group’s Beyond the Horizon sustainability strategy. The Committee was supported
in this work by the Sustainability Executive Committee, 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.
The Committee monitored progress against all the commitments included in the
Group’s Beyond the Horizon sustainability strategy and provided insight and feedback
as appropriate.
The Committee, in conjunction with the Audit Committee, considered and approved
the sustainability-related reporting in the 2023 Annual Report and in the 2023
Sustainability Report.
The Committee reviewed the Group’s preparations for reporting under the Corporate
Sustainability Reporting Directive (CSRD) framework which will be applicable for
accounting periods beginning on or after 1 January 2024. The Committee worked
with management to ensure that an appropriate and adequately resourced action
plan is in place.
Climate Related
Risks and the Path
to Net Zero
The Committee reviewed and approved the material climate related risks and
opportunities facing the Group. The Committee also considered the Group’s Roadmap
to Net Zero which continues to evolve.
Committee
Training
Since the establishment of the Committee, training materials have been shared with the
Committee including the Group’s Sustainability Essentials education modules for their
general update on sustainability matters as relevant to Kerry. A training programme for
2024 is in development.
Committee
Evaluation
As outlined in detail on page 132, an internal evaluation of the Board and its Committees
took place in 2023.
The outcome of the review is that the Sustainability Committee is considered to be
operating effectively.
Terms of Reference
and Ways of
Working
The Committee agreed its Terms of Reference before they were formally approved by
the Board. The Committee also agreed priorities and ways of working, including cadence
of meetings and how it will interact with other Board Committees. It also designed
roadmaps and agreed delivery plans.
149
Kerry Group Annual Report 2023 OUR EXECUTIVE
DIRECTORS HAVE
CONTINUED TO
SHAPE AND LEAD THE
EXECUTION OF OUR
STRATEGY... COMBINED
WITH STRONG ORGANIC
GROWTH
Proposed Remuneration Policy
As we look forward to the next three years, this
year’s policy review provided the Committee with
the opportunity to ensure our 2024 Directors’
Remuneration Policy continues to:
»
incentivise our Executive Directors to deliver our
growth strategy;
» preserve the current strong alignment between
our incentive metrics and the key drivers of
shareholder return; and
» be competitive in attracting and retaining the
best executive talent across the sector.
Consistent with our approach in previous policy
reviews, our proposals were also framed by the
context of our approach to remuneration across the
wider workforce, shareholders' expectations and
governance requirements.
The Committee also reviewed its proposals
through a lens of ensuring an appropriate level of
competitiveness for relevant talent markets, primarily
against FTSE 100 listed companies of comparable
scale and complexity, and also against US and
European sector peer companies (as secondary
sources) given the markets in which we compete for
leadership talent. The Committee concluded from
this assessment that its proposals were appropriate;
the changes we are proposing bring our variable
pay opportunity levels into line with current median
levels in the FTSE 50 (as of 31 December 2023, Kerry’s
market capitalisation would have ranked 35th in the
constituents of the FTSE 100 index).
Directors' Report / Remuneration Committee Report
GOVERNANCE REPORT
Remuneration Committee Report
Section A
Chairperson’s Annual Statement
Dear Shareholder,
On behalf of the Remuneration Committee, I am
pleased to present the Remuneration Committee
Report for the year ended 31 December 2023
which contains:
»
»
The proposed Directors’ Remuneration Policy, to
be put to an advisory vote at the 2024 AGM; and
The annual Directors’ Remuneration Report,
describing how the new policy will be
implemented in 2024 and how our existing policy
has been put into practice during 2023.
During 2023, and through the course of our current
Remuneration Policy, our Executive Directors have
continued to shape and lead the execution of our
strategy, delivering a significant evolution of our
sustainable nutrition portfolio, combined with
strong organic growth in an exceptionally
challenging macroeconomic, geopolitical and
sectoral environment.
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.
Remuneration Policy Review
During 2023, consistent with our three-year review
cycle, the Committee completed a comprehensive
review of the Group’s Directors' Remuneration Policy
in conjunction with our external advisors, Ellason.
Arising from this review a new policy will be put to
an advisory vote at the 2024 AGM. Our current policy
was submitted for shareholder approval in 2021 and
received a high level of support from shareholders,
with a 96% vote in favour.
150
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Kerry’s Remuneration Principles
Delivery of Group Purpose, Values
and Strategy
The Group’s Executive Director short and
long-term remuneration philosophy is to
ensure that Executive remuneration is aligned
to the Group’s purpose, values and culture,
supports strategy and promotes the long-term
success of the Group.
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 linking 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
interests and risk appetite of the Executive
Directors are 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.
During our review, the Committee examined all
aspects of the Remuneration Policy and considered
several alternative iterations of package design
and policy changes, including whether there was
a role for restricted shares, either instead of, or
alongside the existing Long-Term Incentive Plan
(LTIP). Ultimately, we concluded that currently
there is no compelling rationale to depart from
the core substance of our existing policy and
package structure, which continues to be strongly
aligned with our business strategy, key drivers of
shareholder return, our remuneration principles and
corporate governance requirements. Whilst there
are no substantive changes proposed to the pay
model approved in 2021, we are proposing some
carefully considered adjustments to policy limits with
effect from 2024, to ensure our new policy continues
to incentivise the delivery of our growth strategy
whilst keeping pace with evolving competitive
practices.
Full details of the proposed changes to our
Remuneration Policy are provided on page 160,
with the key proposals summarised as follows:
» Retain the overall structure of the current
Remuneration Policy, which is strongly aligned to
our strategy and remuneration principles;
» Retain the current performance measures in our
incentive plans to preserve strong alignment to
the key drivers of shareholder return;
Adjust variable pay opportunity levels to deliver
competitive reward, consistent with our pay-for-
performance culture:
»
- LTIP: Adjust the maximum opportunity on a
phased basis over two years to 375% of basic
salary by 2025 for the CEO (currently 300%),
and 300% of basic salary by 2025 for the CFO
and CEO T&N (currently 250%);
- STIP: No change to the CEO at 200% of basic
salary. Harmonise the STIP opportunity
across all Executive Directors by adjusting the
maximum opportunity for the CFO and CEO
T&N to 200% of basic salary (currently 175%).
»
Increase the shareholding requirement for all
three Executive Directors to align with the new
LTIP opportunity; and
» Continue with our strong record of rigour
and discipline in target-setting across our
incentive plans.
The Committee believes the proposed changes to
the Remuneration Policy are required and justified
for the following reasons:
» We have a well-established and highly
effective Executive Team, driving industry
leading volume growth.
Since the CEO’s appointment in 2017, the
Executive Team has effectively navigated the
Group through unprecedented global market
challenges, including the impact and aftermath
of COVID-19, heightened geo-political tensions
and the resulting macroeconomic uncertainty.
Since the last policy review was completed in
2020, Group revenues have increased by €1.1bn
(+15%) and Group EBITDA has increased by
€167m (+17%).
The Executive Team, has in parallel, delivered
significant progress against Kerry’s sustainability
commitments by reducing our scope 1 and 2
carbon emissions by 48%, reducing food
waste by 39% versus our base year and
increasing Kerry’s nutritional reach of
positive and balanced solutions to 1.25 billion
consumers globally.
151
Kerry Group Annual Report 2023
Directors' Report / Remuneration Committee Report
» Our Executive Team has led significant
transformation of the Group's portfolio, fully
aligned with our strategic priorities of taste,
nutrition and emerging markets.
Since 2017, we have rotated over €2.5bn of
Group revenues, or approximately 40% of our
corporate portfolio, while at the same time
growing revenues organically by €2bn to €8bn
in 2023. This portfolio rotation reflects the
successful execution of strategic acquisitions
(35 in total), with revenues of €1.1bn, and the
divestment of non-strategic businesses (notably
Consumer Foods Meat & Meals and the Sweet
Ingredients Portfolio) with revenues of €1.4bn.
In executing on this extensive portfolio rotation,
the Executive Team has better positioned the
Group for future growth, margin expansion and
delivery of enhanced shareholder return, which
is reflected in the incentive targets we continue
to set. The Executive Team has broadened
and deepened Kerry’s science, technology
and innovation capabilities for positive and
meaningful impact on our rapidly-evolving food
and beverage markets; enabling customers to
improve the nutritional profile of their products,
without compromising on taste, whilst at the
same time reducing the environmental impact
of food production. Kerry is now creating science-
backed sustainable nutrition that delivers
global impact.
» Our Executive Team has allocated capital
in a disciplined and agile way to support
growth, future development and shareholder
value creation.
Through targeted and strategically aligned capital
investment, the Executive Team has strengthened
Kerry’s global manufacturing footprint and
capability to deliver on future growth and business
development. Since the last policy review in 2020
the Group has, for example, invested in new and
expanded manufacturing facilities in the USA,
Indonesia, South Africa, East Africa, the Middle
East and China. The Group now has a presence
in over 55 countries globally with manufacturing
capability in 34 countries (versus 31 in 2020),
including 7 countries in Africa where Kerry has
established a foothold from which to grow in this
strategically important continent. This increase in
scale also brings increased complexity which the
Executive Team is successfully managing.
In 2023 the Executive Team commenced a
Share Buyback Programme with the objective
of returning €300m of cash to shareholders,
reflecting the Group's strong balance sheet and
cash flows.
We are confident that our proposed changes,
which are wholly focused on incentives that will be
conditional on achievement of stretching targets,
further incentivise delivery of our growth strategy
152
and creation of long-term value for our shareholders.
They are reflective of the calibre, experience, and
sustained performance of our Executive Team, and
ensure we are competitively positioned to attract,
incentivise and retain the very best talent across the
sector. As mentioned earlier, the proposed changes,
when fully implemented, will bring the variable pay
opportunity for our Executive Directors in line with
the current median opportunity available to Executive
Directors in the FTSE 50.
Shareholder Consultation
On behalf of the Remuneration Committee, during
the year I had the opportunity to consult with our
major shareholders and proxy voting advisors, as
we developed our proposals for the 2024 Directors’
Remuneration Policy. I would like to take this
opportunity to thank all those who met with me for
the valuable comments, perspectives, and specific
feedback provided. This has been very helpful and
constructive in shaping the final policy approved by
the Committee and which is now being submitted
for shareholder approval.
The Committee is conscious of the need to apply
restraint in executive remuneration at all times
and recognises the particular sensitivity at the
current time, given recent shareholder experience.
The Committee notes that many factors affecting
business valuation, including challenging macro,
market and sector dynamics, have weighed on
Kerry’s share price and that of many of its closest
sector peers in recent times. The Committee is also
mindful that during this same timeframe Kerry has
delivered a robust operational performance with
volume growth ahead of its peers, while also making
significant strategic progress to better position the
Group for long-term success.
Having considered all of these factors in the
round, and having listened to the feedback from
shareholders during our consultation meetings,
the Committee decided to phase the proposed
adjustments to the LTIP opportunity over a
two-year period.
We have also taken on board shareholder feedback
on the importance of demonstrating the discipline
and rigour we continue to apply to target setting
and performance assessment across our incentive
plans. Therefore, the Committee recently back-
tested its approach to target setting to assess if the
EPS and ROACE performance ranges set for recent
LTIP cycles were sufficiently stretching. Further
details are included in the Pay for Performance
section on page 154. Based on this empirical
analysis, the Committee concluded that Kerry’s
targets have represented an appropriately stretching
level of required performance for the opportunity
offered. The Committee will maintain its approach
and strong record of rigour and discipline going
forward, to ensure the targets it sets across our
incentive plans remain appropriately stretching and
representative of outperformance.
Kerry Group Annual Report 2023
Directors' Report / Remuneration Committee Report
Supporting our Colleagues
Throughout 2023, the Committee continued to
monitor the impact of the ongoing volatile economic
environment, global inflationary challenges, and
higher interest rates on our people. In the 2022
Remuneration Report we shared a summary of
the targeted actions taken to support our people.
We have continued to build on these actions in
2023 with the additional measures and benefits
highlighted below:
» We were delighted that 99% of our shareholders,
who voted at last year’s AGM, voted in favour of
our intention to launch Kerry’s first All Employee
Share Plan, supporting us in our long-held
ambition of making share ownership possible
for all Kerry employees. In September 2023 we
proudly and successfully launched this plan,
now called OurShare, to colleagues in eight
Phase 1 countries across two regions. I am very
happy to inform you that more than one in five
eligible employees (21%) chose to join OurShare
in its inaugural year to become proud Kerry
shareholders. In 2024 we will extend OurShare
to all regions, and the vast majority of countries,
with all Kerry employees across all geographies
being eligible to participate by 2025;
» We were formally accredited as a Real Living
Wage employer in the UK in 2023, and have
established a partnership with the global
Fair Wage Network to actively expand our
accreditation to major markets globally
in 2024; and
» We further strengthened our employee
wellbeing measures during 2023 with the
development of a structured, emotional
wellbeing training program for all people leaders
at Kerry, coupled with the launch of our global
sabbatical leave policy for all employees.
Salary increases for the wider workforce in 2024
will again be aligned to market movements on a
country-by-country basis. We will continue to have
flexibility in our pay review process to
facilitate higher increases for lower-paid positions
and to allow for more frequent reviews in
inflationary economies.
Remuneration Outturn 2023
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
difficult market conditions globally.
2023 Short-Term Incentive Plan Outturn
For Executive Directors, the 2023 STIP was based
on financial metrics aligned to the Group’s strategy
with 30% based on Volume Growth, 25% on EBITDA
Margin Expansion and 25% on Cash Conversion.
Performance against key Strategic Objectives formed
the remaining 20% of the overall STIP weighting.
The calculated outturn on the STIP for 2023 was 71%
of the maximum available opportunity as outlined in
further detail on page 170.
The Committee reviewed the formulaic outcome
of the quantitative metrics, and its assessment of
the strategic component, and is satisfied that the
overall outturn is reflective of the Group’s and the
Executives’ performance during the year. 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 2021-2023 Outturn
The three-year performance period in respect of
the 2021-2023 LTIP award ended on 31 December
2023. The 2021 LTIP award was subject to growth in
Adjusted Earnings per Share (EPS), Total Shareholder
Return (TSR), Return on Average Capital Employed
(ROACE) and Sustainability Measures; with
weightings of 40%, 25%, 15% and 20% respectively.
This is the first award to include three sustainability
metrics, as introduced following our last policy
review in 2021.
The final outturn of the 2021-2023 LTIP award was
61% of maximum opportunity as outlined in further
detail on pages 174-176.
The Committee reviewed the formulaic outcome
of the LTIP metrics and is satisfied that the overall
outturn is reflective of the Group’s underlying
performance during the three-year performance
period. In line with the Directors’ Remuneration
Policy, 100% of the vested award will be deferred
into shares/options to be held for two years.
Remuneration Policy Implementation 2024
Basic Salary
In reviewing the basic salaries for the Executive
Directors, the Committee was again mindful of
the broader external environment, the strong
performance of our Executive team, and in
particular our wider workforce experience as
outlined previously.
For 2024 the basic salaries of the Executive
Directors will be increased by 3.5% (Ireland based)
and 3.75% (US based). In line with the approach
taken last year, the increases for the Executive
Directors are again below the 2024 average
increases available for the wider workforce
population in Ireland (3.75%) and the US (4.0%), with
higher increases available for lower-paid employees
or where market adjustments are required to
maintain appropriate competitive positioning.
Pension
Executive Directors’ pension contributions will
remain aligned to those of Kerry’s wider workforce
in Ireland.
153
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Incentive Plans
We have consistently ensured there is a very strong
alignment between our short-term and long-term
incentive metrics and the Group’s business strategy
and financial targets. During 2023 the Remuneration
Committee reviewed the incentive plan metrics and
weightings to ensure full alignment with the Group’s
purpose, values, culture, strategy and mid-term targets.
2024 Short-Term Incentive Plan
A review of the STIP design and metrics was
completed to ensure they are aligned to strategy,
consistent with best practice, and the targets are
appropriately stretching. The 2024 STIP will continue
to operate on a similar basis to 2023 with no change
to the metrics or weightings.
No change in STIP opportunity is proposed for the
CEO which will remain at 200% of basic salary. As
previously outlined, to better balance the focus on
shorter-term drivers of success and to harmonise
the STIP opportunity across the Executive Directors,
a proposed increase to STIP opportunity will, subject
to shareholder approval, be implemented in 2024 for
the CFO and CEO T&N, whereby their maximum STIP
opportunity will be increased from 175% to 200% of
basic salary.
2024 Long-Term Incentive Plan
A review of the LTIP design, metrics, weightings and
targets was also completed in 2023. The Committee
concluded that the current metrics and weightings
continue to be closely aligned with key value drivers
for the Group (see page 163) and will therefore remain
unchanged for 2024. Consistent with the Committee's
proven track record of demonstrating rigour and
discipline when setting targets, and in light of the
increased opportunity available under the proposed
new policy, the Committee decided to add additional
stretch by increasing the targets for the EPS and
ROACE metrics, and to adjust the target range for the
sustainability metrics as the Group moves another year
closer to the targets included in the Beyond the Horizon
sustainability strategy. The threshold and maximum
levels for TSR remain as per 2023, with minor revisions
to the TSR peer group for 2024 to improve overall
relevance.
In consideration of shareholder feedback, we
are phasing the proposed increase to the LTIP
opportunity over two years. Therefore, the
maximum LTIP opportunity for 2024 will, subject to
shareholder approval, be increased from 300% to
340% of basic salary for the CEO, and from 250% to
275% of basic salary for the CFO and CEO T&N.
Pay for Performance
Kerry has a strong track record of demonstrating
appropriate rigour and discipline when setting
stretching targets as described earlier.
To back-test its approach to target setting, the
Committee determined the equivalent percentile rank
of the EPS and ROACE performance ranges set for
recent LTIP cycles in the context of actual outcomes
delivered over the relevant three-year period by
Kerry’s TSR peers.
This analysis indicated that the targets set by
the Committee for Kerry have represented
stretching performance, with the top end of the
performance ranges consistently representing
market outperformance, particularly in the context
of award opportunities that are currently below FTSE
50 competitive norms. Our disciplined approach
to target setting is further demonstrated by the
levels of STIP and LTIP outturns achieved historically
(See Table 10 on page 179). We will maintain our
approach of setting targets that are stretching
in the context of our strategic plan and external
market conditions, and appropriate in the context
of the award opportunities on offer. Our proposed
adjustments to award opportunities for 2024 onward
seek to keep pace with competitive market norms,
rather than being set materially ahead of market.
The Committee is satisfied that the targets
set for the 2024 STIP and LTIP awards are
appropriately stretching given the current
challenging environment, overall market growth
rates, the level of capital expenditure required to
support future growth ambitions and the Group's
medium-term targets.
Non-Executive Director Fees for 2024
The Chairman and non-Executive Directors’ fees were
reviewed as part of the overall policy review, and it
was determined that the existing policy is working
well; therefore no material changes are proposed.
For 2024, in line with the Remuneration Policy, an
annual increase of 3.5% 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.
154
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Other Matters
Appointment of Remuneration
Committee Advisors
During 2023, the Committee completed a formal
tender process for the appointment of its independent
advisors which included a number of leading specialist
remuneration advisory firms. Following the conclusion
of this process, the Committee selected Ellason as
its Remuneration Advisors and they assumed the
role with effect from 4 April 2023. Ellason reports
directly to me in my capacity as Chairperson of the
Remuneration Committee.
Amendment of LTIP Rules
Arising from the policy review, the 2021 LTIP rules,
as approved by shareholders at the 2021 AGM, will
be resubmitted for approval at the 2024 AGM. The
only change will be to update clause 9 of Part A of
the rules as it pertains to the maximum individual
limit which is to be increased to 375% in line with
the proposal for the CEO LTIP award opportunity
from 2025. All other terms remain unchanged.
Committee Performance
An internal review of the Remuneration Committee’s
performance was undertaken by the Committee
during 2023 and the outcome of this review is that the
Committee is operating effectively.
Conclusion
As noted earlier, the new Remuneration Policy for the
period 2024 to 2026, and the report detailing how the
existing policy was implemented in 2023 (and how the
new Policy is proposed to be implemented in 2024),
will be put to two separate advisory votes at this year’s
AGM. Last year 95% of our shareholders who voted,
voted in favour of the Directors’ Remuneration Report.
I would like to express again my appreciation to those
shareholders who engaged with us as part of the
policy review. I believe that what we have proposed,
and refined based on shareholder feedback, reflects
a continuation and improvement of the policy
implemented in 2021 as well as the calibre, experience
and sustained performance of our Executive Directors.
We are confident they will continue to deliver
significant long-term value for our shareholders
through the course of the new policy.
Finally, I would like to take this opportunity to thank
the members of the Remuneration Committee for
their commitment, input and support during the year.
Emer Gilvarry
Chairperson of the Remuneration Committee
155
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Section B
Remuneration Committee and Key Activities
Committee Membership
During 2023, the Remuneration Committee
comprised four independent non-Executive
Directors; Ms. Fiona Dawson, Dr. Karin Dorrepaal,
Mr. Christopher Rogers and Ms. Emer Gilvarry, who
chaired the Committee. Details of the skills and
experience of the Directors are contained in the
Directors’ biographies on pages 108-111.
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 2023, are set out in written terms
of reference which are available from the Group’s
website Kerry.com or upon request.
Remuneration Committee Meetings and
Activities 2023
The Committee held five meetings during 2023.
Attendance at these meetings is outlined on
page 131.
The key activities undertaken by the Committee in
discharging its duties during 2023 are set out below:
Subject
Remuneration Committee Activity
Remuneration
Report
Remuneration
Policy Review
A review of best practice remuneration reporting was completed during 2023 to ensure
ongoing compliance with relevant legislation and reporting requirements.
In line with the normal three-year cycle the Committee completed a review of the
existing Remuneration Policy during 2023. Arising from this review a new policy will
be put to an advisory vote at the 2024 AGM. See Remuneration Policy Review and
Implementation sections for proposed changes.
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
The STIP was reviewed during 2023 to ensure that the metrics are aligned with Group
strategy, purpose and values, the weightings are appropriate, and the associated targets
are appropriately stretching.
The Committee considered the overall effectiveness of the LTIP in 2023 to ensure that it
is structured appropriately to incentivise Executive Directors and senior managers across
the Group. The Committee also assessed the vesting values under the 2021 LTIP for
windfall gains due to share price movements since the date of grant in 2021.
Chairman &
non-Executive
Directors Fees
A detailed benchmark review of the Chairman and non-Executive Directors’ fees was
undertaken during 2023 with the assistance of Ellason. Following that review no material
changes to fees are proposed. As provided in the Remuneration Policy, the base fees for
the Chairman and non-Executive Directors are reviewed annually.
Senior
Management
In accordance with the terms of the Code, the Committee set the remuneration
arrangements for senior management and the Company Secretary.
Appointment of
the Remuneration
Committee Advisor
Workforce
Remuneration
and Related
Policies
During 2023, the Committee conducted a formal tender process for the appointment
of its principal advisor. The process involved a request for proposal, submissions by a
number of leading remuneration advisory firms and presentations to the Committee
Chair. Following the conclusion of this process, the Committee selected Ellason as its
Remuneration Advisor and they assumed the role with effect from 4 April 2023,
replacing Korn Ferry.
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 timeline for global living wage accreditation,
the launch of a global sabbatical leave policy and updates on employee wellbeing and
recognition programmes.
156
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Subject
Remuneration Committee Activity
All Employee
Share Plan
The Committee received regular updates on Kerry’s first All Employee Share Plan
(‘OurShare’) ahead of and following its launch in September 2023.
Workforce
Engagement
Activity
Shareholder
Consultation
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 the 2024 Remuneration Policy, executive remuneration outcomes for 2023, as well as
the level of salary increases for Executive Directors and fee increase for non-Executive
Directors applicable in 2024.
The Committee reviewed the results of the shareholder vote on the Remuneration
Report at the 2023 AGM, noting that 95% of shareholders who voted supported the
Report. The Committee also reviewed the additional feedback received from the proxy
voting advisors.
In late 2023, the Chairperson of the Committee consulted with a number of the
Group's major institutional shareholders and with proxy voting advisors regarding
the proposed 2024 Remuneration Policy. The Committee welcomed the engagement
and the shareholders consulted provided important input and commentary which was
considered by the Committee. These inputs, together with inputs from shareholder
representative bodies and governance groups, informed the final Remuneration Policy,
including the proposal to phase the adjustments in LTIP opportunity over 2 years.
