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Annual Report and Accounts 2022

Howden Joinery Group Plc

Annual Report and Accounts 2022 Howden Joinery Group Plc

2022

Contents

We make the builder’s life simpler. We help

them to achieve exceptional results for

theircustomers, and to profit from it.

We succeed by helping our customers

tosucceed.

Strategic Report

08 Our purpose, our culture & values, our market,

our strategy and our business model

16 Chairman’s statement

19 Chief Executive’s statement

28 Key performance indicators

30 Financial review

36 Risk management and principal risks

46 Sustainability matters

71 Going concern and Viability statements

74 Other Directors’ statements

Governance

78 Corporate governance report

80 Board of Directors

82 Key Board activity

84 Executive Committee and Company Secretary

86 Directors' duties (Section 172(1) statement)

88 Stakeholder engagement

96 2018 UK Corporate Governance Code:

application and compliance

102 Nominations Committee report

112 Remuneration Committee report

136 Audit Committee report

144 Sustainability Committee report

146 Directors’ report

Financial Statements

150 Independent auditor’s report

164 Consolidated income statement

164 Consolidated statement of

comprehensive income

165 Consolidated balance sheet

166 Consolidated statement of changes in equity

167 Consolidated cash flow statement

168 Notes to the consolidated financial statements

205 Company balance sheet

206 Company statement of changes in equity

207 Notes to the Company financial statements

Additional Information

212 Parent company and all subsidiary undertakings

213 Five year record

214 Shareholder and share capital information

216 Shareholder Ranges

216 Corporate timetable

217 Advisors and registered office

Howden Joinery Group Plc / Annual Report & Accounts 2022

Financial Statements

Additional Information

Strategic Report

Governance

Overview / Contents

Overview Page Title

Howdens – UK’s #1

specialist trade-only

kitchen supplier

“ Howdens achieved another set of strong results in

2022, with rapid progress on executing our strategic

priorities and continued market share gains.

Our teams have been agile in navigating high levels of

inflation and supply chain disruption while supporting

our customers with a market leading product range, high

stock availability and outstanding customer service.”

Andrew Livingston – CEO

30 new UK

depots

Performance in 2022

Operational highlightsFinancial highlights

5 new depots

in Republic of

Ireland

20 additional

depots in

France

21 new kitchen

ranges

Good progress

on our ESG

commitments

Making more

product in our

own factories

Continuing to

strengthen our

digital offering

Revenue

Gross

margin

£2.3bn

60.9%

Operating

profit

Earnings

per share

£415m

65.8p

Profit

before tax

2022 FY

dividend

£406m £308m

20.6p £115m

£250

Dividends

paid in year

buybacks

Net cash

at year end

* 2021 included a special dividend of £54.1m.

2018

2019

2020

2021

2021*

2021

2022

£1.5bn61.7%

£240m31.3p

£239m11.6p

£231m£68.3m£131m

£1.5bn60.1%

£196m24.9p

£185m18.2p

£431m£0.0m£10m

£1.6bn62.3%

£260m35.0p

£261m3.9p

£267m£70.6m£126m

£2.1bn61.6%

£402m53.2p

£390m19.5p

£515m£133.6m£50m

£2.3bn60.9%

£415m65.8p

£406m20.6p

£308m£115.0m£250m

Howden Joinery Group Plc / Annual Report & Accounts 2022

Additional Information

Financial Statements

Governance

Strategic Report

Overview / Performance in 2022 03

Howden Joinery Group Plc / Annual Report & Accounts 2022

Overview OverviewPage Title Page Title

Howdens at a glance

To supply from local stock nationwide the small builder’s ever-changing,

routine integrated kitchen and joinery requirements, assuring best local

price, no-call-back quality and confidential trade terms...

... and to provide the builder’s customer with enough choice, advice and

aftersales to make a home to be proud of.

