Creating value - abf.co.uk

1 Annual Report 2021. Creating value 2021 GROUP FINANCIAL HIGHLIGHTS INTRODUCTION. Group revenue Adjusted operating profit Adjusted profit before tax Creating value together 1,011m 908m (2020: ) (2020: 1,024m) (2020: 914m). Adjusted earnings Dividends per share Special dividend per share per share Associated British Foods is a highly (2020: ) (2020: Nil). diversified group, with a wide range of Gross investment Net cash before Net debt including lease liabilities lease liabilities food and ingredient businesses as well as our flagship retail brand, Primark. We 721m 1,901m 1,380m are united by our purpose to provide safe, (2020: 641m) (2020: 1,558m) (2020: 2,081m). Operating profit Profit before tax Basic earnings nutritious and affordable food, and clothing per share that is great value for money. 808m 725m (2020: 810m) (2020: 686m) (2020: ) Together, as ABF, we work hard every day to create long-term value for our stakeholders, from our customers, employees and suppliers CONTENTS.

2 To our shareholders. Strategic report Governance IFC 2021 Group financial highlights 96 Chairman's introduction In our annual report this year we highlight IFC. 1. At a glance Introduction 98. 100. Board of Directors Corporate governance how we create value across our businesses . 12. 16. Chairman's statement Chief Executive's statement 117. 136. Directors' Remuneration Report Directors' Report innovating, growing, collaborating and 18. 20. Our business model and strategy Key performance indicators 139. 140. Statement of directors' responsibilities Independent Auditor's Report investing to ensure we continue to deliver 22. 22. Operating review Grocery ever more sustainable growth. 32 Sugar Financial statements 150 Consolidated income statement 40 Agriculture 151 Consolidated statement of 46 Ingredients comprehensive income 52 Retail 152 Consolidated balance sheet 62 Financial review 153 Consolidated cash flow statement 65 Section 172 and our stakeholders 154 Consolidated statement of changes 72 Responsibility in equity 86 Climate-related Financial Disclosures 155 Significant accounting policies (TCFD).

3 161 Accounting estimates and judgements 88 Principal risks and uncertainties 162 Notes forming part of the 95 Viability statement and going concern financial statements 214 Company financial statements 222 Progress report 223 Glossary 224 Company directory All photographs in this report complied with the relevant COVID-19 guidelines at the time in the countries in which they were taken. Associated British Foods plc Annual Report 2021 1. AT A GLANCE. Our operating Our operating businesses businesses Our values ev cting eryone s pe dignity 's Re Actin rigour Delivering integrity g with with Pr gh og Grocery Sugar Agriculture Ingredients Retail ressing throu collab ration o Our grocery brands occupy leading AB Sugar is one of the largest sugar AB Agri is a leading international Our Ingredients businesses are leaders Primark is one of the largest fashion positions in markets across the globe. producers in the world.

4 Illovo is the agri-food business operating across in yeast and bakery ingredients and retailers in Europe and the largest See pages 18 to 19 for more on our In the UK, nine out of 10 households largest sugar producer in Africa and the supply chain, producing and supply specialty ingredients to the clothing, footwear and accessories values and how we operate. use our brands. British Sugar is the sole processor of marketing animal feed, nutrition and food, nutrition, feed and retailer by volume in the UK. In total, UK sugar beet. technology-based products. pharmaceutical industries. we have 398 stores in 14 countries, including the United States. Revenue Adjusted operating Revenue Adjusted operating Revenue Adjusted operating Revenue Adjusted operating Revenue Adjusted operating profit profit profit profit profit 3,593m 413m 1,650m 152m 1,537m 44m 1,508m 151m 5,593m 321m (2020: 3,528m) (2020: 437m) (2020: 1,594m) (2020: 100m) (2020: 1,395m) (2020: 43m) (2020: 1,503m) (2020: 147m) (2020: 5,895m) (2020: 362m).

5 About us About us 53 128,000 9 out One of 31 One of 100% 39m countries operated in, across Europe, Africa, employees of 10 the largest community clinics and hospitals serving the largest of the UK's sugar beet crop processed invested in safety risk management, of which the Americas, Asia and UK households use sugar producers in communities adjacent fashion retailers in by British Sugar 24% was dedicated to Australia our grocery brands the world to our Illovo Sugar Europe COVID-19 safety plants in Africa measures UK's One 53% One of 79% 544,000 >1m largest meals provided through surplus food donations of the of our total workforce are women the largest of the waste we generated was sent for people's lives improved since the launch of people in the Primark supply chain animal feed business to foodbanks leading food manufacturers in the UK. recycling, recovery or other beneficial use Twinings' Sourced with Care programme suppliers of specialty yeast ingredients globally Our brands Our brands Innovating together Grocery Twinings As interest in health and wellbeing grows among consumers across the globe, we have continued to expand our range of Twinings teas, with innovative new blends and flavours to meet this demand.