Committee
Evaluation
As outlined on page 132 an internal review of the Board and its Committees was
conducted during 2023. The outcome of the review is that the Remuneration Committee
is operating effectively.
Terms of
Reference
During the year, the Committee reviewed and updated its Terms of Reference. A copy of
these terms is available on the Group website 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.
Votes on Remuneration
Total Votes Cast
Directors’ Remuneration Policy (2021 AGM)
Remuneration Committee Advisors
The Remuneration Committee is authorised by the
Board to appoint external advisors. Following a
formal tender process, Ellason were appointed as
Remuneration Committee Advisor in 2023.
The fees incurred with Ellason and Korn Ferry for
advising the Committee in 2023 were €197,556
(2022: €nil) and €22,979 (2022: €62,588) respectively.
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 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 (2023 AGM)
108,273,820
103,195,158
5,078,662
94,472
95.3%
4.7%
The Committee appreciates the level of support shown by the shareholders for the Remuneration Policy and
the Remuneration Reports since the policy was approved and is committed to continued consultation with
shareholders on this subject matter.
157
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
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 Group; properly reflects the
duties and responsibilities of the Executives; and is
structured to attract, retain and motivate individuals
of the highest quality from its international talent
market. 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 significant 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 interests and risk appetite of the Executive
Directors are properly aligned with the interests
of the shareholders and other stakeholders. When
approving 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 33,
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.
Drivers of Shareholder Return
Volume
Growth
Margin
Expansion
Growth
EPS
Return
ROACE
Cash
Conversion
Share
Price
Dividend/
Share
Buyback
Total
Shareholder
Return
Underpinned by Sustainability Measures
These are the main Group metrics included in the
Executive Directors' Short-Term Incentive Plan (STIP)
and Long-Term Incentive Plan (LTIP) underpinned
by the Group’s sustainability metrics. Together these
metrics drive positive Total Shareholder Return
which aligns the interests of the Executive Directors
with those of shareholders. Our remuneration
philosophy also supports our long-term approach
by deferring a significant part of short 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 practice, malus and clawback
provisions apply to the Executive Directors' STIP
and LTIP awards.
Remuneration Policy Review
Under the Shareholders’ Rights Directive, which
was transposed into Irish Law in March 2020,
Kerry is not obliged to submit its Remuneration
Policy to shareholders for a non-binding advisory
vote until the 2025 Annual General Meeting. As an
Irish incorporated company Kerry 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. However,
consistent with the Group’s commitment to comply
with best corporate governance practice and our
existing three year cycle, a new policy will be brought
to shareholders at the 2024 AGM and be submitted
to a non-binding advisory vote.
Similarly, Kerry 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.
158
Kerry Group Annual Report 2023
Directors' Report / Remuneration Committee Report
In designing the Remuneration Policy, the Committee considered the best practice features detailed in the UK
Corporate Governance Code as follows:
Matters
Clarity
Examples
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 proposed Remuneration Policy is simple and easy to
understand.
Risk
Predictability
Proportionality
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
ensure that this 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.
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 166 illustrate how the rewards potentially receivable by our Executive Directors
vary based on performance delivered and share price growth.
There is a clear link between individual rewards, delivery of strategy and long-term
performance. In addition, the significant role played by ‘at risk‘ pay delivered through
the STIP and LTIP, 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 overall design of the new policy was informed by a combination of reviewing the current policy against
best practice features as noted above, the evolution of the Group's strategy, relevant talent markets, wider
workforce remuneration policy and practices, shareholder expectations, and taking into account feedback
from our shareholders during the review process.
Following consideration of these factors, the Committee concluded on the policy changes detailed overleaf.
159
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Remuneration Policy – Summary of Proposed Changes
Following a detailed review, the Remuneration Committee agreed to retain the overall structure of the current
Remuneration Policy as it is aligned to our strategy, remuneration principles and corporate governance
requirements. In addition, the current performance measures in our incentive plans will be retained to
preserve the strong alignment with the key drivers of shareholder return.
The table below summarises the key changes arising from the policy review conducted during the year.
These changes, as described earlier in the Chairperson’s Annual Statement, have been embedded in the
Remuneration Policy that is proposed to apply for the three years 2024 to 2026.
Element
Current Policy
Proposed Policy
Short-Term Incentive Plan (STIP)
Maximum Opportunity
(% of basic salary)
CEO: 200% (target: 100%)
CEO: 200% (target: 100%) - No change
CFO and CEO T&N: 175% (target: 87.5%)
Increase maximum STIP opportunity
as follows:
Long-Term Incentive Plan (LTIP)
Maximum Opportunity
(% of basic salary)
CEO: 300%
CFO and CEO T&N: 250%
Other
Share Ownership
Requirements
(% of basic salary)
CEO: 300%
CFO and CEO T&N: 250%
CFO and CEO T&N: 200% (target: 100%)
Increase maximum LTIP opportunity
on a phased basis over two years
as follows:
CEO: 340% in 2024, 375% in 2025
CFO and CEO T&N: 275% in 2024,
300% in 2025
Increase in-service shareholding
requirement as follows:
CEO: 375%
CFO and CEO T&N: 300%
160
Kerry Group Annual Report 2023
Directors' Report / Remuneration Committee Report
Remuneration Policy Table
The following table details the proposed Remuneration Policy for the Executive Directors
for the period 2024 to 2026:
Purpose and
Link to Strategy
Basic Salary
Operation
Opportunity
Reflects the value of the
individual, their skills and
experience
» Remuneration Committee sets the
basic salary and benefits of each
Executive Director
» Determined after taking into account
a number of elements including the
Executive Directors’ performance,
experience and level of responsibility
» Paid monthly in Ireland and bi-weekly
in the US
Salary is referenced to job
responsibility and internal/external
market data
»
»
»
Set at a level to
attract, retain and
motivate Executive
Directors
Typically reviewed
annually with
increases normally
set by reference
to the wider
workforce in the
relevant market
Full review
undertaken every
three years
Performance
Metrics
» Not applicable
These benefits primarily relate to
the use of a company car or a car
allowance
» Not applicable
» Not applicable
»
»
Competitive salaries
are set to promote the
long-term success of the
Group and attract, retain
and motivate Executive
Directors to deliver
strong performance for
the Group in line with
the Group’s strategic
objectives
Benefits
To provide a competitive
benefit package
aligned with the role
and responsibilities of
Executive Directors
Pension
To provide competitive
retirement benefits
to attract and retain
Executive Directors
»
» Pension arrangements may vary based
on the 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
»
»
»
» Not applicable
The pension
contribution rates
for incumbent
Executive Directors
are set at 10% of
basic salary, in line
with Kerry’s Irish
wider workforce
rate
The maximum
company pension
contribution
rate for new
Executive Director
appointments is
aligned to that
of the wider
workforce rate
161
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Purpose and
Link to Strategy
Operation
Opportunity
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
» Performance targets aligned to the
»
Group’s published strategic goals with
the targets and weightings for financial
and non-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 164)
» Maximum
opportunity
is 200% of
basic salary
Target
opportunity is
50% of maximum
opportunity
for on-target
performance
Threshold
performance
results in a STIP
payable at 0% of
maximum
Long-term Incentive Plan (LTIP)
Performance
Metrics
For FY 2024
» Volume
Growth
» Margin
Expansion
» Cash
»
Conversion
Strategic
Objectives
» Conditional awards over shares or
» Maximum
opportunity is
up to 375% of basic
salary
For FY 2024
» Adjusted
»
Earnings Per
Share “EPS”
Total
Shareholder
Return “TSR”
» Return on
Average
Capital
Employed
“ROACE”
Sustainability
Metrics
»
»
300% - 375% of
basic salary
» Not applicable
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
share options
The awards vest depending on a
number of performance metrics being
met over a performance period of at
least three years
Following vesting, 100% of the earned
award is deferred for a period of up to
two years (i.e. to ensure a combined
performance period and deferral
period of five years)
» Malus and clawback provisions are
in place for awards under LTIP (see
page 164)
Shareholding Requirement
»
Maintain alignment
of the interests of the
shareholders and the
Executive Directors, and
demonstrate commitment
over the long-term
»
Executive Directors are required
to build and to hold shares in the
Company to a minimum level set in
relation to the LTIP opportunity and
expressed as a percentage 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
162
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
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, prevailing market conditions 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 commercial sensitivity, the Committee believes it would be detrimental to the Company to
disclose targets in advance of or during the relevant performance period. The Committee will disclose
the targets and performance against them in the Remuneration Report following the end of the
performance year.
LTIP
The performance targets under the LTIP are set to reflect the Group’s longer-term growth objectives
and at a level where maximum vesting represents genuine 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
STIP
STIP
Cash Conversion
Cash generation for reinvestment or return to shareholders
STIP
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
STIP
LTIP
LTIP
LTIP
Sustainability
Core to our strategy and long-term sustainable performance LTIP
163
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
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 Group'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.
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 normally prorated
to reflect the proportion of the performance
period that has elapsed on the date of cessation,
and subject to performance and a two year
deferral requirement; 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.
The Company retains the right to apply the malus
and clawback provisions to STIP and LTIP awards
held or vested to former directors. Other elements
of remuneration are not subject to malus or
clawback provisions.
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.
Committee Discretion
The Committee has discretion to adjust the
formulaic outturns under STIP and LTIP, both
upwards and downwards, 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, the calculation methodology for
those performance metrics and the composition of
the TSR peer group when appropriate, in the interest
of alignment and fairness.
Service Contracts
The CEO and Executive Directors have service
contracts in place which can be terminated by
either party giving 12 months’ notice. In addition,
all service contracts include pay in lieu of notice,
non-compete and non-solicitation provisions of
up to 12 months post departure, 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.
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. 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 (even if higher than the average increase
awarded to the wider workforce), 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 they join the Board.
Subject to the rules of the scheme, an LTIP award
may be granted after joining the Group.
164
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
If it is necessary to buyout incentive 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 payment vehicle (cash or shares), as
well as the 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.
Change of Control
Outstanding STIP and LTIP shares/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.
To further strengthen the alignment between
Executive Directors and the wider workforce,
employees can participate in an All Employee Share
Plan (‘OurShare’) which was launched in 2023 and is
being rolled out across the Group. The Committee
and the Board believe that share ownership is
a powerful and important way of creating an
ownership culture and mindset. OurShare will
be extended to all regions and the vast majority
of countries in 2024, with all employees eligible
by 2025. See page 22 for further details on the
OurShare All Employee Share Plan.
Consultation with Employees
Our approach to employee engagement is set out
in detail on page 124 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
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. In addition, through OurShare employees
are able to become shareholders in Kerry and
exercise their voting rights as shareholders on all
resolutions submitted for approval at the Annual
General Meeting.
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 voting 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 the
Remuneration Policy and its implementation.
165
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Non-Executive Directors’
Remuneration Policy
Non-Executive Directors’ fees, (other than the Board
Chair's fee, which is determined by the Committee),
are determined by the Executive Directors to 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 2024. 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 second circle representing
target, the third circle representing maximum
potential and the outer circle representing maximum
potential plus 50% increase in the LTIP share value.
Outer
2nd
Outer
3rd
2nd
Outer
Edmond Scanlon
Basic Salary
Pension
& Benefits
STIP
LTIP
62%
12%
52%
15%
44%
26%
14%
86%
2%
2%
4%
26%
31%
24%
Marguerite Larkin
57%
14%
47%
17%
39%
28%
2%
12%
88%
2%
Basic Salary
Pension
& Benefits
STIP
LTIP
4%
29%
34%
27%
Gerry Behan
57%
14%
46%
17%
39%
28%
2%
15%
85%
3%
Basic Salary
Pension
& Benefits
STIP
LTIP
5%
28%
34%
27%
The charts above exclude the effect of any Company
share price appreciation except in the ‘maximum
+50%’ scenario.
166
Inner
3rd
2nd
Inner
3rd
Inner
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Section D
Remuneration Policy
Implementation
Short-Term Incentive Plan (STIP)
A review of the STIP metrics was completed in 2023
to ensure that they remain appropriate, are linked to
strategy, consistent with best practice and that the
targets are appropriately calibrated.
Part I: Remuneration Policy
Implementation 2024
This part of the report sets out how the proposed
Remuneration Policy as described on pages 158-166
will operate in 2024.
The Committee concluded that no changes are
required to the metrics and weightings for 2024.
To better balance the focus on shorter-term drivers
of success it is proposed to harmonise the STIP
opportunity across the Executive Directors (while
continuing to differentiate the LTIP opportunity).
Basic Salary and Benefits
The salaries of the Executive Directors effective for
the year commencing on 1 March 2024, together
with the comparative figures for 2023, are as follows:
The maximum STIP opportunity remains unchanged
for the CEO at 200% of basic salary. The maximum
STIP opportunity for the CFO and CEO T&N will,
subject to shareholder approval, be increased from
175% to 200% of basic salary for 2024.
2024 STIP – Performance Metrics and Weightings
Performance 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 believes 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.
Directors
2024
€’000*
2023
€’000*
% Increase
Edmond Scanlon
1,335
1,289
Marguerite Larkin
825
797
3.5%
3.5%
$’000*
$’000* % Increase
Gerry Behan
1,100
1,060
3.75%
* The numbers above reflect rounding.
For 2024 the basic salaries of the Executive Directors
will be increased by 3.5% (Ireland based) and 3.75%
(US based). In line with the approach taken last year,
the increases for the Executive Directors are again
below the 2024 average increases available for
the wider workforce population in Ireland (3.75%)
and the US (4.0%), with higher increases available
for lower-paid employees or where market
adjustments are required to maintain appropriate
competitive positioning.
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 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 T&N
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.
167
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Long-Term Incentive Plan (LTIP)
A review of the LTIP metrics was completed in
2023 to ensure that they remain appropriate,
linked to strategy and that targets are appropriately
stretching. The Committee concluded that no
changes are required to the metrics and weightings
for 2024.
The maximum LTIP opportunity for 2024 will, subject
to shareholder approval, be increased from 300%
to 340% of basic salary for the CEO. For the CFO
and CEO T&N, the maximum LTIP opportunity will,
subject to shareholder approval, be increased from
250% to 275% of basic salary for 2024.
LTIP Award Year
2024
Performance Metrics
Threshold Maximum
EPS (40% weighting)1
Kerry’s EPS growth
per annum
5%
11%
% of award which vests
25%
100%
ROACE (15% weighting)
ROACE achieved
% of award which vests
Relative TSR
(25% weighting)
Position of Kerry in
peer group2
9%
25%
13%
100%
Median
Above 75th
percentile
% of award which vests
25%
100%
Sustainability
(20% weighting)3
Nutrition Reach Goal
1.25bn
Carbon Reduction
Food Waste Reduction
% of award which vests
48%
39%
25%
1.5bn
51%
42%
100%
The Committee also increased the target ranges
for the sustainability metrics as the Group moves
another year closer to the targets included in the
Beyond the Horizon sustainability strategy. The
threshold and maximum levels for the TSR metric
remains as per 2023 with minor revisions to the TSR
peer group for awards granted in 2024 to improve
overall relevance.
The Committee is satisfied that the target ranges
above are appropriately stretching particularly given
the current uncertain macroeconomic environment
and challenging trading conditions which are
constraining overall market growth rates. When
setting the targets, the Committee also considered
market expectations for future performance,
the impact of historically high M&A multiples on
return-on-investment outcomes, the level of capital
expenditure required to support future growth
ambitions, performance achieved against the
previous targets set and the medium-term targets
included in the latest strategic plan (see pages 32-33).
See Group Key Performance Indicators (KPIs) on
pages 34-35 for more information on the link
between the performance metrics used for incentive
purposes and the Group’s Strategic Plan.
Non-Executive Director Remuneration Review
Following a detailed review completed in 2023
there will be no material changes to non-Executive
Director fees. In line with the Remuneration Policy,
an annual increase of 3.5% 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 (3.75%).
The following increases will be applied effective
1 March 2024:
Fee Type1
2024 Fees
€’000
2023 Fees
€’000
422
92
407
89
Note 1: Adjusted EPS growth is measured on a constant
currency basis.
Note 2: The TSR Peer Group companies are listed on page 174.
Note 3: Please see pages 34-35 for further details in relation to
sustainability metrics.
Chairman’s fee
Non-Executive Director
Base fee
Note 1: There are no changes to the Committee membership,
Committee Chair fees or any other fees. The numbers
above reflect rounding.
Consistent with the Committee's proven track
record of demonstrating rigour and discipline
when setting targets, and in light of the increased
opportunity levels in the 2024 award, the Committee
decided to add additional stretch by increasing
the target ranges for the EPS and ROACE metrics
versus those applicable for the 2023 award. The top
end of the target range set for the ROACE metric
is now higher than the upper end of the Group's
medium-term target of 10% - 12%. This is considered
to be appropriately stretching recognising the
Committee's intention, by including ROACE in the
LTIP, is to incentivise a consistently good level of
returns rather than maximising performance over
the short-term at the expense of sustainable value
creation longer-term.
168
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Part II: Remuneration Policy Outturn 2023
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 Corporate Governance 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 200. 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 2023 (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
2023
€’000
1,283
74
128
1,485
32%
1,822
1,287
3,109
68%
4,594
2022
€’000
1,244
74
224
1,542
40%
1,941
416
2,357
60%
3,899
2023
€’000
793
35
79
907
35%
986
716
1,702
65%
2,609
2022
€’000
770
35
139
944
42%
1,050
231
1,281
58%
2,225
2023
$’000
1,053
80
103
1,236
36%
1,308
848
2,156
64%
3,392
€’000
3,112
2022
$’000
1,014
81
226
1,321
44%
1,384
307
1,691
56%
3,012
€’000
2,869
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 2023 for all Executive Directors
was 10% of their basic salaries. The pension figure for Gerry Behan includes both defined benefit and defined contribution
retirement benefits.
Note 4: The 2023 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 2024) over the three years by (€572k) for Edmond
Scanlon, (€318k) for Marguerite Larkin and by (€346k) for Gerry Behan. The LTIP included in this table for 2023 was awarded
in 2021.
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 €10,315k (2022: €8,993k) using a US dollar exchange rate of 1.09
(2022: 1.05).
169
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Basic Salary Increases
Edmond Scanlon’s basic salary as CEO was increased by 3.2% and the basic salaries of Marguerite Larkin and
Gerry Behan were increased by 3.2% and 4% respectively, effective from 1 March 2023, which were below the
increases for the wider workforce in Ireland (3.5%) and the US (4.5%) respectively.
Annual Incentive Outturns (STIP)
Table 2: STIP Achievement Against Targets
Financial Metrics (CEO, CFO, and CEO T&N – 80% weighting)
Metric
1. Volume Growth1
(30% weighting)
Taste & Nutrition
s Threshold
t
e
g
r
a
T
Target
Max
Actual
performance
Bonus outturn
Link to strategy
0%
1.5%
3.5%
1.1%
11%
2. Margin Expansion2
(25% weighting)
3. Cash Conversion
(25% weighting)
Group
0 bps
+40 bps
+60 bps
+50 bps
19%
Group
70%
80%
85%
92%
25%
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
Note 1: The 2023 target for the Volume Growth metric was set at the Taste & Nutrition segment level which accounts for 86% of
Group revenues. The target excludes volume performance in the Dairy Ireland segment as the key performance measure for
this business segment is EBITDA, given the impact of raw material supply variability on volumes each year.
Note 2: The targets and actual performance for the EBITDA Margin Expansion metric excludes the mathematical effect of
implementing selling price increases/decreases to maintain cash margin in light of input cost inflation/deflation (+10 bps).
When setting the targets above, the Committee
considered them to be appropriately stretching
and, if achieved, reflective of a good underlying
performance.
The target level set for the volume metric took
account of an anticipated flat to declining market
volume growth rate in 2023 (versus a historical
growth rate of ~2%) due to customer inventory
management dynamics, as well as the impact of the
inflationary environment and higher interest rates
on consumer demand. The actual volume growth
rate achieved of 1.1%, in the Committee’s opinion,
represents a good market outperformance.
The targets also took account of the targets in the
medium-term plan, 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)
CEO
0
10
20
16
16%
CFO
0
10
20
16
16%
CEO T&N
0
10
20
16
16%
Specific to the Executive Directors' responsibility, linked to strategic plan implementation
and talent management.
s
t
e
g
r
a
T
Threshold
Target
Max
Actual performance
Metric outturn
Link to strategy
170
Kerry Group Annual Report 2023 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 above target award.
Strategic
Objective
CEO
Performance Assessment
Achievement: 16% (80%)
Portfolio &
Strategy
Significant strategic portfolio, technology and footprint evolution and expansion:
» Divestment of Kerry’s Sweet Ingredients Portfolio in further refinement of Taste &
Nutrition portfolio;
» Definitive agreement to acquire part of the global lactase enzyme business of Chr.
»
»
Hansen and Novozymes on a carve out basis, to further enhance Kerry’s biotechnology
solutions capability;
Further enhancement of Emerging Market capability through acquisitions and
investments across APMEA and LATAM, including Shanghai Greatang Orchard Food
Co., Ltd in China and Proexcar S.A.S. in Colombia; and
Taste & Nutrition capability further enhanced through investment in new and
expanded facilities:
– Customer Co-Creation Centre opened in Barcelona, Spain;
– New state-of-the-art Taste manufacturing facility in Karawang, Indonesia; Kerry’s largest
greenfield investment in South-East Asia;
– East Africa manufacturing capability expanded; first manufacturing facility in Tanzania;
– New facilities in South Africa and the Middle East.
Operating
Model &
Digital
Enablement
Strong progress in driving further alignment of Kerry’s Operating Model to embed capability
for strategy execution:
»
Focused uplift in manufacturing and process capability, coupled with enhanced supply-
chain agility and plant leadership capability building;
Significant progress on digitisation and automation for enhanced customer experience
and operational effectiveness. Chief Digital Officer appointed, Digital Transformation
office established; and
»
» Commercial capability further strengthened in priority areas of focus, including customer
innovation partnerships, enhanced commercial insights and reporting, targeted sales
team development.
Stakeholder
Engagement
Strong programme of stakeholder engagement during 2023:
»
» Kerry All-Employee Share Plan launched in eight phase 1 countries, achieving above-
Extensive shareholder and customer engagement;
industry engagement rates;
» Award-winning Sustainability Essentials programme launched and completed by 7,000
employees; and
» Ongoing focus on MyCommunity programme and global partnerships including Concern
Worldwide and World Food Programme.
Leadership
Team and
Succession
Planning
Strong progress in building strength, depth and diversity of the leadership team and
talent pipeline:
» Group General Counsel appointed;
»
Senior leadership capability further strengthened through rigorous succession planning,
targeted development, and strategic sourcing; and
Senior leadership gender diversity further enhanced (now 34% v 2025 ambition of
35%). Gender equity commitments strengthened through signature to UN Women’s
Empowerment Principles (WEPs). Women in Leadership programme successfully piloted
for global roll-out.
»
171
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Strategic
Objective
CFO
Performance Assessment
Achievement: 16% (80%)
Portfolio &
Strategy
Significant strategic portfolio, technology and footprint evolution and expansion:
» Divestment of Kerry’s Sweet Ingredients Portfolio in further refinement of Taste &
Nutrition portfolio;
» Definitive agreement to acquire part of the global lactase enzyme business of Chr.
»
»
Hansen and Novozymes on a carve out basis, to further enhance Kerry’s biotechnology
solutions capability;
Further enhancement of Emerging Market capability through acquisitions and
investments across APMEA and LATAM, including Shanghai Greatang Orchard Food
Co., Ltd in China and Proexcar S.A.S. in Colombia; and
Taste & Nutrition capability further enhanced through investment in new and expanded
facilities across South-East Asia, Southern Europe, East Africa, South Africa and the Middle
East.
Strong progress in driving further alignment of Kerry’s Operating Model to embed capability
for strategy execution:
» Global Business Services (GBS) organisation further expanded and strengthened with
improvements in all service levels and delivery of enterprise savings and efficiencies;
Further optimisation of Finance function leveraging GBS and digital enablement; and
Significant progress in enhancing and embedding digital tools to drive consistency,
efficiency and transparency e.g., predictive pipeline analytics, enhanced commercial
reporting tool, procure-to-pay process and solutions.