Resources and

relationships

• Decentralised business

model

• Empowered local depot

managers, close to the

trade

• Trusted customer

relationships with around

half a million builders

• Local depot network with

a nationwide reach

• The right product. In stock

in local depots at best

localprice

Outcomes

• Happy builders and end-users

• Sustainable profit growth, sector-leading

margins and strong cash generation

• Returns to shareholders

• Investment in:

– our employees

– new depots

– new product

– new manufacturing and logistics

– digital

– new jobs throughout our business

• Giving back to local communities

Resources and relationships

• Trade-only, with excellent service

• Helping our trade customers to succeed in

selling to their customers:

– Trade accounts support the builder’s

cashflow

– Design and planning services

– Home visits for end-users

– Marketing materials

– The right product. In-stock in local depots

• Competitive confidential pricing

• Digital tools to help the trade and end-users

Supporting

the builder

Worthwhile

for all concerned

manufacturing

& distribution

Global

sourcing

Nationwide

depot

network

Resources and

relationships

• Skilled and motivated

workforce

• UK’s largest kitchen supplier

– economies of scale

• Our own factories – the

choice to make or buy

• Our own warehousing

and distribution network

Resources and

relationships

• Global supply chain

expertise

• Trusted supplier

relationships give us

access to the latest

products at the best

prices

• Responsible purchasing

practices

The UK’s largest

specialist trade-only

kitchen supplier

Financial Statements

Additional Information

Strategic Report

Governance

Howden Joinery Group Plc / Annual Report & Accounts 2022

Overview / Howdens at a glance

Overview OverviewPage Title Page Title

4 Monitoring and reporting

We provide a consolidated key risks report to the

Executive Committee and Board for review, using

escalation criteria previously set by them. Mitigation

plans and the progress against them are also reported.

The Board consider and agree the key risks, appetites

and mitigation strategies which are fed back to risk

owners. We conduct this exercise twice yearly and it

used to

determine the Group’s principal risks.

3 Response

Risks that require a response have additional mitigation

strategies agreed and a future action plan drawn up

together with a timeframe. We assign responsibility for

implementation of action plans.

2 Assessment

We assess risks using a Group-wide scoring mechanism

that considers both the likelihood of occurrence and the

potential impact. We prioritise them by their risk score

and an assessment of the level of exposure against our

risk appetite is conducted. Risk that exceed our appetite

may

require additional risk response.

1 Identification

Functional management and leaders formally identify

risks twice a year providing both a bottom-up and a

top-down perspective. We record these in functional risk

registers for each area of our business. We also conduct

ad hoc reviews of new and emerging risks throughout

the year as theyarise.

Risk management and

principal risks

Our approach to risk and how we manage

it. Our principal risks and what we’re doing

to mitigate their potential effects.

Chairman’s statement

Howdens delivered a strong performance

in 2022.

Our purpose, culture and

values, market, business model

andstrategy

Financial review

2022 current trading and outlook for 2023.

Chief Executive’s statement

To help our trade customers achieve

exceptional results for their customers.

Going concern and Viability

How we

create value

Strategic report

2022 performance and

Howdens at a glance

Sustainability report

Why sustainability matters to us.

3630

1902

08 16

08 Our purpose, our culture & values, our market,

our business model and our strategy

16 Chairman’s statement

19 Chief Executive’s statement

28 Key performance indicators

30 Financial review

36 Risk management and principal risks

46 Sustainability matters

71 Going concern and Viability statements

74 Other Directors’ statements

Additional Information Financial Statements Governance

Strategic Report

Strategic report / Contents

Howden Joinery Group Plc / Annual Report & Accounts 2022

0706

Howden Joinery Group Plc / Annual Report & Accounts 2022

Strategic ReportPage Title Page TitleStrategic Report

Our purpose-driven approach

Our purpose

Business model

Culture & values Sustainability Governance

Markets Long-term value for our stakeholders

Strategy

Risks

To help our trade customers achieve exceptional results for their

customers and to profit from doing so. When our customers succeed,

we succeed and our stakeholders succeed.

Long-term, sustainable growth and value for all stakeholders.

Ensuring that our business positively impacts the world around

us and the people in it.

Worthwhile for

all concerned.

The importance of

sustainable behaviour

is recognised right

through the business.

A clear governance

framework. Operating

with integrity.

Trade-only. In stock from local depots.

Entrepreneurial depots supported by

UK manufacturing and efficient

sourcing and distribution.

Reach more builders. Offer them the best

product, pricing, service and support.

Generate profits for reinvestment and

shareholderreturns.