6 Retailing as Twinings Superblends in the UK and US, Twinings Live Well in Australia and La Tisani re in France, performance is exceeding our expectations. In the UK, Superblends is growing strongly year-on-year and in the US we expanded our offering with a new range, fortified with vitamins or minerals. In Australia, we are well-placed to become a leading brand for wellbeing drinks and in France we became the leader in the teas and herbs' category, driven by our organic benefit-led range including herbs such as guarana, turmeric, basil and lemongrass. See pages 22 to 31 for more on Superblends and Grocery performance this year. 2 Associated British Foods plc Annual Report 2021 Associated British Foods plc Annual Report 2021 3. Growing together Sugar Illovo Sugar Africa Illovo Sugar Africa delivered an exceptional performance this year, driven by operational efficiencies and capitalising on strong market growth opportunities across our six countries of operation.

7 Eswatini, Malawi, Mozambique, South Africa, Tanzania and Zambia. Domestic market sales increased by 60,000 tonnes to approximately million tonnes in the year. Regional sales were also strong, with a further 245,000 tonnes of sugar delivered to neighbouring countries, building our #AfricanSugar4 AfricanMarkets strategy of becoming the supplier of choice in the markets of central and southern Africa. tonnes sold in domestic and regional African markets See pages 32 to 39 for more on Illovo and Sugar performance this year. 4 Associated British Foods plc Annual Report 2021 Associated British Foods plc Annual Report 2021 5. Collaborating together Agriculture AB Neo In September 2020, AB Agri launched a specialist neonate nutrition business AB. Neo which focuses on the essential and very particular needs of young farm animals. AB Neo manufactures a range of products for piglets, calves and poultry, helping our customers provide the best start in life for their animals.

8 We currently produce over 200,000 tonnes of animal feed for young animals every year, with manufacturing in Denmark, Poland, Spain and the UK. Our growth strategy is focused on moving into new geographies. 200,000. tonnes of feed for young animals produced this year See pages 40 to 45 for more on AB Neo and Agriculture performance this year. 6 Associated British Foods plc Annual Report 2021 Associated British Foods plc Annual Report 2021 7. Investing together Ingredients AB Mauri and ABF Ingredients Our specialty ingredients businesses, AB Mauri and ABF Ingredients, continued to invest this year with the opening of two new state-of-the-art facilities to support their future growth and development. AB Mauri opened a new Global Technology Centre in the Netherlands (pictured right), which provides an international hub for our research and development in bakery and yeast ingredients. It is at the cutting edge of bakery capability and reinforces AB Mauri's position as a market leader in bakery and yeast ingredients.

9 AB Enzymes, part of ABF Ingredients, opened a pilot plant at the manufacturing site in Rajam ki, Finland. This new plant significantly increases our capability and capacity to validate and optimise a wider range of new concepts before full-scale production. 2 new research and development facilities opened in the year See pages 46 to 51 for more on the research and development centres and Ingredients performance this year. 8 Associated British Foods plc Annual Report 2021 Associated British Foods plc Annual Report 2021 9. More sustainable together Retail Primark More sustainable fashion, affordable for all At Primark, we believe that more sustainable fashion should not have to come with a high price tag for people or our planet. We have been on a journey for more than a decade to build a more sustainable business, but we will go further and faster, using our size and scale to make a real difference. That is why this year we have launched the Primark Cares sustainability strategy.

10 Our priorities are to minimise fashion waste, reduce our impact on the planet and improve the lives of the people who make our clothes. See pages 52 to 61 for more on Primark Cares and Retail peformance this year. 10 Associated British Foods plc Annual Report 2021 Associated British Foods plc Annual Report 2021 11. CHAIRMAN'S STATEMENT. Chairman's statement The economic effects of the measures taken by governments to restrict the COVID-19 pandemic were evident in the financial results for our last financial year and in the results for this financial year. The Board recognises that a Group of our scale and significance has responsibilities to many stakeholders. I want to say thank you once again to every employee for their hard work and determination in these difficult times. Sales and profit for the Group this We invested 721m in our businesses This year we have extensively engaged financial year were again below pre- this year.