»
»
Strong programme of engagement with all key stakeholders during 2023:
»
»
Extensive engagement with shareholders, financial institutions and business schools;
Share Buyback programme commenced with objective of returning €300m of cash to
shareholders;
» Kerry All-Employee Share Plan launched in eight phase 1 countries, achieving above-
»
industry engagement rates; and
Strong progress on sustainability performance management and reporting (including GRI
and CSRD).
Strong progress in building strength, depth and diversity of the leadership team and
talent pipeline:
»
Strength and diversity of global Finance Leadership Team further strengthened through
rigorous succession planning, targeted development and strategic sourcing;
Executive sponsor of a range of key global people initiatives including: SEEN employee
network group (supporting Race, Ethnicity and Cultural Belonging); International
Women’s Day; All-Employee Share Plan; and
Strong progress in gender diversity in senior leadership (now 34% v 2025 ambition of
35%).
»
»
Operating
Model &
Digital
Enablement
Stakeholder
Engagement
Leadership
Team and
Succession
planning
172
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Strategic
Objective
CEO T&N
Performance Assessment
Achievement: 16% (80%)
Portfolio &
Strategy
Significant strategic portfolio, technology and footprint evolution and expansion:
» Divestment of Kerry’s Sweet Ingredients Portfolio in further refinement of Taste &
Nutrition portfolio;
» Definitive agreement to acquire part of the global lactase enzyme business of Chr.
»
»
Hansen and Novozymes on a carve out basis, to further enhance Kerry’s biotechnology
solutions capability;
Further enhancement of Emerging Market capability through acquisitions and
investments across APMEA and LATAM, including Shanghai Greatang Orchard Food
Co., Ltd in China and Proexcar S.A.S. in Colombia; and
Taste & Nutrition capability further enhanced through investment in new and expanded
facilities across South-East Asia, Southern Europe, East Africa, South Africa and the
Middle East.
Operating
Model &
Digital
Enablement
Strong progress in driving further alignment of Kerry’s Operating Model to embed capability
for strategy execution:
»
» ProActive Health technology portfolio aligned to consumer need states for meaningful
Technology portfolio effectively leveraged for customer innovation partnerships;
customer engagement and focused commercial execution;
Significant progress on digitisation and automation for enhanced customer experience
and operational effectiveness; and
Strong progress in building further process technology expertise.
»
»
Stakeholder
Engagement
Strong programme of engagement with all key stakeholders during 2023:
» Kerry’s trade and external Board presence further enhanced, with a focus on technology
leadership and specialism in key growth platforms;
» Academic partnerships and collaboration in food research further built out; and
»
Targeted internal learning agenda to enhance depth of expertise of commercial
leadership.
Leadership
Team and
Succession
Planning
Strong progress in building strength, depth and diversity of leadership team and
talent pipeline:
»
Technology leadership further strengthened through rigorous succession planning,
targeted development and strategic sourcing;
Taste leadership development programme launched; and
Strong progress in gender diversity in senior leadership (now 34% v 2025 ambition
of 35%). Strong Technology leadership representation in Kerry Women in Leadership
programme.
»
»
Discretion
The Committee concluded that there was no requirement to exercise discretion as the 2023 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 2023
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 2023 a pay-
out of 71% of maximum opportunity was achieved by each Director.
Under the Remuneration Policy, two thirds of the award is payable in cash and one third is awarded by way of
shares/options to be issued two years after vesting following a deferral period.
173
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Long-Term Incentive Plan (LTIP)
LTIP Approved in 2021 (LTIP 2021)
The terms and conditions of the plan were approved
by shareholders at the 2021 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.
The first conditional awards under this scheme
were made to Executive Directors in 2021. Subject
to performance metrics being met over a three-
year performance period, the LTIP award will vest
in March of 2024, 100% of which will be subject
to a two year deferral period. This provides for a
combined performance period and deferral period
of five years for the full award that vests.
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 is disclosed in note 28 to the
financial statements.
The proportion of each conditional award which
vests will depend on the Adjusted EPS Growth, TSR,
ROACE and Sustainability performance during the
relevant three-year performance period.
2021 LTIP Awards
Set out below is the performance against targets
for the 2021 LTIP award where the three-year
performance period ended on 31 December 2023
and the award vests in March 2024.
EPS Performance Test
40% 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:
Average
Adjusted EPS
Growth
Percentage
of the Award
Which Vests
Threshold
Maximum
6%
12%
25%
100%
Below 6% none of the award vests. Vesting between threshold
and maximum points is on a straight line basis.
Vesting Level for EPS Metric
The outturn of the EPS performance test is an
average adjusted EPS growth of 11.5% which results
in an award outcome of 37% out of a possible
maximum of 40%. When calculating the outturn for
this metric, the adjusted EPS growth % achieved
used for 2021, 2022 and 2023 excludes the dilutive
effect which the significant business disposals
(Consumer Foods Meat and Meals, the Russian
business and the Sweet Ingredients Portfolio)
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%, 2022 at 7.3%
and 2023 at 1.2% recognised a dilution impact of
these disposals of 3.2%, 7.6% and 3.0% respectively.
TSR Performance Test
25% 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*
Givaudan
Kellogg’s
Sensient Technologies
Barry Callebaut
McCormick & Co.
Corbion
Nestlé
Ingredion
Novozymes*
General Mills
Premier Foods*
Glanbia
Symrise
Greencore*
Tate & Lyle
Danone
Unilever
IFF
* For awards granted in 2024 the following companies will be
removed from the peer group: Chr. Hansen, Novozymes,
Greencore and Premier Foods. DSM-Firmenich and Novonesis
(formerly Novozymes/Chr. Hansen) will be added.
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
Greater than
75th percentile
0%
25%
100%
Below Median none of the award vests. Vesting between
median and 75th percentile is on a straight line basis.
174
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Vesting Level for TSR Metric
The outturn of the measurement of the TSR metric
in relation to the 2021 awards is below median,
resulting in an award outturn of 0% out of a possible
maximum of 25% as the threshold performance level
for this metric was not achieved.
ROACE Performance Test
15% 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
Maximum
10%
14%
25%
100%
Below 10% none of the award vests. Vesting between threshold
and maximum 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 2021 award is a ROACE of
10.3% resulting in an award outturn of 5% out of a
maximum of 15%.
Vesting Level for Sustainability Metrics
The outturn of the measurement of the
sustainability metrics over the three year period
period is an award outturn of 19% out of a maximum
of 20%. This was achieved through above maximum
performance for Carbon Reduction (48%) and Food
Waste Reduction (39%) and achieving an above
target performance on our Nutrition Reach
measure (1.25bn).
The targets for the Sustainability metrics in the 2021
LTIP award were aligned to the Group's original
Beyond the Horizon sustainability commitments
which were set in 2020. Since then, the Group
has accelerated its commitments on emissions
reduction, aligning its Scope 1 and 2 target with
the 1.5 degree pathway under the Paris Accord.
The Group also fast-tracked certain activities,
including transition to renewable electricity, all
of which improved the Group's performance in
relation to Carbon Reduction versus the target set.
In addition, the targeted deployment of our Reduce,
Reuse, Repurpose, Recycle strategy improved our
performance in relation to Food Waste versus the
anticipated progress in 2020.
The strong outcomes achieved reflects the
significant progress being made against our Beyond
the Horizon sustainability commitments.
Table 3: Overall Outturn of the 2021 LTIP Award
Vesting in 2024
LTIP Metric
Weighting
%
Actual
Vesting %
Sustainability Performance Test
The 2021-2023 LTIP is the first award to include
sustainability measures following the approval of the
2021 Remuneration Policy at the 2021 AGM.
EPS
TSR
ROACE
20% of the award vests according to the Group’s
performance versus the commitments set out
in its Beyond the Horizon sustainability strategy.
This measurement is determined by reference to
three key sustainability metrics over the three-year
performance period:
Sustainability
Metrics
Percentage
of the Award
Which Vests
Nutrition
Reach
Carbon
Reduction
Food
Waste
Reduction
Threshold
Maximum
Threshold
Maximum
Threshold
Maximum
1.11 bn
1.27 bn
19%
23%
14%
22%
25%
100%
25%
100%
25%
100%
Below threshold none of the award vests. Vesting between
threshold and maximum points is on a straight line basis.
40%
25%
15%
20%
100%
37%
0%
5%
19%
61%
Sustainability
Total
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.
Discretion
The Committee concluded that there was no
requirement to exercise discretion as the
2021-23 LTIP outturn reflected the underlying
business performance and the broader
stakeholder experience during the three year
performance period.
175
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
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 2023 relate to awards made in 2020, 2021 and 2022 which have a three-year
performance period. The 2020 awards vested in 2023. The 2021 and 2022 awards will potentially vest in 2024
and 2025 respectively. The market price of the shares on the date of each award is disclosed in note 28 to the
financial statements.
Executive Directors’ and Company Secretary’s Interests in Long-Term Incentive Plan
Table 4: Individual Interest in LTIP (Audited)
LTIP Vesting and Conditional Awards
Conditional
Awards at
1 January
2023
LTIP
Schemes
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
2023
Share Price
at Date of
Conditional
Award
Made
During
the Year
Directors
Edmond Scanlon1
2013/21
Marguerite Larkin
2013/21
93,604
47,843
–
–
(9,422)
(17,173)
(2,587)
(9,558)
Gerry Behan
2013/21
56,011
(3,270)
– (12,084)
42,388
21,844
27,391
109,397
57,542
68,048
€91.26
€91.26
€91.26
Company Secretary
Ronan Deasy
2013/21
12,237
–
(3,855)
(2,068)
3,740
10,054
€91.26
Note 1: In the case of Edmond Scanlon the share options vested includes 4,774 Career Share options granted prior to his
appointment as an Executive Director. These options had a combined seven year performance and deferral period.
Conditional LTIP awards made on 8 March 2023, under the 2021 LTIP Plan, have a three-year performance
period and will potentially vest in March 2026. Under the 2021 LTIP 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 2028.
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.
176
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
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
2023
Share Options
Exercised
During the
Year
Share Options
Vested
During the
Year1
Share Options
Outstanding at
31 December
2023
Exercise
Price Per
Share
Directors
Edmond Scanlon
Marguerite Larkin
Company Secretary
Ronan Deasy
54,380
10,752
3,593
(20,195)
–
–
16,513
6,424
50,698
17,176
€0.125
€0.125
3,855
7,448
€0.125
Note 1: Share Options which vested in March 2023 related to 2020 LTIP awards and 33% of the 2022 STIP (paid in March 2023). 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.
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
2023
2022
Note:
Note:
134
117
851
717
2,130
1,752
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 169.
Payments to Former Directors
No payments were made to former Directors during 2023 (2022: €nil) in respect of their duties as Directors.
Vested 2018 LTIP awards which were subject to a two-year deferral period and delivered in 2023 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 2023 (2022: €nil).
177
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Non-Executive Director Remuneration and Shareholdings
Table 7: Remuneration paid to non-Executive Directors in 2023 and Shareholdings (Audited)
Fees 2023
€’0001
Fees 2022
€’0001
31 Dec 2023
Ordinary Shares
Number1
31 Dec 2022
Ordinary Shares
Number
Tom Moran
Hugh Brady
Genevieve Berger
Gerard Culligan
Fiona Dawson
Karin Dorrepaal
Emer Gilvarry
Catherine Godson
Michael Kerr
Con Murphy
Christopher Rogers
Patrick Rohan
Philip Toomey
Jinlong Wang
405
123
15
-
109
125
123
15
138
-
128
93
-
128
1,402
307
121
-
28
95
114
116
-
130
28
121
-
130
126
1,316
1,029
6,850
-
167
-
850
10,000
-
1,640
3,289
-
-
1,029
6,850
-
167
-
850
10,000
7,728
1,640
-
9,000
-
Note 1: Non-Executive Directors fees are reflective of when the individuals were appointed to or retired from the Board (see page
146). 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 €27,000.
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 Executive 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
2023 Ordinary
Shares
Number
31 December
2023 Share
Options
Number
31 December
2023 Total
Number
31 December
2022
Ordinary
Shares
Number
31 December
2022 Share
Options
Number
31 December
2022 Total
Number
Directors
Edmond Scanlon
39,806
- Deferred1
Marguerite Larkin
- Deferred1
Gerry Behan
- Deferred1
Company Secretary
Ronan Deasy
- Deferred1
–
4,335
–
65,644
12,098
3,230
–
32,633
18,065
7,324
9,852
–
–
6,849
599
72,439
18,065
11,659
9,852
65,644
12,098
10,079
599
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
Note 1: The deferred shares and share options above, relate to 33% of the awarded amount of the Executive Directors 2021 and 2022
STIP awards and 50% of the 2019 and 2020 LTIP award (vested in March 2022 and 2023 respectively). These awards are subject
to a two year deferral period and will be delivered in shares/share options in March 2024 and March 2025 respectively,
178
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Shareholding Guidelines
The table below sets out the Executive Directors’ shareholding at 31 December 2023 shown as a multiple
of basic salary. Refer to the Remuneration Policy Table on page 162 in Section C for details of the Executive
Director shareholding requirements.
Table 9: Individual Shareholding as a Multiple of Basic Salary
Executive Director
Edmond Scanlon
Marguerite Larkin2
Gerry Behan
As a Multiple of Basic Salary1
5x
2x
6x
Note 1: The share price used to calculate the above is the share price as at 31 December 2023 and the shareholding is based on all
shares held and vested option awards (including deferred) reflected in table 8.
Note 2: Marguerite Larkin, in line with the current policy, will increase her shareholding to at least the minimum 3x 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 2013 to 31 December 2023. Also outlined in the
table on page 180, the remuneration of the Chief Executive Officer is calculated in line with the methodology
captured under legislation which was enacted for UK incorporated companies.
The indices below have been selected as appropriate indices as they comprise other companies within the
same broad sector as Kerry.
10 Year Total Shareholder Return (Value of €100 Invested on 31/12/2013)
€300
€250
€200
€150
€100
€50
€0
100
169
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Kerry
E300 Food & Beverage
MSCI World Food Producers
Table 10: Remuneration Paid to the CEO 2014 – 2023
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
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
2014
2015
2016
2017
CEO – Edmond Scanlon
20171
2018
2019
2020
2021
2022
2023
3,283
4,161
3,625
5,285
808
2,577
3,991
2,323
3,855
3,899
4,594
57%
58%
62%
75%
75%
60%
76%
0%
72%
78%
71%
91.9%
61.8%
29.4%
62.3%
62.3%
63.7%
62.8%
32.5%
22.0%
21.3%
61.0%
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.
179
300
250
200
150
100
50
0
Kerry Group Annual Report 2023 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 2022 to the year ended 31 December 2023.
Year-on-year change in pay for Directors compared to the global average employee
Executive Directors
Edmond Scanlon*
Marguerite Larkin*
Gerry Behan *
Non-Executive Directors1
Hugh Brady
Genevieve Berger
Gerard Culligan
Fiona Dawson
Karin Dorrepaal
Joan Garahy
Emer Gilvarry
Catherine Godson
Michael Kerr
Tom Moran
Con Murphy
Christopher Rogers
Patrick Rohan
Philip Toomey
Jinlong Wang
All Group Employees2
2023
€’000
4,594
2,609
$,000
3,392
€,000
123
15
-
109
125
123
15
138
405
-
128
93
-
128
55
2022
€’000
3,899
2,225
$,000
3,012
€,000
121
-
28
95
114
116
-
130
307
28
121
-
130
126
54
2022 to 2023
Change %
2021 to 2022
Change %
2020 to 2021
Change %
2019 to 2020
Change %
18%
17%
1%
1%
66%
98%
(42%)
(28%)
13%
(0.1%)
44%
(47%)
2%
100%
(100%)
15%
10%
6%
100%
6%
32%
(100%)
6%
100%
(100%)
2%
2%
6%
(67%)
100%
10%
24%
15%
-
13%
(6%)
-
(6%)
-
(6%)
(6%)
16%
581%
100%
67%
144%
(67%)
2%
-
(66%)
5%
19%
-
22%
15%
17%
-
15%
-
2%
-
-
(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 146).
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 2023 (excluding social welfare costs and costs related
to Executive Directors) by the average number of employees in 2023, as disclosed in note 4 to the consolidated financial
statements. The value disclosed for 2022 has been represented on a constant currency basis.
Note 3: The Company performance can be seen in the 10 Year Total Shareholder Return graph on page 179.
180
Kerry Group Annual Report 2023 Directors' Report / Remuneration Committee Report
Relative Importance of Spend on Pay
The total amount spent on Executive Director remuneration (including Long-Term Incentive Plan) and overall
employee pay is outlined below in relation to retained profit, dividends paid and taxation paid.
2023
Director Remuneration (0.4%)
Profit after tax
before NTIs (29.6%)
Dividends Paid (8%)
Taxation Paid (12%)
Employee Costs (50%)
2022
Director Remuneration (0.4%)
Profit after tax
before NTIs (29.3%)
Dividends Paid (7%)
Taxation Paid (10.3%)
Employee Costs (53%)
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 2023 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 0.9%.
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.
2023
€’000*
€4,594
€55
€51
84x
27x
2022
€’000*
€3,899
€50
€47
77x
31x
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 2023 is higher than 2022 which is primarily due to the combined
performance outturn under the short-term and long-term incentive plans being higher than the previous 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 2023. This ratio has decreased year on year which is due to both an increase in the remuneration for the
median employee and also reflects the reduction in pension for the CEO to the wider workforce rate with effect
from 1 January 2023.
181
Kerry Group Annual Report 2023 Financial Statements
FINANCIAL
STATEMENTS
Financial Statements
Independent Auditors’ Report 184
Financial Statements 192
Notes to the Financial Statements 200
Supplementary Information
Financial Definitions 269
182
Kerry Group Annual Report 2023
Financial Statements
Kerry Group Annual Report 2023
183
Separate opinion in relation to IFRS
Accounting Standards as issued by the
International Accounting Standards Board
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 IFRS
Accounting Standards as issued by the International
Accounting Standards Board (IASB).
In our opinion, the Consolidated financial
statements comply with IFRS Accounting Standards
as issued by the IASB.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (Ireland) (‘ISAs
(Ireland)’) and applicable law. Our responsibilities
under ISAs (Ireland) are further described in the
Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the
audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in
accordance with the ethical requirements that are
relevant to our audit of the financial statements in
Ireland, which includes IAASA’s Ethical Standard as
applicable to listed public interest entities, and we
have fulfilled our other ethical responsibilities in
accordance with these requirements.
To the best of our knowledge and belief, we declare
that non-audit services prohibited by IAASA’s Ethical
Standard were not provided to the Group or the
Company.
Other than those disclosed in note 3 to the financial
statements, we have provided no non-audit services
to the Group or the Company in the period from 1
January 2023 to 31 December 2023.
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’):
– give a true and fair view of the Group’s and the
Company’s assets, liabilities and financial position
as at 31 December 2023 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 Consolidated financial statements,
Article 4 of the IAS Regulation.
We have audited the financial statements, included
within the Annual Report 2023 (‘Annual Report’),
which comprise:
– the Consolidated and Company Balance Sheets as
at 31 December 2023;
– the Consolidated Income Statement and
Consolidated Statement of Comprehensive
Income for the year then ended;
– the Consolidated and Company Statements of
Cash Flows for the year then ended;
– the Consolidated and Company Statements of
Changes in Equity for the year then ended; and
– the notes to the financial statements, which
include a description of the accounting policies.
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.
184
Kerry Group Annual Report 2023Financial Statements / Independent Auditors’ Report
Our audit approach
Overview
Overall materiality
– €40.0 million (2022: €42.0 million) - Consolidated financial statements.
– Based on approximately 5% of profit before taxation and non-trading items.
– €14.4 million (2022: €10.6 million) - Company financial statements.
– Based on approximately 1% of net assets.
Performance materiality
– €30.0 million (2022: €31.5 million) - Consolidated financial statements.
– €10.8 million (2022: €7.9 million) - Company financial statements.
Audit scope
– We conducted audit work in 35 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 24
components was performed. Specific audit procedures on certain balances
and transactions were also performed at a further 11 components. We also
performed audit work at each of the Group’s 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 revenue 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.
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’, ‘Impairment of non-financial
assets’, ‘Critical accounting estimates and judgements’
and note 12 ‘Intangible assets’.
The Group has goodwill and indefinite life intangible
assets of €4,986.4 million at 31 December 2023
representing approximately 43% of the Group’s total
assets at year end.
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.
185
Kerry Group Annual Report 2023Financial Statements / Independent Auditors’ Report
Key audit matter
How our audit addressed the key audit matter
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 rates. 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 the current
macro-economic environment and 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
(including revenue growth rates and EBITDA margin
percentages), discount rates and the long term 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. We also
considered any tax developments during the financial
year, including outcomes of concluded tax authority
audits.
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
2023 to be within an acceptable range of reasonable
estimates.
Goodwill and indefinite life intangible assets
impairment assessment (Group)
(continued)
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 2023 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, which includes the cash flows
(including revenue growth rates and EBITDA margin
percentages) and long term growth rate assumptions,
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.
186
Kerry Group Annual Report 2023Financial Statements / Independent Auditors’ Report 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
€1,058.5 million at 31 December 2023. The carrying
value of the investments 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.
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.
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 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.
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 either of the Group’s principal shared
service centres in Malaysia and Mexico.
We determined that an audit of the complete
financial information (a ‘full scope’ audit) should be
performed at 24 components due to their size or risk
characteristics and to ensure appropriate coverage.
These 24 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 11 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. 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. 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.
In the current year, the Group team continued a
programme of site visits which are designed so
that senior team members visit the full scope audit
locations regularly on a rotational basis. During
2023, the Group team visited component locations
in Ireland, the Netherlands, the United States,
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 that 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. 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.
187
Kerry Group Annual Report 2023Financial Statements / Independent Auditors’ Report
Materiality
The scope of our audit was influenced by our
application of materiality. We set certain quantitative
thresholds for materiality. These, together with
qualitative considerations, helped us to determine
the scope of our audit and the nature, timing and
extent of our audit procedures on the individual
financial statement line items and disclosures and
in evaluating the effect of misstatements, both
individually and in aggregate on the financial
statements as a whole.
Based on our professional judgement, we
determined materiality for the financial statements
as a whole as follows:
Consolidated
financial
statements
Overall
materiality
€40.0 million
(2022: €42.0 million).
Company
financial
statements
€14.4 million
(2022: €10.6
million).
How we
determined
it
Approximately 5% of
profit before taxation
and non-trading
items.
Approximately
1% of net
assets.
Rationale for
benchmark
applied
The entity
is a holding
Company
whose main
activity is the
management
of investments
in subsidiaries.
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.
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 €30.0 million (Group audit) and €10.8
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.
188
We agreed with the Audit Committee that we would
report to them misstatements identified during
our audit above €1.9 million (Group audit) (2022:
€1.9 million) and €720,000 (Company audit) (2022:
€532,000) 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 the Directors’ 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.
Kerry Group Annual Report 2023Financial Statements / Independent Auditors’ Report 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.
In connection with our audit of the financial
statements, our responsibility is to read the other
information and, in doing so, consider whether the
other information is materially inconsistent with the
financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated.
If we identify an apparent material inconsistency or
material misstatement, we are required to perform
procedures to conclude whether there is a material
misstatement of the financial statements or a material
misstatement of the other information. If, based on
the work we have performed, we conclude that there
is a material misstatement of this other information,
we are required to report that fact. We have nothing
to report based on these responsibilities.
With respect to the Directors’ Report, we also
considered whether the disclosures required by
the Companies Act 2014 (excluding the information
included in the ‘Non Financial Statement’ as defined
by that Act on which we are not required to report)
have been included.
Based on the responsibilities described above and
our work undertaken in the course of the audit,
ISAs (Ireland) 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 2023 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.
– 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 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
189
Kerry Group Annual Report 2023Financial Statements / Independent Auditors’ Report
appropriate to adopt the going concern basis
of accounting in preparing them, and their
identification of any material uncertainties to the
Group’s and Company’s ability to continue to do so
over a period of at least twelve months from the
date of approval of the financial statements;
– The directors’ explanation as to their assessment
of the Group’s and Company’s prospects, the
period this assessment covers and why the period
is appropriate; and
– The directors’ statement as to whether they have a
reasonable expectation that the Company will be
able to continue in operation and meet its liabilities
as they fall due over the period of its assessment,
including any related disclosures drawing attention
to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the
longer-term viability of the Group was substantially
less in scope than an audit and only consisted of
making inquiries and considering the directors’
process supporting their statement; checking that
the statement is in alignment with the relevant
provisions of the UK Corporate Governance Code;
and considering whether the statement is consistent
with the financial statements and our knowledge and
understanding of the Group and Company and their
environment obtained in the course of the audit.