See page 13

See page 10 See page 46 See page 11 See page 76

See page 14

See page 12 See page 36

Culture is aligned

with purpose, values

and strategy

Our business model and

strategy generate value for

a range of stakeholders

Sustainable behaviour preserves

our culture, maintains focus on

our business model, mitigates our

risks and addresses the needs

of our stakeholders

Our governance framework

guides all decisions

and outcomes

Our purpose drives our business model and shapes our strategic decisions

We respond to external opportunities and mitigate threats

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

08 09

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / Our purpose-driven approach

Strategic Report Strategic Report Page Title

Our purpose, our culture & values, our market,

our strategy and our business model

Our purpose Our culture and values

Howdens’ focus on serving our trade customers underpins

everything we do. We believe the best way to source and install

a kitchen is to work with your local tradesperson, and we are

clear that the purpose and future success of our business lies

in serving the trade market to the highest standards.

Our relationship with our trade customers has three key

facets, each supported by our entrepreneurial culture.

Trade service and convenience

Depots located where our customers need them; monthly

account facilities; product in-stock to get the job done

including appliances, joinery, flooring and hardware.

A design service to help customers choose and

plan their kitchens.

Product leadership

Product design and testing facilities ensure that we offer

the right product styles that are attractive to consumers;

designed to be trade quality and easy to fit with the builders

in mind (‘fit and forget quality’).

Trade value

Best local trade prices enabled by in-house manufacturing,

long-term key supplier agreements and a low-cost depot

operating model.

To help our trade customers

achieve exceptional results

for their customers and to

profit from it.

Worthwhile for our trade customers

• Profitability, convenience, service, support

• Great product range for them to offer to their customers

• Outstanding service

• Trusted personal relationships – we do what we say

• Trade accounts and confidential discounts

• Design, planning and marketing support

Worthwhile for our staff

• A good wage, plus local profit-sharing and incentives,

excellent rewards and recognition for outstanding

performance

• An entrepreneurial culture, with central support

• A growing company with opportunities to develop and

progress. Structured career development programmes

Worthwhile for our suppliers

• Strong and enduring relationships based on trust

• Working together to develop new products and deliver

best service

• Scale – good opportunities for them to build a profitable

business by working with us

Worthwhile for our other stakeholders

• Delivering consistent long-term value for shareholders

with a growing dividend and return of surplus cash through

share buybacks

• Helping end-users at each stage of their buying decision

• Important local employer in over 850 communities

• Giving back to charities and local communities

• Responsible purchasing and environmental policies

Customers

Environment

and communities

Shareholders

Pensioners

Staff

Suppliers

and landlords

Government and

local authorities

Howdens was founded on the principle

that the business should be worthwhile for

all concerned — customers, prospective

customers, homeowners, tenants, local

communities, our suppliers, our investors,

our staff and their families.

This founding principle

has shaped our business

model and our strategic

decisions for more than

25 years, and it continues

to be at the heart of what

we do.

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

10 11

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / Our culture and values

Strategic Report Strategic Report

Our strategy

The kitchen market

• 29 million homes in the UK. 18 million owned and 11 million rented

• UK kitchen and joinery market of £11.5bn

• The market continues to shift from DIY to ‘Do It For Me’

• Howdens sells to the Trade sector, who supply a broad range of markets,

including owner-occupied homes, private rentals and social housing

• Our Contracts division supports the increasing demands of the new build market

Reach more builders

Grow market share. Increase

trade convenience.

Achieved via:

Our long-term strategic objectives

Underpinned by:

Our medium-term strategic initiatives (page 21)

• Evolving our depot model

• Improving our product range

and supply management

• Developing our digital platforms

• Expanding our international

operations

Measured by:

KPIs (page 28)

Product innovation

The right amount of the best product,

at the best price.

Operational excellence

Increase customer service, efficiency,

trade value and profitability.

• Sales growth

• Profit before tax

• Cash

• Depot openings

• Health & Safety

• FSC

or PEFC certified

raw materials

• Waste recycling

Prudent financial management

Giving us the tools to do the job.

Our market

Growing our market

Structural drivers Recent trends

• Product to compete at all price

points. Take more market share

• Continue excellent customer

satisfaction with both builders

and end-users

• Population growth: by 2030 UK population will

grow by 5% and will have 2m new citizens (ONS

)

• Ageing UK housing stock will drive renovation.