In addition, based on the work undertaken as
part of our audit, we have concluded that each
of the following elements of the Corporate
Governance Statement is materially consistent with
the financial statements and our knowledge obtained
during the audit:
– The directors’ statement that they consider the
Annual Report, taken as a whole, is fair, balanced
and understandable, and provides the information
necessary for the members to assess the Group’s
and Company’s position, performance, business
model and strategy;
– The section of the Annual Report that describes
the review of effectiveness of risk management
and internal control systems; and
– The section of the Annual Report describing the
work of the Audit Committee.
We have nothing to report in respect of our
responsibility to report when the directors’ statement
relating to the Company’s compliance with the
Code does not properly disclose a departure from a
relevant provision of the Code specified under the
Listing Rules for review by the auditors.
Responsibilities for the financial statements
and the audit
Responsibilities of the directors for the
financial statements
As explained more fully in the Directors’
Responsibility Statement set out on pages 115-116,
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.
190
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
any 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 and
Nomination, Sustainability and Remuneration
Committees;
Kerry Group Annual Report 2023Financial Statements / Independent Auditors’ Report – Considered the results of the audit procedures
performed by component teams relating to
compliance with applicable laws and regulations
and to address assessed fraud risk;
– Considered the Group’s 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 of matters raised in so far as they are
related to the financial statements;
– Inspection of internal audit reports in so far as they
related to the financial statements;
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.
– Evaluating whether there was evidence of
– The Company Balance Sheet is in agreement with
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 and
extent of audit procedures performed.
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.
the accounting records.
Other exception reporting
Directors’ remuneration and transactions
Under the Companies Act 2014 we are required to
report to you if, in our opinion, the disclosures of
directors’ remuneration and transactions specified
by sections 305 to 312 of that Act have not been
made. We have no exceptions to report arising from
this responsibility.
We are required by the Listing Rules to review
the six specified elements of disclosures in the
report to shareholders by the Board on directors’
remuneration. We have no exceptions to report
arising from this responsibility.
Prior financial year Non Financial Statement
We are required to report if the Company has not
provided the information required by Regulation
5(2) to 5(7) of the European Union (Disclosure of
Non-Financial and Diversity Information by certain
large undertakings and groups) Regulations 2017 in
respect of the prior financial year. We have nothing
to report arising from this responsibility.
Prior financial year Remuneration Report
We are required to report if the Company has not
provided the information required by Section 1110N
of the Companies Act 2014 in respect of the prior
financial year. We have nothing to report arising
from this responsibility.
Appointment
We were appointed by the members on 28 April
2016 to audit the financial statements for the
year ended 31 December 2016 and subsequent
financial periods. The period of total uninterrupted
engagement is 8 years, covering the years ended 31
December 2016 to 31 December 2023.
Paul Barrie
for and on behalf of PricewaterhouseCoopers
Chartered Accountants and Statutory Audit Firm
Dublin
14 February 2024
191
Kerry Group Annual Report 2023Financial Statements / Independent Auditors’ Report
CONSOLIDATED INCOME STATEMENT
for the financial year ended 31 December 2023
Before
Non-
Trading
Items
2023
€’m
Non-
Trading
Items
2023
€’m
Before
Non-
Trading
Items
2022
€’m
Non-
Trading
Items
2022
€’m
Total
2023
€’m
Notes
Continuing operations
Revenue
2
8,020.3
Earnings before interest, tax, depreciation
and amortisation
1/2/3
1,165.1
Depreciation (net) and intangible asset amortisation
Non-trading items
Operating profit
Finance income
Finance costs
3
5
3
6
6
(299.1)
-
866.0
21.8
(72.1)
Share of joint ventures’ results after taxation
14
(1.9)
-
-
-
8.8
8.8
-
-
-
Total
2022
€’m
8,771.9
1,216.1
(304.3)
8,020.3
8,771.9
1,165.1
1,216.1
(299.1)
(304.3)
-
-
-
8.8
-
(146.2)
(146.2)
874.8
911.8
(146.2)
765.6
21.8
6.6
(72.1)
(72.8)
(1.9)
(0.4)
-
-
-
6.6
(72.8)
(0.4)
Profit before taxation
813.8
8.8
822.6
845.2
(146.2)
699.0
7
(103.1)
8.6
(94.5)
(114.5)
22.0
(92.5)
710.7
17.4
728.1
730.7
(124.2)
606.5
728.3
(0.2)
728.1
Cent
410.4
409.7
606.4
0.1
606.5
Cent
341.9
341.3
Income taxes
Profit after taxation
Attributable to:
Equity holders of the parent
Non-controlling interests
Earnings per A ordinary share
- basic
- diluted
9
9
192
Financial StatementsKerry Group Annual Report 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the financial year ended 31 December 2023
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 (expense)/income recognised directly in total other comprehensive income
Total comprehensive income
Attributable to:
Equity holders of the parent
Non-controlling interests
Notes
2023
€’m
728.1
24
24
17
5
26
17
(1.6)
1.3
0.1
(0.4)
(129.0)
(1.5)
(33.5)
7.1
(157.5)
570.6
570.8
(0.2)
570.6
2022
€’m
606.5
5.9
(2.8)
0.8
(0.2)
152.2
14.9
(13.4)
7.6
165.0
771.5
771.4
0.1
771.5
193
Financial StatementsKerry Group Annual Report 2023
CONSOLIDATED BALANCE SHEET
as at 31 December 2023
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
2023
€’m
31 December
2022
€’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
2,133.0
5,826.3
52.0
39.8
125.0
98.0
80.2
2,099.3
5,720.0
58.9
41.7
0.3
95.6
71.9
8,354.3
8,087.7
1,100.2
1,279.0
943.7
13.7
1.5
3,338.1
11,692.4
1,354.4
1,423.8
970.0
59.5
388.0
4,195.7
12,283.4
1,773.1
1,966.5
37.1
7.5
173.0
18.3
4.5
-
701.1
18.4
190.9
15.3
3.4
19.7
2,013.5
2,915.3
2,432.6
2,432.6
9.7
49.7
207.5
395.6
46.4
14.6
3,156.1
5,169.6
6,522.8
21.9
398.7
(44.6)
6,145.3
6,521.3
1.5
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
6,522.8
6,223.6
The financial statements were approved by the Board of Directors on 14 February 2024 and signed on its behalf by:
Tom Moran, Chairman
Edmond Scanlon, Chief Executive Officer
194
Financial StatementsKerry Group Annual Report 2023
COMPANY BALANCE SHEET
as at 31 December 2023
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
31 December
2023
€’m
31 December
2022
€’m
Notes
11
15
23
19
20
21
27
-
1,058.5
1,058.5
-
394.2
394.2
0.1
843.5
843.6
-
231.0
231.0
1,452.7
1,074.6
5.1
5.1
-
-
5.1
5.9
5.9
0.1
0.1
6.0
1,447.6
1,068.6
21.9
398.7
154.1
872.9
22.1
398.7
132.3
515.5
1,447.6
1,068.6
The Company earned a profit after taxation of €650.4m for the financial year ended 31 December 2023 (2022: €166.7m).
The financial statements were approved by the Board of Directors on 14 February 2024 and signed on its behalf by:
Tom Moran, Chairman
Edmond Scanlon, Chief Executive Officer
195
Financial StatementsKerry Group Annual Report 2023
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the financial year ended 31 December 2023
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 2022
Profit after taxation
Other comprehensive income/
(expense)
Total comprehensive income
Shares issued during the financial
year
Dividends paid
Share-based payment expense
Non-controlling interests arising on
acquisition
27
10
28
22.1
398.7
(129.6)
5,310.0
5,601.2
-
5,601.2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
606.4
171.0
(6.0)
606.4
165.0
0.1
-
606.5
165.0
171.0
600.4
771.4
0.1
771.5
-
-
22.9
-
-
-
(173.6)
(173.6)
-
-
22.9
-
-
-
-
1.6
-
(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
Profit after taxation
Other comprehensive expense
Total comprehensive (expense)/
income
Shares issued during the
financial year
Shares (purchased)/cancelled
during the financial year
Dividends paid
Share-based payment expense
-
-
-
-
(0.2)
-
-
27
27
10
28
-
-
-
(130.7)
-
(130.7)
728.3
(26.8)
701.5
728.3
(157.5)
570.8
(0.2)
728.1
-
(157.5)
(0.2)
570.6
-
-
-
-
-
-
-
0.2
(101.7)
(101.7)
-
(191.3)
(191.3)
21.6
-
21.6
-
-
-
-
-
(101.7)
(191.3)
21.6
At 31 December 2023
21.9
398.7
(44.6)
6,145.3
6,521.3
1.5
6,522.8
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 2022
Other comprehensive income
Share-based payment expense
28
At 31 December 2022
Other comprehensive
(expense)/income
Shares cancelled during the
financial year
Share-based payment expense
28
At 31 December 2023
1.7
-
-
1.7
-
0.2
-
1.9
0.3
107.4
(238.1)
1.4
(2.3)
(129.6)
-
-
0.3
-
-
-
0.3
-
167.1
22.9
130.3
-
(71.0)
3.1
-
4.5
0.8
171.0
-
(1.5)
22.9
64.3
-
-
21.6
151.9
(130.5)
(0.3)
0.1 (130.7)
-
-
-
-
-
-
0.2
21.6
(201.5)
4.2
(1.4)
(44.6)
The nature and purpose of each reserve within shareholders’ equity are described in note 35.
196
Financial StatementsKerry Group Annual Report 2023
COMPANY STATEMENT OF CHANGES IN EQUITY
for the financial year ended 31 December 2023
Share
Capital
€’m
Share
Premium
€’m
Other
Reserves
€’m
Retained
Earnings
€’m
Notes
Total
€’m
22.1
398.7
109.4
Company:
At 1 January 2022
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
Profit after taxation
Other comprehensive income
Total comprehensive income
Shares issued during the financial year
Shares (purchased)/cancelled
during the financial year
Dividends paid
Share-based payment expense
8
27
10
28
8
27
27
10
28
-
-
-
-
-
-
-
-
-
-
-
-
22.1
398.7
-
-
-
-
(0.2)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22.9
132.3
-
-
-
-
522.4
166.7
-
1,052.6
166.7
-
166.7
166.7
-
-
(173.6)
(173.6)
-
22.9
515.5
1,068.6
650.4
650.4
-
-
650.4
650.4
-
-
0.2
(101.7)
(101.7)
-
(191.3)
(191.3)
21.6
154.1
-
21.6
872.9
1,447.6
At 31 December 2023
21.9
398.7
Other Reserves comprise the following:
Capital
Redemption
Reserve
€’m
Other
Undenominated
Capital
€’m
Share-Based
Payment
Reserve
€’m
Note
At 1 January 2022
Share-based payment expense
28
At 31 December 2022
Other comprehensive income
Shares cancelled during the financial year
Share-based payment expense
28
At 31 December 2023
1.7
-
1.7
-
0.2
-
1.9
0.3
-
0.3
-
-
-
0.3
107.4
22.9
130.3
-
-
21.6
151.9
The nature and purpose of each reserve within shareholders’ equity are described in note 35.
Total
€’m
109.4
22.9
132.3
-
0.2
21.6
154.1
197
Financial StatementsKerry Group Annual Report 2023
CONSOLIDATED STATEMENT OF CASH FLOWS
for the financial year ended 31 December 2023
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
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
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
Purchase of own shares
Payment of lease liabilities
Issue of share capital
Repayment of borrowings
Cash inflow from interest rate swaps on repayment of borrowings
Proceeds from borrowings
Net cash movement due to financing activities
Net decrease 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 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 - pre lease liabilities
Net debt at end of the financial year - pre lease liabilities
Lease liabilities
Net debt at end of the financial year
198
Notes
2023
€’m
2022
€’m
822.6
699.0
14
5
6
29
29
5
30
13
14
5
10
29
27
29
29
29
29
29
219.6
79.5
1.9
(8.8)
50.3
185.5
(13.5)
(99.8)
(14.2)
1,223.1
(119.5)
13.9
(79.7)
1,037.8
221.6
82.7
0.4
146.2
66.2
(224.0)
(15.7)
(85.4)
(27.2)
863.8
(80.0)
5.4
(67.4)
721.8
(281.9)
(221.0)
11.6
3.3
38.1
1.4
(131.1)
(353.8)
(9.7)
(3.0)
-
316.4
(94.4)
(191.3)
(101.7)
(36.4)
-
(695.9)
34.4
4.1
(986.8)
(43.4)
969.8
(17.4)
909.0
(43.4)
657.4
614.0
1.0
(2.3)
612.7
(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)
23
11/29
23/29
(2,148.2)
(1,535.5)
(68.6)
(2,049.9)
(2,148.2)
(69.2)
(1,604.1)
(2,217.4)
Financial StatementsKerry Group Annual Report 2023
COMPANY STATEMENT OF CASH FLOWS
for the financial year ended 31 December 2023
Cash flows from operating activities
Profit before taxation
Adjustments for:
Depreciation (net)
Finance income
Change in working capital
Cash generated from operations
Finance income received
Net cash from operating activities
Investing activities
Investments in subsidiary undertakings
Net cash from investing activities
Financing activities
Dividends paid
Issue of share capital
Purchase of own shares
Net cash movement due to financing activities
Net decrease 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
Notes
2023
€’m
2022
€’m
645.9
162.1
0.1
(4.2)
29
(138.0)
503.8
4.2
508.0
(215.0)
(215.0)
0.1
(0.6)
11.3
172.9
0.6
173.5
-
-
15
10
27
29
(191.3)
(173.6)
-
(101.7)
(293.0)
-
-
-
-
-
(173.6)
(0.1)
0.1
-
199
Financial StatementsKerry Group Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2023
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 as issued
by the IASB (‘IFRS Accounting Standards’), International
Financial Reporting Interpretations Committee (‘IFRIC’)
interpretations and those parts of the Companies
Act, 2014 applicable to companies reporting under
IFRS Accounting Standards. 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 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 International Financial Reporting Standards
(‘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 Accounting Standards 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.
In the 2023 consolidated financial statements, the
Group has re-presented corresponding 2022 balances
to align with current year presentation in note 23
‘Analysis of financial instruments by category’ and note
200
24 ‘Financial instruments’ to reflect the disclosure of
deferred contingent consideration as a level 3 financial
instrument recorded at fair value through profit or loss.
Certain income statement headings and other financial
measures included in the consolidated financial
statements are not defined by IFRS such as earnings
before interest, tax, depreciation and amortisation
(‘EBITDA’), non-trading items and net debt. The Group
makes this distinction to enhance the understanding of
the financial performance of the business as outlined
in the Supplementary Information section on pages
269-272.
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. The going
concern of the Group was also assessed by considering
the potential impact of climate related risks on
profitability and liquidity, continuing inflationary cost
pressures, customer inventory management and rising
interest rates during the period. 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 2023Financial 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. 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.
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.
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. Given that
borrowings, deferred tax balances and certain intangible
assets are managed on a centralised basis, these items
are not allocated between operating segments for the
purposes of the information presented in note 2.
The Group has determined it has two operating
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 while our dairy consumer
brands can be found predominantly 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%
201
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
1. Statement of accounting policies (continued)
Property, plant and equipment (continued)
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.
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 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.
202
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.
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
1. Statement of accounting policies (continued)
Intangible assets (continued)
Brand related intangibles (continued)
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.
Costs relating to the development of computer
software for internal use are capitalised once the
following recognition criteria outlined 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 (including revenue growth
rates and EBITDA margin percentages) and long-term
growth rates.
When an impairment loss (other than on goodwill)
subsequently reverses, the carrying amount of
the asset is increased to the revised estimate of
its recoverable amount, not exceeding its carrying
amount that would have been determined had no
impairment loss been recognised for the asset in
prior years. Assets that are subject to amortisation are
reviewed for impairment whenever events or changes
in circumstances indicate the carrying amount may not
be recoverable. Impairment is reviewed by assessing
the asset’s value in use when compared to its carrying
value.
The carrying amounts of property, plant and
equipment are reviewed at each balance sheet date
to determine whether there is any indication of
impairment. An impairment loss is recognised when
the carrying value of an asset exceeds its recoverable
amount.
Inventories
Inventories are valued at the lower of cost and net
realisable value. Cost includes raw materials, direct
labour and all other expenditure incurred in the normal
course of business in bringing the products to their
present location and condition. Cost is calculated
at the weighted average cost incurred in acquiring
inventories. Net realisable value is the estimated
selling price of inventory on hand less all further costs
to completion and all costs expected to be incurred
in distribution and selling. Write-downs of inventories
are primarily recognised under ‘Raw materials and
consumables’ in the Consolidated Income Statement.
Income taxes
Income taxes include both current and deferred
taxes. Income taxes are charged or credited to the
Consolidated Income Statement except when they
relate to items charged or credited directly in other
comprehensive income or shareholders’ equity. In this
instance the income taxes are also charged or credited
to other comprehensive income or shareholders’
equity.
The current tax charge is calculated as the amount
payable based on taxable profit and the tax rates
applying to those profits in the financial year together
with adjustments relating to prior years. Deferred taxes
are calculated using the tax rates that are expected to
apply in the period when the liability is settled or the
asset is realised, based on tax rates that have been
enacted or substantively enacted at the balance sheet
date.
The Group is subject to uncertainties, including tax
audits, in any of the jurisdictions in which it operates.
The Group accounts for uncertain tax positions
in line with IFRIC 23 ‘Uncertainty over Income Tax
Treatments’. The Group considers each uncertain tax
treatment separately or together with one or more
uncertain tax treatments based on which approach
better predicts the resolution of the uncertainty. If the
Group concludes that it is not probable that a taxation
authority will accept an uncertain tax treatment
the Group reflects the effect of the uncertainty in
determining the related taxable profit, tax bases,
unused tax losses, unused tax credits or tax rate.
203
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
1. Statement of accounting policies (continued)
Income taxes (continued)
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.
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.
204
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/or 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.
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
1. Statement of accounting policies (continued)
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
Long-Term and Short-Term Incentive Plan:
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.
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 for all share-based payments 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.
All Employee Share Plan:
The Group grants share-based payments to
participating employees under its All Employee Share
Plan (AESP). The equity-settled share-based awards
granted under the plan 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. The fair value of the award is measured using
the Monte Carlo option pricing model.
At the balance sheet date, the estimate of the level of
vesting for this plan 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 monthly 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.
205
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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.
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.
1. Statement of accounting policies (continued)
Business combinations
The acquisition method of accounting is used
for the acquisition of businesses. The cost of the
acquisition is measured at the aggregate fair value
of the consideration given. The acquiree’s identifiable
assets, liabilities and contingent liabilities that
meet the conditions for recognition under IFRS 3
‘Business Combinations’ are recognised at their fair
value at the date the Group assumes control of the
acquiree. Acquisition related costs are recognised in
the Consolidated Income Statement as incurred. If
the business combination is achieved in stages, the
acquisition date fair value of the Group’s previously
held investment in the acquiree is remeasured to fair
value at the acquisition date through profit or loss.
Certain assets and liabilities are not recognised at their
fair value at the date control was achieved as they
are accounted for using other applicable IFRSs. These
include deferred tax assets/liabilities and also any
assets related to employee benefit arrangements.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which
the combination occurs, the Group reports provisional
amounts for the items for which the valuation of the
fair value of assets and liabilities acquired is still in
progress. Those provisional amounts are adjusted
during the measurement period of one year from the
date control is achieved when additional information is
obtained about facts and circumstances which would
have affected the amounts recognised as of that date.
Where applicable, the consideration for the acquisition
includes any asset or liability resulting from a contingent
consideration arrangement measured at fair value at the
date control is achieved. Subsequent changes in such fair
values are adjusted against the cost of acquisition where
they qualify as measurement period adjustments. All
other subsequent changes in the fair value of contingent
consideration classified as an asset or liability are
accounted for in accordance with relevant IFRSs.
Any fair value adjustments in relation to acquisitions
completed prior to 1 January 2010 have been accounted
for under IFRS 3 ‘Business Combinations (2004)’.
Investments in subsidiaries
Investments in subsidiaries held by the Parent
Company are carried at cost less accumulated
impairment losses.
Investments in joint ventures
Investments in joint ventures held by the Group are
accounted for using the equity method, after initially
being recognised at cost in the Consolidated Balance
Sheet.
Financial instruments
Financial assets and financial liabilities are recognised
on the Consolidated Balance Sheet when the Group
becomes party to the contractual provisions of the
instrument.
Financial assets and liabilities are initially measured
at fair value plus transaction costs, except for those
classified as fair value through profit or loss, which are
initially measured at fair value.
206
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
1. Statement of accounting policies (continued)
Financial instruments (continued)
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.
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.
207
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
1. Statement of accounting policies (continued)
Financial instruments (continued)
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.
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.
208
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. 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.
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements 1. Statement of accounting policies (continued)
Critical accounting estimates
and judgements (continued)
Impairment of goodwill and intangible assets (Estimation)
(continued)
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 industry
inflation and customer inventory management.
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 macroeconomic conditions 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.
209
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements 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 endorsed by the EU. 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 2023 but do not have a
material effect on the results or financial position of the Group:
Effective Date
- IAS 1 (Amendments)
Presentation of Financial Statements
1 January 2023
- IAS 8 (Amendments)
Accounting Policies, Changes in Accounting Estimates and Errors
1 January 2023
- IAS 12 (Amendments)
Income Taxes
The following Standards and Interpretations are not yet effective for the Group and are not
expected to have a material effect on the results or financial position of the Group:
- IAS 1 (Amendments)
Presentation of Financial Statements
- IFRS 16 (Amendments)
Leases
- IAS 7 & IFRS 7
(Amendments)
Supplier Finance Arrangements
1 January 2023
Effective Date
1 January 2024
1 January 2024
1 January 2024
- IAS 21 (Amendments)
The Effects of Changes in Foreign Exchange Rates
1 January 2025
210
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
2. Analysis of results
The Group has determined it has two operating 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, while our dairy consumer
brands can be found predominantly in chilled cabinets in retailers across Ireland and the UK.
Taste &
Nutrition
2023
€’m
Dairy
Ireland
2023
€’m
Group
Eliminations
and
Unallocated
2023
€’m
Taste &
Nutrition
2022
€’m
Total
2023
€’m
Dairy
Ireland
2022
€’m
Group
Eliminations
and
Unallocated
2022
€’m
Total
2022
€’m
External revenue
6,936.7
1,083.6
-
8,020.3
7,387.0
1,384.9
-
8,771.9
Inter-segment revenue
38.2
199.8
(238.0)
-
29.6
154.0
(183.6)
-
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
6,974.9
1,283.4
(238.0)
8,020.3
7,416.6
1,538.9
(183.6)
8,771.9
1,185.9
53.4
(74.2)
1,165.1
1,220.1
70.7
(74.7)
1,216.1
(219.6)
(79.5)
8.8
874.8
21.8
(72.1)
(1.9)
822.6
(94.5)
728.1
728.3
(0.2)
728.1
(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
*
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
8,165.4
683.4
2,843.6 11,692.4
8,583.1
766.2
2,934.1 12,283.4
(1,734.1)
(247.7)
(3,187.8) (5,169.6)
(1,897.0)
(289.4)
(3,873.4)
(6,059.8)
6,431.3
435.7
(344.2)
6,522.8
6,686.1
476.8
(939.3)
6,223.6
Other segmental information
Property, plant and
equipment additions
Depreciation (net)
Intangible asset additions
Intangible asset
amortisation
Share of joint ventures’
results after taxation
271.0
37.6
0.9
309.5
238.9
17.6
0.3
256.8
197.7
1.6
39.0
21.4
-
0.2
0.5
14.3
40.3
219.6
200.1
15.9
79.5
0.4
43.0
20.5
0.1
0.2
1.0
11.7
39.5
221.6
12.2
82.7
1.9
-
-
1.9
0.4
-
-
0.4
211
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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
2023
€’m
4,637.3
1,798.6
500.8
Dairy
Ireland
2023
€’m
1,051.9
31.7
-
Total
2023
€’m
5,689.2
1,830.3
500.8
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
6,936.7
1,083.6
8,020.3
7,387.0
1,384.9
8,771.9
Analysis by primary geographic market
Disaggregation of revenue from external customers is analysed by geographical split:
Taste &
Nutrition
2023
€’m
134.7
1,382.5
3,772.5
1,647.0
6,936.7
Dairy
Ireland
2023
€’m
405.3
600.3
32.5
45.5
1,083.6
Total
2023
€’m
540.0
1,982.8
3,805.0
1,692.5
8,020.3
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
Republic of Ireland
Rest of Europe
Americas
APMEA
External revenue
Information about geographical areas
Europe
2023
€’m
Americas
2023
€’m
APMEA
2023
€’m
Total
2023
€’m
Europe
2022
€’m
Americas
2022
€’m
APMEA
2022
€’m
Total
2022
€’m
Assets by location
5,177.2
4,941.4
1,573.8
11,692.4
5,357.9
5,486.3
1,439.2
12,283.4
Property, plant and
equipment additions
92.1
161.9
55.5
309.5
55.8
147.4
53.6
256.8
Intangible asset additions
14.3
1.6
-
15.9
12.1
0.1
-
12.2
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 €540.0m (2022: €540.4m). The non-current assets located in the Republic of Ireland are €1,285.7m
(2022: €1,503.6m).
Revenues from external customers include €939.9m (2022: €958.9m) in the UK and €2,972.1m (2022: €3,399.8m) in the
USA. The non-current assets in the UK are €352.1m (2022: €353.3m) and in the USA are €3,112.1m (2022: €3,267.1m).
For clarity the UK is included within Europe in the tables above.
Taste & Nutrition external revenues consists of €2,186.4m (2022: €2,218.5m) in emerging markets and €4,750.3m (2022:
€5,168.6m) in developed markets. Third party revenues in Taste & Nutrition in the foodservice channel was €2,138.0m
(2022: €2,055.6m) and €4,798.7m (2022: €5,331.5m) in the non-foodservice channels.
There are no material dependencies or concentrations on individual customers which would warrant disclosure
under IFRS 8 ‘Operating Segments’. The accounting policies of the operating 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.
212
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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
Continuing
Operations
2023
€’m
Continuing
Operations
2022
€’m
8,020.3
8,771.9
Notes
4,148.6
1,173.2
1,367.5
0.9
(11.2)
176.2
4,940.0
1,186.1
1,495.0
11.4
(0.9)
(75.8)
4
19
16
Earnings before interest, tax, depreciation and amortisation
1,165.1
1,216.1
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
186.6
190.9
34.9
(1.9)
79.5
(8.8)
874.8
32.7
(2.0)
82.7
146.2
765.6
301.3
303.2
PwC
Ireland
2023
€’m
PwC
Other
2023
€’m
PwC
Worldwide
2023
€’m
PwC
Ireland
2022
€’m
PwC
Other
2022
€’m
PwC
Worldwide
2022
€’m
Statutory disclosure:
Group audit
Other assurance services
Total assurance services
Tax advisory services
Other non-audit services
Total non-audit services
1.4
-
1.4
-
-
-
Total auditors’ remuneration
1.4
Assurance services
Non-audit services
Total
2.4
-
2.4
-
0.1
0.1
2.5
3.8
-
3.8
-
0.1
0.1
3.9
97%
3%
100%
1.4
0.1
1.5
-
-
-
1.5
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%
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 €5,056 (2022: €4,838) which are due to the Group’s auditor in respect of the
Parent Company. Reimbursement of auditors’ expenses amounted to €0.1m (2022: €0.2m).
213
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
4. Total staff numbers and costs
The average number of people employed by the Group was:
Europe
Americas
APMEA
Taste &
Nutrition
2023
Number
4,004
9,917
6,226
Dairy
Ireland
2023
Number
1,645
-
-
Total
2023
Number
5,649
9,917
6,226
20,147
1,645
21,792
The aggregate payroll costs of employees (including Executive Directors) was:
Taste &
Nutrition
2023
€’m
288.7
721.7
243.5
Dairy
Ireland
2023
€’m
113.6
-
-
Total
2023
€’m
402.3
721.7
243.5
Europe
Americas
APMEA
Taste &
Nutrition
2022
Number
4,688
11,037
5,998
21,723
Taste &
Nutrition
2022
€’m
337.3
806.3
243.3
Dairy
Ireland
2022
Number
1,628
-
-
1,628
Dairy
Ireland
2022
€’m
108.1
-
-
Total
2022
Number
6,316
11,037
5,998
23,351
Total
2022
€’m
445.4
806.3
243.3
1,253.9
113.6
1,367.5
1,386.9
108.1
1,495.0
Social welfare costs of €168.2m (2022: €175.9m) and share-based payment expense of €21.6m (2022: €22.9m) are
included in payroll costs. Pension costs included in the payroll costs are disclosed in note 26.
214
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
5. Non-trading items
Global Business Services expansion
Acquisition integration costs
Accelerate Operational Excellence
Profit/(loss) on disposal of businesses and assets
Non-trading items (before tax)
Tax on above
Non-trading items (net of related tax)
(i) Profit/(loss) on disposal of businesses and assets
Property, plant and equipment - disposed
Goodwill
Brand related intangible assets
Inventories
Assets classified as held for sale - disposed
Assets classified as held for sale - impaired
Trade and other receivables
Deferred tax liabilities
Trade and other payables
Consideration
Cash received
Vendor loan note
Disposal related costs
Cumulative exchange difference on translation recycled on
disposal
Notes
(ii)
(iii)
(iv)
(i)
7
Businesses
2023
€’m
Notes
11
12
12
18
(1.7)
(0.7)
(0.5)
(1.6)
(349.8)
-
(0.4)
26.7
0.7
2023
€’m
(4.1)
(16.5)
(53.5)
(74.1)
82.9
8.8
8.6
17.4
*Assets
2023
€’m
(11.3)
-
-
-
(3.9)
(15.3)
-
-
-
2022
€’m
(13.6)
(20.3)
(49.2)
(83.1)
(63.1)
(146.2)
22.0
(124.2)
Total
2023
€’m
(13.0)
(0.7)
(0.5)
(1.6)
(353.7)
(15.3)
(0.4)
26.7
0.7
(327.3)
(30.5)
(357.8)
356.8
125.0
481.8
(43.0)
438.8
1.5
13.9
-
13.9
(13.5)
0.4
-
Profit/(loss) on disposal of businesses and assets
113.0
(30.1)
Net cash inflow on disposal:
Consideration
Less: cash disposed
Less: disposal related costs paid
Less: vendor loan note
Businesses
2023
€’m
*Assets
2023
€’m
481.8
-
(40.4)
(125.0)
316.4
13.9
-
(2.3)
-
11.6
*
Assets represent non-current assets and assets classified as held for sale.
370.7
125.0
495.7
(56.5)
439.2
1.5
82.9
Total
2023
€’m
495.7
-
(42.7)
(125.0)
328.0
215
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
5. Non-trading items (continued)
(i) Profit/(loss) on disposal of businesses and assets (continued)
Profit/(loss) on disposal of businesses
As previously announced, the Group completed the sale of the trade and assets of its Sweet Ingredients Portfolio
during the period for a final consideration of €475.5m comprising of a cash consideration of €350.5m (following routine
closing adjustments) plus a €125.0m interest bearing vendor loan note. The operational footprint disposed consisted of
four manufacturing facilities in the US (in Illinois, Kansas, Missouri, and California), and six facilities across the UK, the
Netherlands, Germany and France. 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’. As part of the ongoing portfolio review during the year the Group also disposed of small operations in South
Africa, UK and South Korea for a consideration of €6.3m. The profit on disposal of these businesses was €113.0m, with
the related tax charge of €9.8m. The profit on disposal of these businesses includes the associated costs in relation to
these divestments.
In 2022 the Group divested of its subsidaries in Russia and Belarus and sold a small cereal operation in North America.
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’. The loss on
disposal of these businesses for the year end 31 December 2022 was €63.0m and the related tax credit was €4.3m.
(Loss)/profit on disposal of assets
The Group disposed of property, plant and equipment primarily in North America and Europe for a consideration
of €13.9m resulting in a profit of €2.6m. This profit on disposal of property, plant and equipment was offset by an
impairment charge of €15.3m in the US and a €13.5m charge with respect to related disposal costs. In addition to these
charges, a number of additional assets were disposed across the group and a €3.9m loss on disposal was recognised. A
tax credit of €6.0m arose on the disposal of assets for the period.
During 2022, the Group disposed of property, plant and equipment primarily in North America and APMEA for a
combined consideration of €51.7m resulting in a gain of €6.2m. A tax charge of €1.9m arose on the disposal of assets. In
2022, certain assets classified as held for sale based in the USA and APMEA were impaired to their fair value less costs to
sell by €5.6m, consisting of €1.2m of property, plant and equipment impairment, €2.7m of goodwill impairment, €1.7m
of brand related intangibles impairment and €nil of estimated costs to sell including marketing, legal, site rectification,
environmental and other related expenses necessary to complete the disposals in 2023. The related tax credit was
€0.5m. In addition, in 2022 there was a specific impairment charge of €0.3m and €0.4m in relation to goodwill and
brand related intangibles respectively recorded in intangible assets.
(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. The Group incurred costs of €4.1m (2022: €13.6m), to conclude
the three year programme, reflecting relocation of resources, advisory fees, redundancies and the streamlining of
operations. The associated tax credit was €0.5m (2022: €3.0m).
(iii) Acquisition integration costs
These costs of €16.5m (2022: €20.3m) 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 €2.8m (2022: €4.5m) arose due to tax deductions
available on acquisition related costs.
(iv) Accelerate Operational Excellence
These costs of €53.5m (2022: €49.2m) predominantly reflect costs of streamlining operations, project management
costs and consultancy fees 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 €9.1m (2022: €11.6m) arose due to tax deductions available on accelerated
operational excellence costs.
216
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
Notes
2023
€’m
2022
€’m
6. Finance income and costs
Finance income:
Interest income on deposits
Interest income on vendor loan note
24
Finance income
Finance costs:
Interest payable and finance charges
Interest on lease liabilities
Interest rate derivative
11(iii.i)
Net interest income on retirement benefits obligation
26
Finance costs
Net finance costs
14.5
7.3
21.8
(72.8)
(2.6)
0.2
(75.2)
3.1
(72.1)
(50.3)
6.6
-
6.6
(70.9)
(3.4)
0.4
(73.9)
1.1
(72.8)
(66.2)
217
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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
2023
€’m
2022
€’m
126.5
1.9
128.4
(25.3)
103.1
(0.8)
(7.8)
(8.6)
125.7
1.9
127.6
(33.1)
94.5
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
5
17
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
Recognition of unprovided deferred tax assets
Other adjusting items
Income tax expense
2023
€’m
2022
€’m
822.6
699.0
102.8
87.4
1.4
3.6
(2.8)
(4.8)
(5.6)
(0.1)
94.5
0.3
9.6
0.6
(3.6)
-
(1.8)
92.5
An increase in the Group’s applicable tax rate of 1% would reduce profit after taxation by €8.2m (2022: €7.0m).
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.
The Government of Ireland, the jurisdiction in which Kerry Group plc is incorporated, transposed the Global Minimum
Tax Pillar Two rules into domestic legislation as part of the Finance (No. 2) Act 2023 (the ‘Finance Act’). The Finance
Act closely follows the EU Minimum Tax Directive and OECD Guidance released to date. The Pillar Two rules applies a
15% effective tax rate on profits and the Group is within the scope of these rules from 1 January 2024. The Pillar Two
legislation sets out a detailed and highly complex set of rules on how to calculate the 15% effective tax rate. As a result
of these complexities, the accounting effective tax rate is not always indicative of the effective tax rate as calculated
under Pillar Two.
As the Pillar Two legislation was not effective for Kerry Group plc in respect of the year ended 31 December 2023, the
Group has no related current tax exposure. The Group applies the exception to recognising and disclosing information
about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12
issued in May 2023. Pillar Two legislation is not expected to have a material impact on the financial statements of the
Group. The Group continue to monitor changes in law and guidance as they apply to Kerry Group plc.
218
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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 €650.4m (2022: €166.7m).
9. Earnings per A ordinary share
Basic earnings per share
Profit after taxation attributable to equity holders of the parent
410.4
728.3
341.9
606.4
EPS
cent
2023
€’m
EPS
cent
2022
€’m
Diluted earnings per share
Profit after taxation attributable to equity holders of the parent
409.7
728.3
341.3
606.4
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
2023
m’s
177.4
0.3
177.7
175.8
2022
m’s
177.4
0.3
177.7
177.0
10. Dividends
Group and Company:
Amounts recognised as distributions to equity shareholders in the financial year
Final 2022 dividend of 73.40 cent per A ordinary share paid 12 May 2023
(Final 2021 dividend of 66.70 cent per A ordinary share paid 6 May 2022)
Interim 2023 dividend of 34.60 cent per A ordinary share paid 10 November 2023
(Interim 2022 dividend of 31.40 cent per A ordinary share paid 11 November 2022)
2023
€’m
2022
€’m
130.0
118.0
61.3
55.6
191.3
173.6
Since the financial year end the Board has proposed a final 2023 dividend of 80.80 cent per A ordinary share which
amounts to €142.0m based on ordinary shares in issue at 31 December 2023. The payment date for the final dividend
will be 10 May 2024 to shareholders registered on the record date as at 12 April 2024. The consolidated financial
statements do not reflect this dividend.
11. Property, plant and equipment
Group:
Property, plant and equipment
Right-of-use assets
Notes
2023
€’m
2022
€’m
(i)
(ii)
2,070.3
2,037.2
62.7
62.1
2,133.0
2,099.3
219
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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 2022
Businesses acquired
Additions
Purchase adjustments
Transfer from construction in progress
Businesses disposed
Disposals
Transfer to held for sale
Exchange translation adjustment
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
240.6
3.0
136.3
-
(170.7)
(0.6)
(0.8)
(4.7)
6.2
At 31 December 2022
1,351.3
2,152.6
209.3
Businesses acquired
Additions
Purchase adjustments
Transfer from construction in progress
Businesses disposed
Disposals
Transfer from/(to) held for sale
Exchange translation adjustment
30
5
5
18
0.5
23.8
(3.6)
55.0
(1.0)
2.0
37.7
-
153.6
(2.2)
(32.0)
(155.7)
1.1
(46.6)
(6.6)
(34.3)
4.6
209.0
-
(208.6)
-
(0.8)
0.1
(5.0)
At 31 December 2023
1,348.5
2,147.1
208.6
Accumulated depreciation and impairment
At 1 January 2022
Charge during the financial year
Businesses acquired
Businesses disposed
Transfer to held for sale
Exchange translation adjustment
At 31 December 2022
Charge during the financial year
Businesses disposed
Disposals
Transfer from/(to) held for sale
Exchange translation adjustment
At 31 December 2023
Carrying value
At 31 December 2022
At 31 December 2023
220
420.3
1,317.8
43.0
(4.7)
(8.1)
(28.5)
8.0
146.9
(7.2)
(82.2)
(153.1)
26.4
430.0
1,248.6
42.3
-
143.1
(1.5)
(24.3)
(153.2)
0.5
(10.4)
438.1
(3.3)
(34.1)
1,199.6
3
5
5
18
-
-
-
-
-
-
-
-
-
-
-
-
-
921.3
910.4
904.0
947.5
209.3
208.6
2.6
3.8
2,037.2
2,070.3
13.8
3,775.5
-
1.3
-
-
(0.1)
(1.1)
-
0.5
14.4
-
2.6
-
-
-
46.1
213.8
9.0
-
(26.6)
(119.7)
(258.8)
88.3
3,727.6
7.1
273.1
(3.6)
-
(3.2)
(2.1)
(190.6)
-
(0.2)
14.7
11.3
1.0
(0.1)
(0.8)
(5.4)
(86.1)
3,718.9
1,749.4
190.9
(12.0)
(91.1)
-
(181.6)
0.4
11.8
1.2
-
34.8
1,690.4
186.6
(1.5)
(1.8)
(179.3)
-
(0.3)
10.9
(2.8)
(44.8)
1,648.6
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
11. Property, plant and equipment (continued)
(i) Property, plant and equipment analysis (continued)
Company:
Cost
At 1 January 2022
At 31 December 2022 and 2023
Accumulated depreciation
At 1 January 2022
Charge during the financial year
At 31 December 2022
Charge during the financial year
At 31 December 2023
Carrying value
At 31 December 2022
At 31 December 2023
Land and
Buildings
Total
€’m
4.7
4.7
4.5
0.1
4.6
0.1
4.7
0.1
-
221
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
11. Property, plant and equipment (continued)
(ii) Right-of-use assets analysis
Land and
Buildings
€’m
Notes
Plant,
Machinery
and
Equipment
€’m
Motor
Vehicles
€’m
Group:
Cost
At 1 January 2022
Businesses acquired
Additions
Businesses disposed
Terminations
Transfer to held for sale
Exchange translation adjustment
At 31 December 2022
Businesses acquired
Additions
Businesses disposed
Terminations
Transfer to held for sale
Exchange translation adjustment
At 31 December 2023
Accumulated depreciation
At 1 January 2022
Charge during the financial year
Businesses disposed
Terminations
Transfer to held for sale
Exchange translation adjustment
At 31 December 2022
Charge during the financial year
Businesses disposed
Terminations
Transfer to held for sale
Exchange translation adjustment
At 31 December 2023
Carrying value
At 31 December 2022
At 31 December 2023
92.2
0.2
34.9
(3.9)
(9.4)
(10.8)
1.5
104.7
2.6
19.4
-
(18.5)
(0.6)
(2.8)
104.8
43.8
23.6
(2.8)
(7.6)
(4.0)
1.9
54.9
25.1
-
(16.8)
(0.4)
(2.0)
60.8
49.8
44.0
30
5
18
3
5
18
23.1
0.1
5.2
(0.1)
(4.2)
(2.4)
-
21.7
-
13.0
-
(1.8)
(0.1)
(0.4)
32.4
11.7
5.8
(0.1)
(2.7)
(1.1)
(0.1)
13.5
7.0
-
(1.6)
-
(0.2)
18.7
8.2
13.7
16.8
-
2.9
(1.3)
(4.5)
(1.0)
0.8
13.7
-
4.0
-
(3.0)
(0.1)
(0.2)
14.4
11.4
3.3
(1.0)
(4.3)
(0.6)
0.8
9.6
2.8
-
(2.9)
-
(0.1)
9.4
4.1
5.0
Total
€’m
132.1
0.3
43.0
(5.3)
(18.1)
(14.2)
2.3
140.1
2.6
36.4
-
(23.3)
(0.8)
(3.4)
151.6
66.9
32.7
(3.9)
(14.6)
(5.7)
2.6
78.0
34.9
-
(21.3)
(0.4)
(2.3)
88.9
62.1
62.7
The right-of-use assets consist of:
-
land and buildings for warehouse space, offices and manufacturing facilities. The lease terms vary and range from
1 to 90 years for buildings and range from 1 to 87 years for land;
machinery, equipment, tools, furniture and other equipment when combined are insignificant to the total leased
assets portfolio and have an average remaining lease term of 2 years; and
motor vehicles for management and sales functions and trucks for distribution in specific businesses. The lease
terms for motor vehicles range from 1 to 4 years with an average remaining term of 2 years.
-
-
222
Kerry Group Annual Report 2023Financial 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*
2023
€’m
34.9
3.7
0.2
2.6
2023
€’m
42.9
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
2023
€’m
69.2
39.0
(1.9)
-
2022
€’m
74.2
43.9
(4.2)
-
(36.4)
(35.1)
-
-
(1.3)
68.6
2023
€’m
26.2
42.4
68.6
(8.2)
(4.0)
2.6
69.2
2022
€’m
26.9
42.3
69.2
(iii.iv) At the balance sheet date the Group had commitments under non-cancellable leases which fall due as follows:
Discounted
2023
€’m
Undiscounted
2023
€’m
Discounted
2022
€’m
Undiscounted
2022
€’m
Within 1 year
Between 1 and 2 years
Between 2 and 5 years
After 5 years
26.2
16.9
18.2
7.3
68.6
31.0
18.5
24.1
10.7
84.3
26.9
15.6
21.6
5.1
69.2
32.0
19.5
24.3
6.4
82.2
223
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
12. Intangible assets
Notes
Goodwill
€’m
Brand
Related
Intangibles
€’m
Computer
Software
€’m
Cost
At 1 January 2022
Businesses acquired
Additions
Purchase adjustment
Businesses disposed
Disposals
Transfer to held for sale
Exchange translation adjustment
At 31 December 2022
Businesses acquired
Additions
Purchase adjustment
Businesses disposed
Disposals
Transfer (to)/from held for sale
Exchange translation adjustment
At 31 December 2023
Accumulated amortisation and impairment
At 1 January 2022
Charge during the financial year
Businesses disposed
Disposals
Impairment
Transfer to held for sale
Exchange translation adjustment
At 31 December 2022
Charge during the financial year
Businesses disposed
Disposals
Impairment
Transfer (to)/from held for sale
Exchange translation adjustment
At 31 December 2023
Carrying value
At 31 December 2022
At 31 December 2023
3,135.5
197.8
2,633.2
122.8
-
(0.9)
(9.6)
-
(193.8)
96.1
3,225.1
30
176.9
-
8.2
(0.7)
-
(10.3)
(42.2)
3,357.0
-
3.0
(6.6)
-
(77.8)
51.4
41.6
-
3.2
(0.5)
(7.2)
20.2
(30.3)
2,753.0
2,726.0
409.8
5
5
18
3
5
5
18
14.2
314.4
-
-
-
0.3
-
(0.1)
14.4
-
-
-
-
(11.0)
(2.9)
0.5
50.9
(4.5)
-
0.4
(33.8)
10.2
337.6
52.3
-
(7.2)
-
19.4
(8.4)
393.7
3,210.7
3,356.5
2,388.4
2,359.3
Total
€’m
6,166.9
321.1
12.2
1.7
(16.5)
(1.2)
(271.6)
148.3
6,360.9
218.5
15.9
11.4
(1.2)
(14.7)
7.2
(72.1)
398.2
0.5
12.2
(0.4)
(0.3)
(1.2)
-
0.8
-
15.9
-
-
(7.5)
(2.7)
0.4
415.9
6,525.9
257.6
31.8
(0.1)
(0.9)
-
-
0.5
288.9
27.2
-
(7.5)
-
(2.6)
(0.6)
305.4
120.9
110.5
586.2
82.7
(4.6)
(0.9)
0.7
(33.8)
10.6
640.9
79.5
-
(14.7)
-
5.8
(11.9)
699.6
5,720.0
5,826.3
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 €1,629.9m (2022: €1,689.6m) which have indefinite lives.
Approximately €4.4m (2022: €3.8m) of computer software additions during the year were internally generated, included
in this are payroll costs of €3.9m (2022: €2.9m). The Group has not capitalised product development expenditure in 2023
(2022: €nil).
The Group has no separate individual intangible asset that is material, as all intangibles acquired are integrated and
developed within the existing business.
224
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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 2023 or 2022 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 2023, there has been no specific
impairment charge, in 2022 there was a specific impairment charge of €0.3 and €0.4m 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
2023
€’m
Goodwill
2022
€’m
Indefinite Life
Intangibles
2023
€’m
Indefinite Life
Intangibles
2022
€’m
644.0
2,181.5
404.0
634.7
2,157.1
279.5
127.0
3,356.5
139.4
3,210.7
166.4
1,398.3
41.1
24.1
1,629.9
168.2
1,450.8
46.9
23.7
1,689.6
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 (including revenue growth rates and EBITDA margin
percentages). 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
2023
Discount
Rates
2022
Growth
Rates
2023
Growth
Rates
2022
8.8%
8.8%
9.8%
8.1%
8.1%
9.4%
1.3%
1.1%
3.7%
1.3%
1.1%
3.6%
8.5%
7.9%
2.0%
2.0%
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.
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 the economic environment particularly industry inflation, rising interest rates and customer inventory
management 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.
225
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
12. Intangible assets (continued)
Impairment testing (continued)
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 2023 or 2022.