Average age of UK housing stock is 70 years (ONS

)

• Healthy consumer balance sheets and high

employment. UK consumers saved over

£200bn during the pandemic (ONS

)

• Increased end user interest in sustainable

products. 44% of households are switching off

or moving to more energy efficient appliances

(NatWest)

• Entrepreneurial builders are well placed

to win kitchens and joinery work as part of

wider home refurbishment projects. They are

supported by Howdens’ in-stock, trade-only

business model

• Post pandemic UK hybrid working, at up to

5 times pre-pandemic levels, leads

to increased wear and tear in the home

• Consumer mindset more focused on design

and use of kitchen space to maximise flexibility

(Howdens’ proprietary data)

• An ageing population with significant

purchasing power choosing to age in place.

Baby boomers own nearly half, £2tn, of all

British housing equity

• As mortgage rates rise and the cost of living

crisis puts pressure on household budgets,

data suggests that people are staying put and

investing in their current homes rather than

moving

• Reach more builders

With 500K+ customer accounts Howdens

supply to 1 in 3 tradespeople. Opportunity

to grow customer base further.

1 Howdens estimates based on proprietary data.

2 Office of National Statistics.

Our purpose

To help our trade customers achieve

exceptional results for their customers

and to profit from doing so.

1.4m

tradespeople

in the UK

Howden Joinery Group Plc / Annual Report & Accounts 2022

12 13

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / Our strategy

Strategic Report Strategic Report

1. Product manufacturing and sourcing

5. Communities

and environment

• Employment opportunities

and good neighbour in over

850 communities.

• Supporting local and national

charities.

• Responsible ESG practices and

policies.

• See our Sustainability report on

page 46.

4. Investors

• Long-term value creation,

generating cash for further

profitable investment in the

business and to support a

growing dividend.

• Surplus cash after investment

and dividends is returned to

shareholders through share

buybacks.

Our resilient business model

What

we do

The value

we create

• Our manufacturing and sourcing

experts ensure that we offer

attractive products that are trade

quality and easy to fit.

• We design and manufacture all of

our own cabinets, around 5million

in 2022, as well as some cabinet

frontals, worktops and skirting

boards. We’re agile and we keep the

make vs. buy decision under review.

• We make what it makes sense for

us to make in our UK factories

and we buy other product in from

our suppliers.

• We buy in thousands of different

products from hundreds of trusted

suppliers around the world, including

appliances, joinery, flooring and

hardware. We offer everything

necessary tocomplete any kitchen.

The UK’s leading specialist kitchen supplier, selling only through trade customers.

• Our in-house distribution operation

delivers from our factories and

central warehouses to our network

of over 850 depots.

• No two deliveries are alike, and

each one must be correct, complete

and on time. We can guarantee

this because we controlour own

distribution.

2. Distribution

• Our 1,600 specialist kitchen

designers support the builder by

visiting the end-user’s home, or

work with them remotely using our

new virtual design service, and

helping them choose, plan and

design their dream kitchens.

4. Consumers/

Homemakers

2. Staff

• A growing company with

opportunities for training,

development and

career progression.

• A safe working environment,

good salary, pension and benefits,

with local profit-sharing and

incentives.

3. Suppliers

• Strong and enduring relationships

based on trust.

• Co-operative engagement on new

products and the scale necessary

to support suppliers’ businesses

and investment plans.

3. Depots designed for our trade customers

• Our business depends on

entrepreneurial depot managers and

the relationships between our highly

motivated and incentivised depot

teams and their local builders.

• A typical Howdens depot is in an edge-

of-town location – more convenient for

our trade customers, and cheaper to

rent. Around 85% of our UK customers

live within 5 miles of a Howdens depot.

• Our in-stock model means that

builders can get the products

theyneed at short notice, even when

plans change part way through a job.

• We offer the builder quality products,

excellent levels of service and trade

accounts that allow them up to eight

weeks to pay. We focus on helping

our customers succeed. When they

make money, we make money.

1. Customers

• Save time and money with Howdens. Trade quality, full productrange for the

complete kitchen, available from stock atcompetitive, confidential prices.

• Trusted personal relationships providing outstanding service,

from kitchen design to delivery and aftersales support.

• Trade accounts allow the builder to finish their project and get paid by their

customer before they need to pay us. Online account management and anytime

ordering tools help the busy builder.