Further, a 5% increase in the discount rate would not have resulted in an impairment charge in 2023 or 2022 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 2023 or 2022. 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 2023 or 2022. Management believes that no reasonable change, in normal
circumstances, in any of the 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
FVOCI
Investments
€’m
Other
Investments
€’m
At 1 January 2022
Additions
Disposals
Fair value movements
Exchange translation adjustment
At 31 December 2022
Additions
Disposals
Fair value movements
Exchange translation adjustment
At 31 December 2023
4.4
10.4
-
-
0.3
15.1
3.0
(5.7)
-
(0.3)
12.1
Total
€’m
49.9
13.1
(3.3)
(3.8)
3.0
45.5
2.7
(3.3)
(3.8)
2.7
43.8
58.9
2.9
(6.7)
1.4
(1.5)
39.9
5.9
(12.4)
1.4
(1.8)
52.0
Investments held at fair value through other comprehensive income
During 2023, the Group increased its investments by €3.0m (2022: €10.4m), which was offset by a disposal of €5.7m
(2022: €nil). These investments have no fixed maturity or coupon rate. A fair value assessment was performed at 31
December 2023 and at 31 December 2022 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).
226
Kerry Group Annual Report 2023Financial 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
2023
€’m
41.7
-
(1.9)
39.8
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). 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.
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
manufacturer of texturised plant based proteins. Management performed a review of the contractual arrangements
and determined it remains a joint venture.
15. Investments in subsidiaries
Company:
At 1 January
Additions
At 31 December
In 2023, the Company increased its investment in its subsidiaries in order to fund acquisitions.
16. Inventories
Raw materials and consumables
Finished goods and goods for resale
Expense inventories
At 31 December
2023
€’m
843.5
215.0
2022
€’m
843.5
-
1,058.5
843.5
2023
€’m
509.4
514.4
76.4
2022
€’m
598.7
690.6
65.1
1,100.2
1,354.4
These inventory balances are valued at the lower of cost and net realisable value. Write-downs of inventories
recognised as an expense approximates to 1.6% (2022: 1.4%) of raw materials and consumables in the Consolidated
Income Statement.
227
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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:
93.6
4.1
-
1.6
3.7
Property,
Plant and
Equipment
€’m
Intangible
Assets
€’m
Tax Credits
and NOLs
€’m
Retirement
Benefits
Obligation
€’m
Short-Term
Temporary
Differences
and Other
Differences
€’m
362.2
(5.6)
(27.4)
1.2
8.4
3.4
(57.3)
(34.9)
Note
7
Total
€’m
379.5
(31.8)
-
-
(7.6)
0.2
(7.4)
23.4
(2.1)
-
(0.5)
22.4
17.8
(1.0)
(0.7)
(2.1)
17.7
103.0
397.8
(29.3)
3.5
(94.6)
380.4
7
2.8
(10.9)
(11.2)
3.1
(16.9)
(33.1)
-
-
-
(20.7)
-
-
(2.6)
(6.0)
0.5
(7.1)
-
0.2
0.4
0.5
2.9
(6.7)
(20.2)
(5.0)
103.2
360.2
(40.0)
(0.3)
(107.7)
315.4
At 1 January 2022
Consolidated Income
Statement movement
Recognised in OCI during the
financial year
Related to businesses
acquired/(disposed)
Exchange translation
adjustment
At 31 December 2022
Consolidated Income
Statement movement
Recognised in OCI during the
financial year
Related to businesses
acquired/(disposed)
Exchange translation
adjustment
At 31 December 2023
The short-term temporary differences and other temporary differences recognised in other comprehensive income
comprise fair value movements on cash flow hedges of €0.4m (2022: €0.2m). 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
2023
€’m
(80.2)
395.6
315.4
2022
€’m
(71.9)
452.3
380.4
The total deductible temporary differences and unused tax losses for which deferred tax assets have not been
recognised is €12.0m (2022: €24.8m). The Group does not have any unrecognised losses which have an expiry date.
Deferred tax has not been recognised in respect of withholding taxes and other taxes that would be payable on
the unremitted earnings of foreign subsidiaries, as the Group is in a position to control the timing of reversal of the
temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. The
deferred tax liabilities which have not been recognised in respect of these temporary differences are not material as the
Group can rely on the availability of participation exemptions and tax credits in the context of the Group’s investments
in subsidiaries.
An increase of 1% in the tax rates at which deferred tax is calculated would increase the net deferred tax balance of the
Group by €14.7m (2022: €17.2m).
228
Kerry Group Annual Report 2023Financial 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
2023
€’m
1.5
-
-
-
-
1.5
-
-
1.5
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.
During the year, the Group held certain property, plant and equipment classified as held for sale in the Taste & Nutrition
segment in North America. These assets have been impaired by €15.3m representing their fair value less costs to sell
(note 5).
At 31 December 2022, the Group had net assets classified as held for sale of €368.3m. In March 2023, the Group
disposed of its Sweet Ingredients Portfolio from the Taste & Nutrition segment, for a final consideration of €475.5m
comprising of a cash consideration of €350.5m (following routine closing adjustments, see note 5) plus a €125.0m
interest bearing vendor loan note. 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’.
In 2022, 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 of
goodwill impairment and by €1.7m 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.
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
2023
€’m
Group
2022
€’m
Company
2023
€’m
Company
2022
€’m
1,228.8
1,369.3
(40.3)
(46.3)
1,188.5
1,323.0
47.5
-
41.3
1.7
51.5
-
44.5
4.8
-
-
-
-
-
-
-
-
394.2
231.0
-
-
-
-
1,279.0
1,423.8
394.2
231.0
All receivable balances are due within 1 year except for €1.7m (2022: €4.8m) outlined above. All receivable balances are
within terms with the exception of certain trade receivables which are past due and are detailed on the next page.
229
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
19. Trade and other receivables (continued)
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
3
Note
Written off during the financial year
Exchange translation adjustment
At end of the financial year
2023
€’m
2022
€’m
1,050.6
1,105.9
89.9
27.1
12.3
8.6
141.5
33.6
22.8
19.2
1,188.5
1,323.0
2023
€’m
46.3
0.9
(6.2)
(0.7)
40.3
2022
€’m
42.1
11.4
(8.4)
1.2
46.3
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.
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.
230
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
20. Trade and other payables
Trade payables
Other payables and accruals
Lease liabilities
Deferred payments on acquisition of businesses
PAYE
Social security costs
Group
2023
€’m
Group
2022
€’m
Company
2023
€’m
Company
2022
€’m
1,535.4
1,705.7
190.6
206.0
26.2
2.1
11.6
7.2
26.9
5.6
15.1
7.2
1,773.1
1,966.5
4.5
-
-
0.6
-
-
5.1
5.3
-
-
0.6
-
-
5.9
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
2023
€’m
Group
2022
€’m
Company
2023
€’m
Company
2022
€’m
Note
Grants & other
At beginning of the financial year
Grants received during the financial year
Amortised during the financial year
3
Utilised during the financial year
Exchange translation adjustment
At end of the financial year
Analysed as:
Current liabilities
Non-current liabilities
19.4
3.3
(1.9)
(1.6)
(0.1)
19.1
4.5
14.6
19.1
20.9
0.8
(2.0)
-
(0.3)
19.4
3.4
16.0
19.4
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 and
other deferred income received.
22. Other non-current liabilities
Other payables and accruals
Lease liabilities
Deferred payments on acquisition of businesses
Group
2023
€’m
66.5
42.4
98.6
Group
2022
€’m
78.9
42.3
21.4
207.5
142.6
Company
2023
€’m
Company
2022
€’m
-
-
-
-
-
-
-
-
All of the above balances are payable within 2 to 5 years except for €7.3m (2022: €5.5m) which is not due to be paid until
after 5 years.
231
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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
2023
€’m
Assets/
(Liabilities)
at Fair Value
through Profit
or Loss
2023
€’m
Derivatives
Designated
as Hedging
Instruments
2023
€’m
Assets/
(Liabilities) at
FVOCI
2023
€’m
Notes
Total
2023
€’m
52.0
14.4
-
124.3
1,279.0
943.7
12.1
-
-
-
-
-
12.1
2,413.4
-
-
2,236.4
125.0
-
14.4
-
-
-
-
14.4
13.7
0.7
-
12.1
52.0
14.4
-
(7.7)
(9.5)
-
(17.2)
(7.5)
(9.7)
(17.2)
(2.8)
-
-
-
-
(9.5)
-
(9.5)
-
(9.5)
12.1
2,413.4
-
-
-
-
-
-
-
-
(2,469.7)
(7.7)
(9.5)
(1,980.6)
(4,467.5)
(1,817.7)
(2,649.8)
(4,467.5)
12.1
(2,054.1)
-
-
-
-
-
-
-
-
-
(34.7)
0.2
(2,435.2)
(2,469.7)
(9.5)
943.7
(1,535.5)
(68.6)
(1,604.1)
Group:
Financial asset investments
13
Forward foreign exchange contracts
24 (i.i)
Interest rate swaps
Vendor loan note
Trade and other receivables
24 (ii.ii)
24
19
Cash at bank and in hand
24 (iii.i)
Total financial assets
Current assets
Non-current assets - Other
non-current financial instruments
Non-current assets - Financial
asset investments
-
-
-
124.3
1,279.0
943.7
2,347.0
2,222.7
124.3
-
2,347.0
Borrowings and overdrafts
24 (iii.i)
(2,476.3)
Forward foreign exchange contracts
24 (i.i)
24 (ii.ii)
20/22
Interest rate swaps
Trade and other payables
Total financial liabilities
Current liabilities
Non-current liabilities
Total net financial (liabilities)/assets
-
-
(1,879.9)
(4,356.2)
(1,808.1)
(2,548.1)
(4,356.2)
(2,009.2)
39.9
-
-
-
-
-
39.9
-
-
39.9
39.9
6.6
-
-
(100.7)
(94.1)
(2.1)
(92.0)
(94.1)
(54.2)
Included in the previous 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
(34.7)
0.2
(2,441.8)
(2,476.3)
-
943.7
(1,532.6)
(68.6)
(1,601.2)
20/22
-
-
6.6
6.6
-
-
6.6
-
6.6
232
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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 2023, the Group’s debt portfolio included:
-
-
-
-
€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.
€375m of a forward starting interest rate swap, with a trade date of December 2023. Effective from H1 2025, the
Group will pay an annual fixed rate of 2.43% and receive 6 month EURIBOR up until the termination date in H1
2035. The swap is accounted for as a cashflow hedge of a highly probable future debt issuance replacing the 2025
Senior Notes (details of which are set out above).
The adjustment to Senior Notes classified under fair value through profit or loss of €6.6m of an asset (2022: €12.5m)
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
2022
€’m
Assets/
(Liabilities)
at Fair Value
through Profit
or Loss
2022
€’m
Derivatives
Designated as
Hedging
Instruments
2022
€’m
Notes
Assets/
(Liabilities) at
FVOCI
2022
€’m
Group:
Financial asset investments
13
Forward foreign exchange contracts
24 (i.i)
Interest rate swaps
24 (ii.ii)
Vendor loan note
Trade and other receivables
24
19
Cash at bank and in hand
24 (iii.i)
Total financial assets
Current assets
Non-current assets - Other
non-current financial instruments
Non-current assets - Financial
asset investments
-
-
-
-
1,423.8
970.0
2,393.8
2,393.8
-
-
2,393.8
Borrowings and overdrafts
24 (iii.i)
(3,146.2)
Forward foreign exchange contracts
24 (i.i)
Interest rate swaps
24 (ii.ii)
-
-
Trade and other payables
20/22
(2,082.1)
Total financial liabilities
Current liabilities
Non-current liabilities
Total net financial (liabilities)/assets
(5,228.3)
(2,663.5)
(2,564.8)
(5,228.3)
(2,834.5)
43.8
-
-
-
-
-
43.8
-
-
43.8
43.8
12.5
-
-
(27.0)
(14.5)
(4.1)
(10.4)
(14.5)
29.3
Total
2022
€’m
58.9
22.8
37.0
-
1,423.8
970.0
15.1
-
-
-
-
-
15.1
2,512.5
-
-
2,453.3
0.3
-
22.8
37.0
-
-
-
59.8
59.5
0.3
-
15.1
58.9
59.8
15.1
2,512.5
-
(17.2)
(21.5)
-
(38.7)
(18.4)
(20.3)
(38.7)
21.1
-
-
-
-
-
-
-
-
(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)
233
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
23. Analysis of financial instruments by category (continued)
Included in the previous table are the following components of net debt:
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
Notes
Assets/
(Liabilities) at
FVOCI
2022
€’m
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)
20/22
(69.2)
(2,245.4)
-
-
12.5
12.5
-
-
12.5
-
12.5
-
-
-
-
15.5
-
15.5
-
15.5
-
-
-
-
-
-
-
-
-
The following table outlines the financial assets and liabilities held by the Company at the balance sheet date:
Total
2022
€’m
(0.2)
(1.7)
(3,131.8)
(3,133.7)
15.5
970.0
(2,148.2)
(69.2)
(2,217.4)
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
2023
€’m
2022
€’m
19
20
-
394.2
394.2
-
(5.1)
(5.1)
-
231.0
231.0
-
(5.9)
(5.9)
389.1
225.1
234
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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 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. These items are disclosed in the Consolidated Statement of Changes in Equity,
as represented in the table below:
Equity 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
2023
€’m
6,521.3
1,535.5
68.6
100.7
2022
€’m
6,221.9
2,148.2
69.2
27.0
8,226.1
8,466.3
In April 2023 the Group repaid in full US$750m of its 2023 US$ Senior Notes issued in 2013. US$250m of these public
notes were swapped from US dollar fixed to Euro fixed rate using cross currency interest rate swaps which were closed
out at the time of the repayment. The repayment was funded from existing cash resources of the Group.
In June 2023 the Group amended and restated it’s revolving credit facility increasing from €1,100m to €1,500m with
a new maturity date of June 2028. The facility contains two 1-year extension options, exercisable on the 1st and 2nd
anniversaries of the facility and which, if exercised, would extend the maturity date of the facility to June 2030.
In December 2023 the Group entered into a €375m forward starting interest rate swap as a cashflow hedge for a highly
probable debt issuance replacing the 2025 Senior Notes.
The Group has no borrowings that carry financial covenants.
There were no notable debt financing events in 2022.
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
2023
Times
1.5
21.8
2022
Times
1.8
18.1
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.
235
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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)
(ii)
Foreign exchange rate risk management - key foreign exchange exposure of the Group and the disclosures on
forward foreign exchange contracts.
Interest rate risk management - key interest rate exposures of the Group and the disclosures on interest rate
derivatives.
Liquidity risk management - key banking facilities available to the Group and the maturity profile of the Group’s debt.
(iii)
(iv) Credit risk management - details in relation to the management of credit risk within the Group.
(v) Fair value of financial instruments - disclosures in relation to the fair value of financial instruments.
(vi) 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 €27.9m (2022: €6.8m asset) and a sterling liability
of €28.5m (2022: €21.7m asset). Based on these net positions, as at 31 December 2023, 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 €nil (2022: €1.2m).
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 2023 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 €99.4m (2022: €35.1m) and
€25.5m (2022: €30.2m), 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:
- current1
- non-current2
Forward foreign exchange contracts
2023
€’m
Asset
2023
€’m
Liability
13.7
0.7
14.4
(7.5)
(0.2)
(7.7)
2023
€’m
Total
6.2
0.5
6.7
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
*
1
2
Location of line item in the Consolidated Balance Sheet
Other current financial instruments
Other non-current financial instruments
236
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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
2023
€’m
6.2
0.5
6.7
2022
€’m
5.7
(0.1)
5.6
2023
€’m
2022
€’m
1,408.8
1,835.6
52.9
38.2
1,461.7
1,873.8
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
2023
€’m
6.7
(4.3)
(2.4)
(6.7)
2022
€’m
5.6
(6.1)
0.5
(5.6)
The fair value included in the hedging reserve will primarily be released to the Consolidated Income Statement within 9
months (2022: 11 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
Amount reclassified from OCI to profit or loss1
Ineffectiveness recognised in profit or loss1
*
1
Location of line item in the Consolidated Income Statement
Other general overheads
2023
€’m
(3.8)
2.0
(1.8)
(2.0)
-
(2.0)
2022
€’m
5.1
(2.2)
2.9
2.2
-
2.2
There were no transactions during 2023 or 2022 which were designated as hedges that did not occur, nor are there
hedges on forecast transactions that are no longer expected to occur.
237
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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 2023
Euro
Sterling
US Dollar
Others
At 31 December 2022
Total
Pre CCS
€’m
Impact
of CCS
€’m
Total
after CCS
€’m
Floating
Rate
Net Debt
€’m
Fixed
Rate Debt
€’m
(2,214.0)
175.0
(2,039.0)
236.0
(2,275.0)
93.0
314.3
205.5
(1,601.2)
-
(175.0)
-
-
93.0
139.3
205.5
(1,601.2)
93.0
139.3
205.5
673.8
-
-
-
(2,275.0)
(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)
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 €1.4m (2022: €7.5m liability) for movement in exchange rates since the date of execution which is directly
offset by a gain of €1.4m (2022: €7.5m gain) on the application of hedge accounting on the cross currency swaps.
The floating rate financial liabilities are at rates which fluctuate mainly based upon SOFR. SONIA and 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 approximately 10% (2022: 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 0.8% (2022: 0.6%).
238
Kerry Group Annual Report 2023Financial 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
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:
2023
€’m
Asset
2023
€’m
Liability
2023
€’m
Total
2022
€’m
Asset
2022
€’m
Liability
Notes
Designated in a hedging relationship:
Interest rate swap contracts - cash flow
hedges
- current1
- non-current2
Interest rate swap contracts - fair value
hedges
- current1
- non-current2
Interest rate swap contracts
(a)
(b)
-
-
-
-
-
-
-
(0.1)
(0.1)
37.0
-
-
37.0
(0.1)
(0.1)
(9.4)
(9.4)
-
(9.4)
(9.5)
-
(9.4)
(9.5)
-
-
-
-
37.0
*
1
2
Location of line item in the Consolidated Balance Sheet
Other current financial instruments
Other non-current financial instruments
2022
€’m
Total
37.0
37.0
-
-
-
-
(21.5)
(21.5)
(1.6)
(19.9)
(21.5)
(1.6)
(19.9)
15.5
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 which has now been completed.
239
Kerry Group Annual Report 2023Financial 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
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/
(Liability)
Notional Principal
2023
%
2022
%
2023
€’m
2022
€’m
2023
€’m
2022
€’m
Interest rate swap contracts
less than 1 year
> 5 years
Interest rate swap contracts - cash flow hedges
-
2.58
-
37.0
-
234.1
2.43
-
(0.1)
(0.1)
-
37.0
375.0
375.0
-
234.1
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:
2023
€’m
(0.1)
2022
€’m
37.0
Amount reclassified from hedge reserve to profit or loss re: foreign exchange rate fluctuations1
-
(38.8)
Retained earnings and other reserves:
Cash flow hedging reserve
Cost of hedging reserve
Accumulated hedge ineffectiveness
0.1
-
-
1.6
0.1
0.1
0.1
(37.0)
*
1
Location of line item in the Consolidated Balance Sheet
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:
Amount recognised in cash flow hedging reserve
Amount 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
2023
€’m
(5.0)
(0.1)
4.3
(0.7)
(0.1)
(1.6)
2022
€’m
13.8
0.4
(13.3)
(0.6)
(0.1)
0.2
240
Kerry Group Annual Report 2023Financial 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:
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
*
1
2
Location of line item in the Consolidated Income Statement
Other general overheads
Finance costs
2023
€’m
2022
€’m
(4.3)
13.3
0.7
0.1
4.3
0.8
0.6
0.1
(13.3)
0.7
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:
Average Contracted
Fixed Interest Rate
Fair Value Asset/
(Liability)
Notional Principal
2023
%
2022
%
2023
€’m
2022
€’m
2023
€’m
2022
€’m
Interest rate swap contracts
less than 1 year
1 - 2 years
2 - 5 years
Interest rate swap contracts - fair value hedges
-
3.20
-
(1.6)
-
234.1
2.38
-
(9.4)
-
175.0
-
2.38
-
(9.4)
(19.9)
(21.5)
-
175.0
-
175.0
409.1
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.
241
Kerry Group Annual Report 2023Financial 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)
(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 movements1
Receivables:
Foreign exchange rate fluctuations2
Retained earnings and other reserves:
Hedge ineffectiveness
Cost of hedging reserve
2023
€’m
(9.4)
2022
€’m
(21.5)
6.6
12.5
1.4
7.5
-
1.4
9.4
0.1
1.4
21.5
*
1
2
Location of line item in the Consolidated Balance Sheet
Borrowings and overdrafts
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
2023
€’m
-
2022
€’m
(1.2)
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 fluctuations1
Interest rate movements2
Ineffectiveness recognised in profit or loss2
Fixed rate borrowings:
Foreign exchange rate fluctuations1
Interest rate movements2
Receivables:
Foreign exchange rate fluctuations3
Net impact
2023
€’m
2022
€’m
6.1
5.9
(0.1)
(10.4)
(22.2)
(1.5)
-
-
(5.9)
22.2
(6.1)
(0.1)
10.4
(1.5)
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.
242
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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 2023 with significant available liquidity and at the balance sheet date no significant loan maturities
arise until September 2025. During 2023 the Group amended and restated it’s revolving credit facility, the facility has
increased from €1,100m to €1,500m. In addition the Group entered into €375m of a forward starting interest rate swap.
This swap provides protection to the Group against future interest rate movements and also fixes the reference interest
rate applicable to the Group on a future debt issuance. The forward starting interest rate swap is accounted for as a
cashflow hedge. No other significant financing activities were undertaken during 2023.
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 2023 and 2022.
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 2023, the Group had undrawn committed bank facilities of €1,500m (2022: €1,100m), and a portfolio of
undrawn standby facilities amounting to €335m (2022: €343m). The undrawn committed facilities comprise primarily of
a revolving credit facility maturing between 4 - 5 years (2022: between 3 - 4 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 €1,744.8m (2022: €1,934.0m) is payable within 1
year, €66.5m (2022: €78.9m) 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.
243
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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)
Bank overdrafts
Bank loans
Senior Notes
Borrowings and overdrafts - contractual repayments
On
demand &
up to 1
year
€’m
(34.7)
(2.4)
Note
Up to
2 years
€’m
2 - 5
years
€’m
> 5 years
€’m
Total
€’m
(34.7)
(2.4)
-
-
-
-
-
-
-
-
-
(950.0)
(37.1)
(950.0)
(1,500.0)
(2,450.0)
(1,500.0)
(2,487.1)
Lease liabilities (undiscounted)
11 (iii.iv)
(31.0)
(18.5)
Deferred payments on acquisition of businesses
(2.1)
(7.1)
(24.1)
(91.5)
(10.7)
(84.3)
-
(100.7)
Interest commitments on borrowings and overdrafts
(33.8)
(26.8)
(33.8)
(22.5)
(116.9)
At 31 December 2023
(104.0)
(1,002.4)
(149.4)
(1,533.2)
(2,789.0)
(70.2)
(975.6)
(115.6)
(1,510.7)
(2,672.1)
Reconciliation to net debt position:
Borrowings and overdrafts - contractual repayments
(37.1)
(950.0)
-
(1,500.0)
(2,487.1)
Bank Loans - amortised cost adjustments
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)
-
-
-
-
(2.9)
6.6
2.6
-
-
-
11.1
-
2.6
8.2
6.6
(37.1)
(946.3)
2.6
(1,488.9)
(2,469.7)
-
(9.4)
943.7
-
-
-
(0.1)
-
(9.5)
943.7
906.6
(955.7)
2.6
(1,489.0)
(1,535.5)
11 (iii.iv)
(26.2)
(16.9)
(18.2)
(7.3)
(68.6)
Net debt as at 31 December 2023
880.4
(972.6)
(15.6)
(1,496.3)
(1,604.1)
Bank overdrafts
Bank loans
Senior Notes
Borrowings and overdrafts - contractual repayments
On
demand &
up to 1
year
€’m
Note
Up to
2 years
€’m
2 - 5
years
€’m
> 5 years
€’m
(0.2)
-
-
(1.7)
-
-
-
-
Total
€’m
(0.2)
(1.7)
(702.4)
(702.6)
-
(950.0)
(1,500.0)
(3,152.4)
(1.7)
(950.0)
(1,500.0)
(3,154.3)
Lease liabilities (undiscounted)
11 (iii.iv)
(32.0)
(19.5)
Deferred payments on acquisition of businesses
(5.6)
(5.2)
(24.3)
(16.2)
(6.4)
-
(82.2)
(27.0)
Interest commitments on borrowings and overdrafts
(39.9)
(33.8)
(49.4)
(33.8)
(156.9)
At 31 December 2022
(780.1)
(60.2)
(1,039.9)
(1,540.2)
(3,420.4)
(740.2)
(26.4)
(990.5)
(1,506.4)
(3,263.5)
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
-
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)
(21.6)
(5.1)
(69.2)
(17.3)
(985.2)
(1,492.3)
(2,217.4)
11 (iii.iv)
244
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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.
On demand &
up to 1 year
€’m
Up to
2 years
€’m
Interest rate swaps inflow
Interest rate swaps outflow
Net interest rate swaps inflow/(outflow)
Forward foreign exchange contracts inflow/
(outflow)
At 31 December 2023
4.2
(11.8)
(7.6)
6.2
(1.4)
Interest rate swaps inflow
Interest rate swaps outflow
Net interest rate swaps inflow/(outflow)
Forward foreign exchange contracts inflow/
(outflow)
On demand &
up to 1 year
€’m
47.0
(18.4)
28.6
5.7
2.9
(8.6)
(5.7)
0.5
(5.2)
Up to
2 years
€’m
4.2
(12.2)
(8.0)
(0.1)
2 - 5
years
€’m
-
(3.0)
(3.0)
-
(3.0)
2 - 5
years
€’m
2.9
(15.6)
(12.7)
-
At 31 December 2022
34.3
(8.1)
(12.7)
> 5 years
€’m
4.0
(0.1)
3.9
-
3.9
> 5 years
€’m
-
-
-
-
-
Total
€’m
11.1
(23.5)
(12.4)
6.7
(5.7)
Total
€’m
54.1
(46.2)
7.9
5.6
13.5
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 €nil (2022: €38.8m)
1 - 2 years - swaps (outflow) of (€1.4m) (2022: €nil)
2 - 5 years - swaps (outflow) of €nil (2022: (€7.5m))
(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 €1,500m to June 2028; 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.
245
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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% - matured and repaid
in April 2023.
(f) 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 2023 and 2022 all cash, short-term deposits and other liquid investments had a
maturity of less than 3 months. Cash at bank and in hand of €943.7m (2022: €970.0m) includes an amount of €243.8m
(2022: €322.1m) held on short-term deposit of which €50.8m (2022: €70.7m) 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.
As of 31 December 2023, the Group holds an interest-bearing vendor loan note which was entered into as part of the
consideration for the sale of the trade and assets of the Sweet Ingredients Portfolio from the Taste & Nutrition segment
(note 5). The carrying amount of the debt receivable is €124.3m, this represents the amount due from third parties,
initially recognised at fair value of €125.0m and interest capitalised on a bi-annual basis. As the Group objective for
the vendor loan note is to collect the contractual cash flows when due, the Group measures at amortised cost using
the effective interest method subsequent to initial recognition adjusted for any expected credit loss assessment. The
borrower shall repay the interest-bearing vendor loan note in full (together with all accrued but unpaid interest thereon)
on the 3 year tenor termination date. The termination date may be extended using extension options.
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 €394.2m (2022:
€231.0m) as all amounts are expected to be recovered in full in the short-term.
(v) 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).
246
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
24. Financial instruments (continued)
Financial risk management objectives (continued)
(v) Fair value of financial instruments (continued)
(a) Fair value of financial instruments carried at fair value (continued)
Financial assets
Interest rate swaps:
Non-current
Current
Forward foreign exchange contracts:
Non-current
Current
Financial asset investments:
Fair value through profit or loss
Fair value through other
comprehensive income
Financial liabilities
Forward foreign exchange contracts:
Non-current
Interest rate swaps:
Current
Non-current
Current
Deferred payments on acquisition of businesses Non-current
Current
The reconciliation of Level 3 financial asset investments is provided in note 13.
Fair Value
Hierarchy
2023
€’m
2022
€’m
Level 2
Level 2
Level 2
Level 2
Level 1
Level 3
-
-
0.7
13.7
39.9
12.1
-
37.0
0.3
22.5
43.8
15.1
Level 2
(0.2)
(0.4)
Level 2
(7.5)
(16.8)
Level 2
(9.5)
(19.9)
Level 2
-
(1.6)
Level 3
(98.6)
(21.4)
Level 3
(2.1)
(5.6)
Deferred contingent consideration is included in Level 3 of the fair value hierarchy, details of the movement in the year
are included in note 30. The fair value is determined considering the expected payment, discounted to present value
using a risk adjusted discount rate. The expected payment is determined separately in respect of each individual earn-
out agreement taking into consideration the expected level of profitability of each acquisition.
(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
2023
€’m
Fair
Value
2023
€’m
Carrying
Amount
2022
€’m
Fair
Value
2022
€’m
Financial liabilities: Senior Notes - Public
Level 2
(2,441.8)
(2,204.5)
(3,144.3)
(2,761.4)
(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.
247
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
24. Financial instruments (continued)
Financial risk management objectives (continued)
(vi) 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
943.7
14.4
-
958.1
-
-
-
-
970.0
22.8
37.0
1,029.8
-
-
-
-
-
-
-
-
(34.7)
(7.7)
(9.5)
(51.9)
-
-
-
-
(0.2)
(17.2)
(21.5)
(38.9)
943.7
14.4
-
958.1
(34.7)
(7.7)
(9.5)
(51.9)
970.0
22.8
37.0
1,029.8
(0.2)
(17.2)
(21.5)
(38.9)
-
(4.6)
-
(4.6)
-
4.6
-
4.6
-
(13.1)
(15.2)
(28.3)
-
13.1
15.2
28.3
943.7
9.8
-
953.5
(34.7)
(3.1)
(9.5)
(47.3)
970.0
9.7
21.8
1,001.5
(0.2)
(4.1)
(6.3)
(10.6)
At 31 December 2023
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 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
248
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
25. Provisions
Insurance
€’m
Non-Trading
Items
€’m
Environmental
€’m
Group:
At 1 January 2022
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
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 2023
Analysed as:
Current liabilities
Non-current liabilities
43.3
22.7
(5.7)
(11.3)
-
(2.3)
46.7
17.1
(15.8)
(6.7)
-
1.0
42.3
7.4
-
-
-
(0.9)
-
6.5
2.2
-
-
(0.9)
-
7.8
-
-
-
-
12.6
-
12.6
2.4
-
-
-
(0.4)
14.6
2023
€’m
18.3
46.4
64.7
Total
€’m
50.7
22.7
(5.7)
(11.3)
11.7
(2.3)
65.8
21.7
(15.8)
(6.7)
(0.9)
0.6
64.7
2022
€’m
15.3
50.5
65.8
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 2023 and 2022; these costs
are expected to be paid within 24 months.
Environmental
This includes provisions for site remediation, restoration and environmental works stemming from established best
practice for recently acquired acquisitions. 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 Republic of Ireland, 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.
249
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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
2023 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, which are not available for public inspection, are carried out every three
years in Ireland (most recent 1 January 2021) and the UK (most recent 31 December 2020); and annually in the USA
(most recent 1 January 2023).
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. Fluctuations in interest rates can significantly impact
the present value of the defined benefit obligation which can lead to volatility in the Group’s Consolidated Balance
Sheet, Consolidated Income Statement and Consolidated Statement of Comprehensive Income. Interest rates also
impact the funding requirements of the schemes. However, a portion of the schemes’ assets are invested in Liability
Driven Investment (LDI) strategies which are designed to offset the impact of changes in interest rates on the scheme’s
liabilities, hence mitigating some of the interest rate risk.
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 surplus/(deficit). 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 invested in LDI strategies which
are designed to offset the impact of changes in inflation rates on the scheme’s liabilities, hence mitigating some of the
inflation rate risk. Some benefits are also subject to inflation caps.
Mortality risk
The present value of the defined benefit obligation is calculated by reference to the best estimate of the mortality of
schemes’ participants. 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
Recognised in the Consolidated Income Statement
Re-measurements of the net defined benefit liability:
- Return on scheme assets (excluding amounts included in net interest cost)
- Experience losses on schemes’ liabilities
- Actuarial gains arising from changes in demographic assumptions
- Actuarial losses/(gains) arising from changes in financial assumptions
Recognised in the Consolidated Statement of Comprehensive Income
Total
2023
€’m
62.9
1.4
(2.0)
(3.1)
59.2
(11.3)
11.9
(14.5)
47.4
33.5
92.7
2022
€’m
71.0
3.0
(2.0)
(1.1)
70.9
536.1
44.4
(2.6)
(564.5)
13.4
84.3
The total service cost is included in total staff numbers and costs (note 4) and the net interest cost is included in finance
income and costs (note 6).
250
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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
2023
€’m
Schemes
in Deficit
2023
€’m
Schemes
in Surplus
2022
€’m
Schemes
in Deficit
2022
€’m
Total
2023
€’m
Total
2022
€’m
Present value of defined benefit obligation
(314.2)
(703.1)
(1,017.3)
(286.6)
(677.7)
(964.3)
Fair value of scheme assets
412.2
653.4
1,065.6
382.2
647.5
1,029.7
Net recognised surplus/(deficit) before deferred tax
98.0
(49.7)
Net related deferred tax (liability)/asset
(12.3)
12.2
Net recognised surplus/(deficit) after deferred tax
85.7
(37.5)
48.3
(0.1)
48.2
95.6
(30.2)
(11.9)
7.3
83.7
(22.9)
Net recognised surplus/(deficit) by region:
Ireland
2023
€’m
UK
2023
€’m
Rest of
World
2023
€’m
Total
2023
€’m
Ireland
2022
€’m
UK
2022
€’m
Rest of
World
2022
€’m
65.4
(4.6)
60.8
Total
2022
€’m
Present value of defined
benefit obligation
(314.2)
(617.1)
(86.0)
(1,017.3)
(286.6)
(591.2)
(86.5)
(964.3)
Fair value of scheme assets
412.2
589.1
64.3
1,065.6
382.2
586.0
61.5
1,029.7
Net recognised surplus/
(deficit) before deferred tax
Net related deferred tax
(liability)/asset
Net recognised surplus/
(deficit) after deferred tax
98.0
(28.0)
(21.7)
48.3
95.6
(5.2)
(25.0)
65.4
(12.3)
6.9
5.3
(0.1)
(11.9)
1.0
6.3
(4.6)
85.7
(21.1)
(16.4)
48.2
83.7
(4.2)
(18.7)
60.8
The surplus at 31 December 2023 relates to the Irish scheme (31 December 2022: Irish scheme) 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:
2023
2022
Rate used to discount schemes’ liabilities
Inflation assumption
Rate of increase in salaries
Rate of increase for pensions in payment and
deferred pensions
Ireland
%
3.60
2.20
N/A*
Rest of
World
%
UK
%
4.60 4.70 - 6.00
3.00
N/A*
2.50
4.50
Ireland
%
4.20
2.30
N/A*
UK
%
Rest of
World
%
4.85 5.00 - 5.35
3.05
N/A*
2.20 2.35 - 2.95
-
2.30 2.35 - 3.00
*
Not applicable as the Irish, and UK defined benefit schemes are closed to future accrual.
2.50
4.50
-
251
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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
2023
2022
Ireland
Years
UK
Years
23
24
24
26
21
23
22
26
Rest of
World
Years
21 - 22
23
22 - 23
24 - 25
Ireland
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 2023
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.
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
Impact on schemes’ liabilities of changes in assumptions
2023
2022
Ireland
%
UK
%
Rest of
World
%
Ireland
%
UK
%
Rest of
World
%
8.2%
8.1%
4.0%
8.0%
8.2%
4.0%
(7.3%)
(7.2%)
(3.8%)
(7.2%)
(7.3%)
(3.7%)
6.5%
3.3%
(5.9%)
(3.4%)
-
-
6.4%
3.3%
(5.8%)
(3.5%)
-
-
-
-
-
-
0.2%
(0.2%)
-
-
-
-
0.2%
(0.2%)
Increase in life expectancy of 1 Year
4.1%
4.0%
2.0%
4.1%
3.0%
2.0%
Decrease in life expectancy of 1 Year
(4.1%)
(4.0%)
(2.0%)
(4.1%)
(3.0%)
(2.0%)
252
Kerry Group Annual Report 2023Financial 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:
Present value of the defined benefit obligation at beginning of the financial year
(964.3)
(1,560.1)
2023
€’m
2022
€’m
Current service cost
Past service and settlements
Contributions by employees
Interest expense
Benefits paid
Re-measurements:
- experience losses on schemes’ liabilities
- actuarial gains arising from changes in demographic assumptions
- actuarial (losses)/gains arising from changes in financial assumptions
Exchange translation adjustment
(1.4)
2.0
-
(44.5)
45.2
(11.9)
14.5
(47.4)
(9.5)
(3.0)
2.0
-
(28.3)
54.4
(44.4)
2.6
564.5
48.0
Present value of the defined benefit obligation at end of the financial year
(1,017.3)
(964.3)
Present value of the defined benefit obligation at end of the financial year that relates to:
Wholly unfunded schemes
Wholly or partly funded schemes
(14.0)
(1,003.3)
(1,017.3)
(14.2)
(950.1)
(964.3)
The weighted average duration of the defined benefit obligation at 31 December 2023 is approximately 15 years (2022:
approximately 16 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)
Exchange translation adjustment
Fair value of scheme assets at end of the financial year
2023
€’m
2022
€’m
1,029.7
1,626.3
47.6
12.0
-
29.4
15.3
-
(45.2)
(54.4)
11.3
10.2
(536.1)
(50.8)
1,065.6
1,029.7
253
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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 Bonds and Debt Securities
Equities
- Global Equities
- Emerging Market Equities
Diversified Growth Funds
Cash and other
2023
€’m
604.5
328.8
96.0
11.4
13.9
11.0
2022
€’m
488.3
135.6
126.2
14.6
54.2
210.8
Total fair value of pension schemes’ assets
1,065.6
1,029.7
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 2023 and 2022 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 2023 or 2022.
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 leveraged/unleveraged
bonds and derivatives and the value of the LDI assets at 31 December 2023 across the schemes was €604.5m (2022:
€488.3m) 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 2024, the Group expects to make
contributions of approximately €17.0m to its defined benefit schemes.
27. Share capital
Group and Company:
Authorised
2023
€’m
2022
€’m
280,000,000 A ordinary shares of 12.50 cent each
35.0
35.0
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
Shares cancelled during the financial year
At end of the financial year
22.1
-
(0.2)
21.9
22.1
-
-
22.1
The Company has one class of ordinary share which carries no right to fixed income. The total number of shares in issue
at 31 December 2023 was 175,792,661 (2022: 176,986,481).
254
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
27. Share capital (continued)
Shares issued
During 2023 a total of 179,441 (2022: 138,030) 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.
Share buy back programme
At the 2023 Annual General Meeting, shareholders passed a resolution authorising the Company to purchase up to
10% of its own issued share capital. In 2022, no shares were purchased under this programme.
On 1 November 2023, the Company commenced a share buyback programme of up to €300.0m. The purpose of the
buyback programme is to reduce the share capital of the Company and as such, the Company will cancel any shares
repurchased. The buyback programme is carried out within certain pre-set parameters and within the limitations of the
share buyback authority granted at Kerry’s Annual General Meeting on 27 April 2023 and any renewal of that authority.
During 2023 the total number of shares acquired was 1,373,261 at a cost of €101.7m. All shares acquired were A
ordinary shares with a nominal value of 12.50 cent. The shares acquired were cancelled immediately following their
repurchase. At 31 December 2023 there was no financial liability recorded in relation to the share buyback programme
as all shares acquired were paid for in cash during 2023.
The buyback programme is conducted in accordance with the relevant provisions of the Market Abuse Regulation
596/2014/EU (‘MAR’ and including MAR as in force in the UK and as amended by the Market Abuse (Amendment) (EU
Exit) Regulations 2019) and the Commission Delegated Regulation (EU) 2016/1052 (including as in force in the UK and as
amended by the FCA’s Technical Standards (Market Abuse Regulation) (EU Exit) Instrument 2019) as well as the rules of
the Central Bank of Ireland.
28. Share-based payments
The Group operates three equity-settled share-based payment plans. The first plan is the Group’s Long-Term Incentive
Plan, 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 and the third is the Group’s All Employee Share Plan. 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 €21.6m (2022: €22.9m) 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
2021, 2022 and 2023 will potentially vest in 2024, 2025 and 2026 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 2021, 2022 and 2023 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 2018 - 2020 will potentially vest in 2024 - 2026 respectively.
An invitation may lapse if a participant ceases to be employed within the Group before the vesting date.
255
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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
2023
Number of
Conditional
Awards
2022
1,420,418
1,286,342
(88,076)
(66,854)
(59,462)
(46,137)
(112,933)
(119,222)
(210,134)
(224,567)
650,720
590,856
1,600,533
1,420,418
Number of Conditional Awards 2023
Number of Conditional Awards 2022
Shares
Share
Options
Total
Shares
Share
Options
Total
417,964
1,002,454
1,420,418
384,130
902,212
1,286,342
Outstanding at beginning of
the financial year
Forfeited
Vested
(40,046)
(48,030)
(88,076)
(32,601)
(34,253)
(66,854)
(59,462)
(112,933)
(172,395)
(46,137)
(119,222)
(165,359)
Relinquished
(58,848)
(151,286)
(210,134)
(65,261)
(159,306)
(224,567)
New conditional awards
185,296
465,424
650,720
177,833
413,023
590,856
Outstanding at end of the
financial year
444,904
1,155,629
1,600,533
417,964
1,002,454
1,420,418
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
2023
Number of
Share
Options
2022
240,118
187,027
69,805
62,432
65,141
65,125
(111,958)
(77,175)
260,397
240,118
Share options under the LTIP scheme have an exercise price of 12.50 cent. The remaining weighted average life for
share options outstanding is 3.8 years (2022: 4.1 years). The weighted average share price at the date of exercise was
€86.80 (2022: €99.19). 43,128 share options (2022: 54,081 share options) which vested in the financial year are deferred
and therefore are not exercisable at year end.
256
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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
2023
Conditional
Award at
Grant Date
2022
Conditional
Award at
Grant Date
2021
Conditional
Award at
Grant Date
2020
Conditional
Award at
Grant Date
Conditional Award Invitation date
March 2023 March 2022 March 2021
March 2020
Year of potential vesting
Share price at grant date
Exercise price*
Expected volatility
Expected life
Risk free rate
Expected dividend yield
Expected forfeiture rate
2026
€91.26
€0.125
22.9%
2025
€95.46
€0.125
28.6%
2024
2023/2026
€107.80
€109.00
€0.125
25.5%
€0.125
20.8%
3 years
3 years
3 years
3/7 years
3.1%
1.0%
5.0%
(0.3%)
(0.7%)
0.8%
5.0%
0.8%
5.0%
(1.0%)
0.7%
5.0%
Weighted average fair value at grant date
€73.50
€77.68
€89.78 €92.06/€103.97
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 5,601 share options (2022: 9,200 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 2022 and 2023 financial years will be released from deferral in 2024 and 2025 respectively.
257
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
28. Share-based payments (continued)
(iii) All Employee Share Plan
The Group implemented a new all employee share plan (AESP) in September 2023. The plan is currently available to
employees in the following countries: Ireland, UK, Spain, Australia, India, Indonesia, Thailand and Singapore and will
be expanded to other countries within the Group. The plan is structured as an equity-settled scheme. Under the plan,
participating employees are granted one share for every three shares purchased. The additional share is issued to the
participating employee after a two-year period.
The expense related to the AESP has been recognised in the statement of comprehensive income was €5,623. The fair
value of the shares granted under the AESP as at December 31 2023 was €nil. The weighted average fair value of the
shares granted was €nil. Comparatives from prior financial years are €nil.
29. Cash flow components
(i) Cash flow analysis
Change in working capital
Decrease/(increase) in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
(Decrease)/increase in non-current liabilities
Share-based payment expense
Purchase of assets
Purchase of property, plant and equipment
Purchase of intangible assets
Cash and cash equivalents
Cash at bank and in hand
Bank overdrafts
(ii) Net debt reconciliation
Notes
28
12
23
23
Group
2023
€’m
220.9
136.2
(176.0)
(17.2)
21.6
185.5
(266.0)
(15.9)
(281.9)
943.7
(34.7)
909.0
Group
2022
€’m
Company
2023
€’m
Company
2022
€’m
(156.3)
(224.3)
108.2
25.5
22.9
-
(163.2)
3.6
-
21.6
(224.0)
(138.0)
(208.8)
(12.2)
(221.0)
970.0
(0.2)
969.8
-
-
-
-
-
-
-
(12.2)
0.6
-
22.9
11.3
-
-
-
-
-
-
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 2022
1,039.1
34.6
(5.3)
(0.3)
(3,118.0)
(2,049.9)
(74.2)
(2,124.1)
Cash flows
Foreign exchange
adjustments
Other non-cash
movements
(76.0)
6.9
-
3.5
5.0
0.1
0.3
(39.9)
0.7
(0.3)
(70.0)
(29.7)
35.1
(2.6)
(34.9)
(32.3)
-
(22.6)
-
(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)
Cash flows
Foreign exchange
adjustments
Other non-cash
movements
(8.9)
(34.4)
(34.5)
(17.4)
-
2.5
6.9
-
-
687.3
12.9
4.5
(0.3)
614.0
(2.3)
36.4
650.4
1.3
(1.0)
(1.7)
(4.2)
1.0
(37.1)
(36.1)
At 31 December 2023
23
943.7
(9.5)
(34.7)
(2.4)
(2,432.6)
(1,535.5)
(68.6) (1,604.1)
*
Liabilities from financing activities.
258
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
30. Business combinations
The following acquisitions were completed by the Group during 2023:
Acquisition Type
Completion
date
Percentage
acquired
Segment
Principal activity
Strategic rationale
Proexcar
S.A.S.
Equity May 2023
100% share
acquisition
Taste &
Nutrition
Equity
July 2023
100% share
acquisition
Taste &
Nutrition
Shanghai
Greatang
Orchard
Food Co.,
Ltd.
A producer of leading
natural functional
systems technologies,
which can deliver clean
label solutions into
protein applications
based in Colombia.
Strengthens Kerry’s
capabilities and leading
position within the Latin
American meat market, while
also providing a platform for
further strategic growth within
the ANDEAN Region.
A leading producer
of local authentic
and innovative taste
solutions for local
foodservice chains and
the meals and snacks
market in China.
Strongly complements Kerry’s
leading authentic taste
position in China, broadening
and deepening its capability
and portfolio of local taste
solutions in the region, most
notably in the significant
foodservice hotpot market.
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 2023:
Recognised amounts of identifiable assets acquired and liabilities assumed:
Non-current assets
Property, plant and equipment
Brand related intangibles
Current assets
Cash at bank and in hand
Inventories
Trade and other receivables
Current liabilities
Trade and other payables
Other current liabilities
Non-current liabilities
Deferred tax liabilities
Other non-current liabilities
Total identifiable assets
Goodwill
Total consideration
Satisfied by:
Cash
Contingent consideration*
Total
2023
€’m
9.7
41.6
0.8
4.8
8.6
(14.5)
(4.3)
(8.6)
(4.9)
33.2
176.9
210.1
127.8
82.3
210.1
*
The contingent consideration consists of a potential additional payment of up €16.8m (US$18m) payable in 2025
based on achieving earn-out conditions for the Proexcar S.A.S. acquisition, and potential additional payments of
up to €98.7m** (RMB 780m) payable based on contractual arrangements over the period 2025 to 2027 based
on achieving earn-out conditions for the Shanghai Greatang Orchard Foods Co., Ltd acquisition. The €82.3m
represents the fair value of the expected contingent consideration.
** Exchange rate of RMB 7.90:€1
259
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
30. Business combinations (continued)
Net cash outflow on acquisition:
Cash
Less: cash and cash equivalents acquired
Plus: debt acquired (included in other current liabilities)
Total
2023
€’m
127.8
(0.8)
4.1
131.1
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 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. The contingent consideration is measured at fair value at the date control is achieved and subsequent changes
in fair value are adjusted against the cost of acquisition where they qualify as measurement period adjustments. For the
acquisitions completed in 2022, 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. None
of the goodwill recognised is expected to be deductible for income tax purposes.
Transaction expenses related to these acquisitions of €1.6m 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 €8.6m and a gross contractual value of €8.8m.