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

14 15

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / Our resilient business model

Strategic Report Strategic Report Page Title

Demonstrating the strength of our trade-

only, in-stock business model

Howdens delivered a strong performance in 2022, set

against a record prior year performance and an increasingly

challenging external geo-political and macro-economic

environment. Our teams have been adept at navigating

the business through high levels of inflation and further

supply chain disruption while supporting our customers

with a strong product line up, high stock availability and

outstandingservice.

I am delighted to have been given the opportunity to join

the Board of Howdens as Chairman. As I joined last July I

was struck by many qualities of the business with its very

strong customer-centric culture, differentiated business

model, and the excellent leadership team who are focused

on driving performance. As I have spent time in the business

this year, above all else, I have been struck by the talent and

unwavering commitment of Howdens’ 12,000 associates. They

are the lifeblood of this business and have again steadfastly

committed to keeping our customers running this year, in turn

keeping millions of homes and businesses functioning. On

behalf of the Board, I would like to express our sincere thanks

to them and recognise their outstanding contribution to

oursuccess.

Financial performance

Overall, in 2022 Group revenue was up 10.8% compared with

2021, and 46.4% ahead of pre-pandemic levels in 2019. The

Group delivered a 4.0% increase in profit before tax compared

with 2021 and 55.7% ahead of 2019. Earnings for the year were

65.7p per ordinary share, an increase of 23.5% on the prior

year and up 87.7% on 2019.

Strong cash generation remains one of the great hallmarks

of this business. Despite investing in additional inventory to

ensure high levels of stock availability for our customers and

returning £250m of cash to shareholders we ended the year

with cash of £308m. The strength of the Group’s financial

position enables a continued focus on our long-term strategic

initiatives despite continued near-term uncertainties.

This year we have also remained firmly focused on executing

our organic growth strategy at pace under the leadership

of Andrew Livingston and his team. The pandemic has

confirmed to your Board that our strategy is the right one and

we continue to invest in deeper vertical integration, depot

expansion in the UK and France, and product innovation.

You can read more about our progress on many fronts this

year in Andrew’s statement, starting on page 19.

Strategic initiatives

Our kitchen and joinery markets are large and fragmented with

the opportunity for Howdens to continue to grow its market

share. For example, we believe our addressable market in the

UK for the markets we currently operate in is around £11.5bn

compared with Howdens’ UK revenue of around £2.3bn. We

are investing commensurately in our consistent and proven

organic growth strategy which is now well established

under the leadership of Andrew Livingston and his team.

Our priorities are to invest in evolving our depot model,

improving our product range and supply chain, developing

our digital platforms and expanding the Howdens’ model

selectively outside the UK. As Chairman, I am very supportive

of the Group’s ambitions and believe in the exciting growth

opportunities ahead for Howdens to continue to gain profitable

market share.

The opportunity to have a positive impact on our environment

is also a key part of our overall growth plans. We describe this

as making sure Howdens is ‘worthwhile for all concerned’

which means for our people, our customers, our suppliers the

environment and the communities we work in. This year we

have adopted the Task Force on Climate-Related Financial

Disclosures (TCFD) which are set out starting on page 54.

In addition, we have also committed to the Science Based

Targets Initiative (SBTi) signifying our intention to reduce

emissions throughout the supply chain and to achieve

Net Zero by 2050.

Our people

Howdens’ key asset is its workforce and we want to attract,

train and retain great people from the widest possible pool

of talent. We remain focused on creating an engaging place

to work with fulfilling jobs and a strong culture that supports

everyone to do their best. Listening to our employees is key.

Over 7,000 completed the Best Companies engagement

survey in March and it was pleasing to see that colleagues

feel very positive about working at Howdens. We were proud

to receive a ‘two-star’ accreditation as a company ‘with an

outstanding commitment to workplace engagement’. In

fact, Howdens was ranked 10th in the top 100 UK’s Best Big

Companies To Work For last year up from 14th in 2020 which is

impressive considering the challenges of the last two years as

a result of the COVID-19 pandemic.

I am also particularly proud of our continued commitment

to apprenticeships and the value that they can bring to our

business as we compete for future talent. We currently have

603 apprentices working in a range of tailored programmes

throughout all areas of the business. These individuals are

taking the apprenticeship route to gain higher level skills and

professional qualifications and we were delighted to celebrate

the success of 300 employees this year who completed

their programmes with us. I am confident that many of these

individuals will be the Howdens leaders of the future and I wish

them every success in their careers.