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
2023
€’m
29.6
1.0
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:
2023
acquisitions
€’m
Kerry Group
excluding 2023
acquisitions
€’m
Consolidated
Group including
acquisitions
€’m
56.5
1.3
7,990.7
727.3
8,047.2
728.6
2023
€’m
2022
€’m
(i) Guarantees in respect of borrowings of subsidiaries
2,476.3
3,146.2
(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 2023 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 paragraph
3 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.
260
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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
2023
€’m
50.8
150.9
201.7
2022
€’m
70.5
129.5
200.0
Included in other financial commitments are sustainability related projects of €9.0m (2022: €12.5m).
33. Related party transactions
(i) Trading with Directors
In the ordinary course of business as a farmer during 2023, one Director has traded on standard commercial terms
with the Group’s Dairy Ireland reporting segment. Aggregate purchases from, and sales to, this Director during the year
amounted to €0.1m and €nil respectively. The trading balance outstanding to the Group at the financial year end was
€nil. All transactions with this Director 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 this Director.
In 2022, two Directors traded on standard commercial terms, in the ordinary course of business, with the Group’s
Dairy Ireland reporting segment consisting of aggregate purchases of €0.1m from, and sales of €0.1m to these
Directors. The trading balance outstanding to the Group at 31 December 2022 was €nil. All transactions with these
Directors were on standard commercial terms. No expense was recognised in 2022 for bad or doubtful debts in respect
of amounts owed by these 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:
2023
€’m
668.3
27.4
394.2
2022
€’m
185.0
26.5
230.9
Joint ventures
Rendering of services
Sale of goods
Amounts receivable
at 31 December
2023
€’m
0.1
2022
€’m
0.1
2023
€’m
0.2
2022
€’m
0.2
2023
€’m
4.2
2022
€’m
3.1
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 2023, dividends of €21.6m (2022:
€20.0m) were paid to Kerry Co-operative Creameries Limited based on its shareholding. A subsidiary of Kerry Group plc
traded product to the value of €0.1m (2022: €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
2023
€’m
8.6
0.3
2.9
-
-
2022
€’m
8.8
0.6
2.2
-
-
11.8
11.6
261
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
33. Related party transactions (continued)
(v) Transactions with key management personnel (continued)
Retirement benefit charges of €0.1m (2022: €0.2m) arise under a defined benefit scheme relating to 1 Director
(2022: 1 Director) and charges of €0.2m (2022: €0.4m) arise under a defined contribution scheme relating to 2 Directors
(2022: 2 Directors). The LTIP accounting charge is determined in accordance with the Group’s accounting policy for
share-based payments.
Post-retirement benefits in the previous 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 €1.8m (2022: €nil).
Dividends totalling €0.1m (2022: €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 a definitive agreement to acquire part of the global lactase enzyme business of Chr. Hansen Holding
A/S (‘Chr. Hansen’) and Novozymes A/S (‘Novozymes’) (together the ‘Lactase Enzymes Business’) on a carve out
basis. The acquisition comprises certain trade and assets of Chr. Hansen’s global lactase enzyme business and
100% of the share capital of Nuocheng Trillion Food (Tianjin) Co., Ltd, a Chinese subsidiary of Novozymes. Total
consideration is €150.0m subject to routine closing adjustments, with the acquisition expected to close by the end
of April 2024;
subsequent to year end, the Company repurchased 749,081 shares at a cost of €58.9m up to 31 January 2024. The
Company’s intention is to continue to repurchase shares up to the announced amount of €300.0m and will end no
later than 30 April 2024 (note 27); and
proposed a final dividend of 80.80 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 2023.
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 and 2023.
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 All Employee Share Plan for participating employees. Further information in relation to
share-based payment is set out in note 28.
Translation reserve
Exchange differences relating to the translation of the balance sheets of the Group’s foreign currency operations from
their functional currencies to the Group’s presentation currency (euro) are recognised directly in other comprehensive
income and accumulated in the translation reserve.
Hedging reserve
The hedging reserve represents the effective portion of gains and losses on hedging instruments from the application
of cash flow hedge accounting for which the underlying hedged transaction is not impacting profit or loss. The
cumulative deferred gain or loss on the hedging instrument is reclassified to profit or loss only when the hedged
transaction affects the profit or loss.
Cost of hedging reserve
The cost of hedging reserve arises from where the Group has entered into cross currency interest rate swaps. Such
cross currency interest rate swaps have basis risk as there are characteristics in the cross currency interest rate swap
contracts that are not present in the hedged item, being currency basis spreads.
Retained earnings
Retained earnings refers to the portion of net income, which is retained by the Group rather than distributed to
shareholders as dividends.
Non-controlling interests
Non-controlling interests represent the portion of the equity of a subsidiary not attributable either directly or indirectly
to the Group.
262
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
36. Group entities
Principal subsidiaries and joint venture undertakings
Country
Company Name
Nature of Business
Registered Office
Ireland
Accommodation Tralee Limited
Breeo Brands Limited
Breeo Foods Limited
Carteret Investments Unlimited Company
Investment
Dairy Ireland
Dairy Ireland
Investment
Cuarto Limited
Taste & Nutrition
Dairy Consumer Foods (Ireland) Limited
Dawn Dairies Limited
Glenealy Farms (Turkeys) Limited
Golden Vale Dairies Limited
Golden Vale Holdings Limited
Golden Vale Investments Limited
Golden Vale Limited
Grove Farm Limited
Helios Limited
Ichor Management Limited
Ivernia Pig Developments Limited
Kerry Agri Business Holdings Limited
Kerry Agri Business Trading Limited
Kerry Creameries Limited
Kerry Dairy Consumer Foods Limited
Kerry Food Ingredients (Cork) Limited
Kerry Foods Limited
Dairy Ireland
Dairy Ireland
Dairy Ireland
Dairy Ireland
Investment
Investment
Investment
Investment
Investment
Investment
Dairy Ireland
Investment
Dairy Ireland
Dairy Ireland
Dairy Ireland
Taste & Nutrition
Dairy Ireland
Kerry Group Business Services Limited
Kerry Group Finance International Limited
Kerry Group Financial Services Unlimited Company
Kerry Group Services International Limited
Kerry Group Services Limited
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 Nutritional Ingredients (Ireland) Limited
Taste & Nutrition
Kerry Taste & Nutrition (Ireland) Limited
Taste & Nutrition
Kerry Treasury Services Limited
Kerrykreem Limited
Lifesource Foods Research Limited
Linovale Limited
North Kerry Farmers Development Limited
Plassey Holdings Limited
Services
Dairy Ireland
Investment
Investment
Dairy Ireland
Investment
Princemark Holdings Designated Activity Company
Services
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
263
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
Nature of Business
Registered Office
36. Group entities (continued)
Principal subsidiaries and joint venture undertakings (continued)
Country
Company Name
Ireland
Putaxy Limited
Rye Investments Limited
Selamor Limited
Tacna Investments Limited
Zenbury International Limited
Newmarket Co-operative Creameries Limited
UK
Dairy Produce Packers Limited
Driedale Limited
Golden Cow Dairies Limited
Golden Vale (NI) Limited
Leckpatrick Dairies Limited
Leckpatrick Holdings Limited
RVF (UK) Limited
Dairy Consumer Foods (UK) Limited
E B I Foods Limited
Gordon Jopling (Foods) Limited
Kerry Flavours UK Limited
Kerry Foods Limited
Kerry Holdings (U.K.) Limited
Kerry Ingredients (UK) Limited
Kerry Ingredients Holdings (U.K.) Limited
Kerry Management Services (UK) Limited
Belgium
Kerry Ingredients Belgium N.V.
Netherlands
Kerry (NL) B.V.
Kerry Group B.V.
Proparent B.V. (75% shareholding)
Niacet B.V.
Czech Republic Kerry Ingredients & Flavours S.R.O.
Investment
Dairy Ireland
Dairy Ireland
Investment
Services
Dairy Ireland
Dairy Ireland
Dairy Ireland
Dairy Ireland
Investment
Dairy Ireland
Investment
Dairy Ireland
Dairy Ireland
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Dairy Ireland
Investment
Taste & Nutrition
Investment
Services
Taste & Nutrition
Taste & Nutrition
Investment
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
France
Kerry Ingredients Holdings France SAS
Investment
Kerry Savoury Ingredients France SAS
Kerry Flavours France SAS
Germany
Kerry Food GmbH
Kerry Ingredients GmbH
Red Arrow Handels GmbH
Kerry Biotech GP GmbH
c-LEcta GmbH (93% shareholding)
Denmark
Cremo Ingredients A/S
Italy
Kerry Ingredients & Flavours Italia S.p.A.
Poland
Kerry Polska Sp. z o.o.
Hungary
Kerry Hungaria Kft
Luxembourg
Kerry Luxembourg S.a.r.l.
Zenbury International Limited S.a.r.l.
264
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Services
Services
1
1
1
1
1
2
3
3
3
3
3
3
3
4
4
4
4
4
4
4
4
4
5
6
6
7
8
9
10
10
11
12
12
13
14
15
16
17
18
19
20
20
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
Nature of Business
Registered Office
36. Group entities (continued)
Principal subsidiaries and joint venture undertakings (continued)
Country
Company Name
Romania
Kerry Romania S.R.L.
Spain
Kerry Iberia Taste & Nutrition, S.L.U.
Harinas y Semolas del Noroeste, S.A.U.
Pevesa Biotech, S.A.U.
Biosearch, S.A.U.
Malta
Kerry Malta Limited
Slovakia
Dera SK, S.R.O.
Sweden
Ukraine
USA
Canada
Mexico
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
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.
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.
Proexcar S.A.S.
Panama
Kerry Panama, S.A.
Kerry Holdings Panama, S.A.
Guatemala
Baltimore Spice Guatemala, S.A.
Kerry Guatemala, S.A.
Aromaticos de Centroamerica, 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
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.
Singapore
Kerry Ingredients (S) PTE Ltd
Malaysia
Kerry Ingredients (M) Sdn. Bhd.
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Kerry Group Business Services (ASPAC) Sdn. Bhd.
Taste & Nutrition
Almer Malaysia Sdn. Bhd.
Japan
Kerry Japan Kabushiki Kaisha
Taste & Nutrition
Taste & Nutrition
21
22
23
24
25
26
27
28
29
30
30
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
48
49
50
50
51
52
53
54
55
55
55
56
265
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
36. Group entities (continued)
Principal subsidiaries and joint venture undertakings (continued)
Country
Company Name
Nature of Business
Registered Office
China
Kerry Food Ingredients (Hangzhou) 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
Shanghai Greatang Orchard Food Co., Ltd.
Taste & Nutrition
Kerry Food (Shandong) Co., Limited
Egypt
Kerry Egypt LLC
Indonesia
PT Kerry Ingredients Indonesia
PT Kerry Trading Indonesia
India
Kerry Ingredients India Private Limited
Australia
Kerry Ingredients Australia Pty. Ltd
New Zealand
Kerry Ingredients (NZ) Limited
Kenya
Kerry Kenya Limited
Afribon (K) Limited
Cameroon
Afribon Cameroun SARL
Nigeria
Kerry Ingredients Nigeria Limited
Rwanda
Afribon Limited
Tanzania
Kerry Taste & Nutrition Tanzania Limited
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Uganda
Kerry Taste & Nutrition Uganda - SMC Limited
Taste & Nutrition
South Africa
Kerry Ingredients South Africa (Proprietary) Limited
Taste & Nutrition
South Korea
Kerry Ingredients Korea LLC
Saudi Arabia
AATCO Food Industries LLC
Oman
Kerry Oman S.P.C.
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Vietnam
Kerry Taste & Nutrition (Vietnam) Company Limited
Taste & Nutrition
UAE
Kerry MENAT DMCC
Taste & Nutrition
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
Notes
(a) All group entities are wholly owned subsidiaries unless otherwise stated.
(b) Country represents country of incorporation and operation. Ireland refers to the Republic of Ireland.
(c)
With the exception of the USA, Canadian and Mexican subsidiaries, where the holding is in the form of common
stock, all holdings are in the form of ordinary shares.
Pursuant to Section 314-316 of the Companies Act 2014, a full list of subsidiaries, joint ventures and associated
undertakings will be annexed to the Company’s Annual Return to be filed in the Companies Registration Office
in Ireland.
(d)
266
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
36. Group entities (continued)
Registered Office
1
2
3
4
5
6
7
8
9
10
11
Prince’s Street, Tralee, Co Kerry, V92 EH11, Ireland.
Newmarket, Co. Cork, Ireland.
Millburn Road, Coleraine, Londonderry, BT52 1QZ, United Kingdom.
Kerry, Bradley Road, Royal Portbury Dock, Bristol BS20 7NZ, United Kingdom.
Boulevard Industriel 9, 1070, Brussels, Belgium.
Maarssenbroeksedijk 2a, 3542 DN, Utrecht, Netherlands.
Cuneraweg 9c, 4051 CE, Ochten, Netherlands.
Papesteeg 91, 4006 WC Tiel, Netherlands.
Pujmanové 1753/10a, Nusle, 140 00, Praha 4, Czech Republic.
43 Rue Pasteur, 62575 Blendecques, France.
Zone Industrielle du Plan, BP 82067, 06131 Grasse cedex, France.
12 Hauptstrasse 22, 63924, Kleinheubach, Germany.
13 Hanna-Kunath-Strasse 25, 28199, Bremen, Germany.
14
15
16
17
c/o Kerry Food GmbH, Hauptstrasse 22, 63924, Kleinheubach, Germany.
Perlickstrasse 5, 04103, Leipzig, Germany.
Toftegårdsvej 3, DK-5620, Glamsbjerg, Denmark.
Via Capitani di Mozzo, 12/16, 24030, Mozzo, Bergamo, Italy.
18 Ul. Energetyczna 13, 56-400, Olesnica, Poland.
19 Dévai utca 26-28, Budapest, H-1134, Hungary.
20
21
22
23
24
25
26
17 Rue Antoine Jans, Luxembourg, L-1820, Luxembourg.
5th Floor, Room A-7.3, 313 - 315 Barbu Vacarescu Street, District 2, Bucharest, 020272, Romania.
Calle Coto de Doñana, 15, 28320 Pinto, Madrid, Spain.
Polígono Industrial de las Gándaras de Budiño, O Porriño, Pontevedra, Spain.
Avenida Industria S/N Pol. Ind. Poliviso, 41520 El Viso Del Alcor, Sevilla, Spain.
Camino del Purchil, 66, 18004, Granada, Spain.
6, Sqaq Ix-Xatt Nru. 2, Pietà, PTA 1611, Malta.
27 Hodžovo námestie 1A, Bratislava, 811 06, Slovakia.
28
29
30
31
32
33
34
35
Box 1420 - Frejgatan 13, 114 79 Stockholm, Sweden.
Khmelnytska Street, 20/21, Kiev, 03115, 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.
2-D Janine Place, New Brunswick NJ 08901, United States.
36 Osler, Hoskin & Harcourt, LLP, 100 King Street West, 1 First Canadian Place, Suite 6200, PO Box 50, Toronto ON M5X
IB8, Canada.
37
38
39
40
41
42
43
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.
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.
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.
267
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
36. Group entities (continued)
Registered Office (continued)
44
45
46
Carrera 3 # 6a – 100 oficina 703., Ed. Torre Protección, Cartagena, Bolivar, Colombia.
Carrera 50G #10B - Sur 14, Bodega 6, Medellin, Antioquia, Colombia.
Parque Industrial Costa del Este, Calle 3ra Lote 88. Corregimiento Parque Lefevre, 0819-01869, Panama.
47 Distrito Panama, Provincia Panama, Panama.
48
49
50
Kilómetro 26.5 Carretera al Pacifico, Paso a Desnivel, Entrada a Amatitlán, Amatitlán, Guatemala.
23 Avenida 34-61, Zona 12, Colonia Santa Elisa, Guatemala, Guatemala.
2 Calle Oriente Avenida Melvin Jones, Local 14, Centro Comercial Argoz, Santa Tecla, La Libertad, El Salvador.
51 No. 618, Moo 4, Bangpoo Industrial Estate, Tambol Prakesa, Amphur Muang Samutprakarn, Samutprakarn
Province, Thailand.
52
53
54
55
56
57
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.
58 North Side of Xiangjiang Road, Rudong County, Nantong City, China.
59 Dujiashan, Huayang County, Jurong, Jiangsu Province, 212425, China.
60
26 Tai Ping Qiao Industry Park, Xin’an, Deqing County, Zhejiang Province, China.
61 North side of XinYe Road, West side of LiDaXian, DaChang Industrial District, LangFang City, HeBei Province, China.
62 No.6 Haichuan Road, Jiezhuang Street, Hi-tech Zone, Jining, Shandong Province, China.
63 No. 101 Qianxin Road, Jinshanwei Town, Jinshuan District, Shanghai, China.
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
Southeast corner of intersection of Quanxing Road and Jingong Road, Economic Development Zone, Sishui County,
Jining City, Shandong, China.
5th Floor, Namaa Bulding, Rameses Extension Street, 6th District, Nasr City, Cairo, Egypt.
JL. Industri Utama Blok SS-6 Kws.Ind Jababeka II, Cikarang Utara, Cab.Bekasi, Provinsi Jawa Barat, 17520, Indonesia.
Jalan Industri Utama Blok SS-6 Kawasan Industri Jababeka 2, Desa/Kelurahan Mekarmukti, Kec. Cikarang Utara,
Kab. Bekasi, Provinsi Jawa Barat, 17530, 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.
Akwa, Douala, PO Box 5449, Cameroon.
1st Floor Plot 8, Dr Nurdeen Olowopop Ikeja Central Business District, Agidingbi, Ikeja, Lagos Estate, Nigeria.
Kagarama, Kicukiro, Umujyi wa Kigali, Rwanda.
Plot Number 24, Sawe Street, Mikocheni Industrial Road, P.O. Box 62043, Dar-es-Salaam, Republic of Tanzania.
Plot No.3 Kakoma Road, Barkati House, Ntinda Industrial Area, Kampala, Uganda.
Block 3 Nguni Park, 4-6 Lucas Drive, Hillcrest, Durban, KwaZulu Natal, 3610, South Africa.
9th Fl., Sheenbang Bldg, 2575 Nambusunhwan-ro, Seocho-Gu, Seoul, 06735, Republic of Korea.
PO Box Number 5802, PC 21432, 2nd Industrial City, Jeddah, Kingdom of Saudi Arabia.
P.O. Box 130, Postal Code 322, Sohar, Sultanate of Oman, Oman.
82 Me Linh Point Tower, 2 Ngo Duc De Street, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam.
83 Unit No: AG-GF-01, AG Tower, Plot No: JLT-PH1-I1A, Jumeirah Lakes Towers, Dubai, United Arab Emirates.
268
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
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 34-35, 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 performance
This represents the sales performance year-on-year, excluding pass-through pricing on input costs, currency impacts,
acquisitions, disposals and rationalisation volumes.
Volume performance is an important metric as it is seen as the key driver of organic top-line business improvement.
Pricing therefore impacts revenue performance positively or negatively depending on whether input costs move up or
down. A full reconciliation to reported revenue performance is detailed in the revenue reconciliation below.
Revenue Reconciliation
Volume
performance
Transaction
Price
currency Acquisitions
Disposals
Translation
currency
Reported
revenue
performance
1.1%
(6.5%)
(0.9%)
7.8%
0.1%
6.1%
1.1%
(9.3%)
(0.7%)
8.7%
22.8%
11.7%
-
1.2%
(6.0%)
(0.1%)
-
-
-
1.0%
(5.1%)
0.2%
0.1%
0.2%
5.6%
(1.1%)
-
(37.6%)
4.3%
(9.8%)
(3.4%)
(0.7%)
(2.9%)
8.2%
1.2%
6.8%
(6.0%)
(16.6%)
(8.6%)
29.4%
(13.4%)
19.3%
2023
Taste & Nutrition
Dairy Ireland
Group
2022
Taste & Nutrition
Dairy Ireland
Group
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
2023
€’m
728.1
1.9
(21.8)
72.1
94.5
(8.8)
79.5
219.6
2022
€’m
606.5
0.4
(6.6)
72.8
92.5
146.2
82.7
221.6
1,165.1
1,216.1
269
Kerry Group Annual Report 2023Financial Statements / Notes to the Financial Statements
Financial Statements / Financial Definitions
3. EBITDA Margin
EBITDA margin represents EBITDA expressed as a percentage of revenue.
EBITDA
Revenue
EBITDA margin
4. Operating Profit
2023
€’m
2022
€’m
1,165.1
1,216.1
8,020.3
8,771.9
14.5%
13.9%
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
2023
€’m
822.6
(21.8)
72.1
1.9
874.8
2022
€’m
699.0
(6.6)
72.8
0.4
765.6
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
2023
EPS
cent
410.4
29.5
(9.8)
430.1
Performance
%
2022
EPS
cent
Performance
%
20.0%
341.9
(20.6%)
-
-
28.7
70.0
(2.4%)
440.6
3.6%
1.2%
-
-
15.7%
(8.4%)
7.3%
*
Impact of 2023 translation was (16.0)/440.6 cent = 3.6% (2022: (8.4%)).
270
Kerry Group Annual Report 2023
Financial Statements / Financial Definitions
6. Free Cash Flow
Free cash flow is EBITDA plus movement in average working capital, capital expenditure net (purchase of assets,
payment of lease liabilities, proceeds from the sale of assets (net of disposal expenses) and capital grants received),
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
Payments on non-trading items
Purchase of assets
Payment of lease liabilities
Proceeds from the sale of property, plant and equipment
Capital grants received
Exchange translation adjustment
Free cash flow
7. Cash Conversion
2023
€’m
1,037.8
(147.1)
99.8
(281.9)
(36.4)
11.6
3.3
14.2
701.3
2022
€’m
721.8
22.6
85.4
(221.0)
(35.1)
38.1
1.4
27.2
640.4
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
2023
€’m
701.3
728.3
52.3
(17.4)
763.2
92%
2022
€’m
640.4
606.4
50.9
124.2
781.5
82%
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
2023
Times
1.5
21.8
2022
Times
1.8
18.1
271
Kerry Group Annual Report 2023
Financial Statements / Financial Definitions
9. Average Capital Employed
Average capital employed is calculated by taking an average of the shareholders’ equity less vendor loan note and net
debt over the last three reported balance sheets.
2023
€’m
H1 2023
€’m
2022
€’m
H1 2022
€’m
2021
€’m
Equity attributable to equity holders of the parent
6,521.3
6,356.5
6,221.9
6,088.7
5,601.2
Vendor loan note
Net debt
Total capital employed
Average capital employed
(124.3)
(125.0)
-
-
-
1,604.1
1,846.5
2,217.4
2,456.3
2,124.1
8,001.1
8,078.0
8,439.3
8,545.0
7,725.3
8,172.8
8,236.5
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.
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
2023
€’m
728.3
(17.4)
52.3
50.3
2022
€’m
606.4
124.2
50.9
66.2
813.5
847.7
8,172.8
8,236.5
10.0%
10.3%
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
2023
2022
€84.24
€113.25
34.6
73.4
31.4
66.7
€78.66
€84.24
(5.3%)
(24.7%)
2023
2022
€78.66
€84.24
175,792.7
176,986.5
13,827.9
14,909.3
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 232-234.
272
Kerry Group Annual Report 2023
CONTENTS
STRATEGIC
REPORT
Our Performance in 2023 4
At a Glance 6
Chairman's Statement 8
Chief Executive Officer’s Review 10
Our People 14
Our Business Model 24
Our Markets 26
Our Strategy 28
Our Technologies 30
Strategy & Targets 32
Key Performance Indicators 34
Financial Review 36
Business Review: Taste & Nutrition 42
Business Review: Dairy Ireland 45
Sustainability Review 46
Risk Management Report 92
DIRECTORS’
REPORT
Board of Directors 108
Report of the Directors 112
Governance Report
Corporate Governance Report 118
Audit Committee Report 135
Governance and Nomination
Committee Report 141
Sustainability Committee Report 148
Remuneration Committee Report 150
FINANCIAL
STATEMENTS
Independent Auditors’ Report 184
Financial Statements 192
Notes to the Financial Statements 200
SUPPLEMENTARY
INFORMATION
Financial Definitions 269
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
3
SCIENCE-BACKED
SUSTAINABLE
NUTRITION
Kerry Group
Prince’s Street, Tralee,
Co. Kerry, V92 EH11, Ireland.
T: +353 66 718 2000
www.kerry.com
Kerry Group
Annual Report 2023