Demonstrating the strength

of our trade-only, in-stock

business model

“ Howdens delivered a strong

performance in 2022, set against a

record prior year performance and

an increasingly challenging external

geo-political and macro-economic

environment”

Chairman’s

statement

Peter Ventress

Chairman

Howden Joinery Group Plc / Annual Report & Accounts 2022

Financial Statements

Additional Information

Strategic Report

Governance

16 Strategic report / Chairman’s statement

Strategic Report Strategic Report Page TitleChairman’s statement

Chairman’s statement continued

Our teams are also highly active in our local communities.

This year we announced a new partnership with the Football

Association to support their Game Changer programme to

help local communities to improve their club kitchen facilities.

Over the next 3 years Howdens will donate over £3m of our

kitchen and joinery products to support this important cause.

This not only improves the clubs, and their ability to generate

revenue, but also helps the lives of families in the communities

as well as supporting local tradespeople and businesses.

Capital allocation and returns to

shareholders

Our approach to capital allocation is unchanged. We focus

on achieving sustainable profit growth by investing in and

developing our vertically integrated business. We also

want to maintain and grow our ordinary dividend in line

with earnings to reward shareholders with an attractive

ongoing income stream. After allowing for these uses of cash,

Howdens remains committed to returning any surplus capital

toshareholders.

The Group’s dividend policy is to target a dividend cover

of between 2.5x and 3.0x. Taking into account the Group’s

prospects and strong financial position, in July 2022 the Board

declared an interim dividend of 4.7p per ordinary share. The

Board is recommending a final dividend for 2022 of 15.9p per

ordinary share, giving a total dividend of 20.6p per ordinary

share. (2021: 19.5p per ordinary share) and representing

a year-over-year increase of 5.6%. The final dividend will

be paid on 19 May 2023 to shareholders on the register on

11April2023.

In February 2023, the Board decided that the Group will

undertake a new £50m share buyback programme which we

will aim to complete over the next 12 months. This is in addition

to the £250m share buyback programme announced last

year, which was completed during the second half of 2022.

Governance

Companies today are judged by their integrity and

trustworthiness as much as by their financial performance.

One of my key responsibilities as Chairman is to set the tone

for Howdens and ensure good governance (see pages 76 to

147). In my early months as incoming Chairman I have been

extremely well supported by the members of the Board. With

their diverse backgrounds, they bring balance and a wealth

of skills and experience to our organisation that complements

the talents of our executive team. I thank them all for their

valuable contribution as we continue to maintain oversight

of the strategic, operational and compliance risks across

the Group, refine our path to success and uphold the high

standards expected of us.

On behalf of the Board I would also like to thank my

predecessor Richard Pennycook, who retired in September,

for his strong leadership and commitment over the last 8

years. He successfully oversaw a huge amount of positive

change over that period including an orderly succession from

Howden’s founding CEO Matthew Ingle to Andrew Livingston in

2018, and I am personally grateful to Richard for the time and

invaluable support he gave to me during my induction.

In February, we announced that Geoff Drabble will step down

from the Board at the end of the Annual General Meeting on

4 May 2023. On behalf of the Board, I’d like to thank Geoff

for his nearly eight years of service, in particular, as Senior

Independent Director and as the Non-Executive Director

Responsible for Workforce Engagement. He has made a

significant contribution to Howdens during a very successful

period of growth in the Company’s history and we wish

him well in the future. The Nominations Committee has a

comprehensive succession planning process and a further

announcement on the handover of Geoff’s responsibilities will

be made in due course.

Looking ahead

The Group performed strongly in 2022 and while the

macroeconomic and geopolitical environment is uncertain,

our business model is resilient, and we start the new financial

year in a position of strength, leveraging our scale and

expertise to continue to support our customers.

I am proud to have joined Howdens. It is a great business with

a clear strategy, well defined executional plans and huge

growth potential. Looking ahead, we remain excited about the

significant structural growth opportunities in our markets and

our ability to generate further sustainable long-term value for

all our stakeholders.

Peter Ventress

Chairman

6 March 2023

Further reading

See our Sustainability report Page 46

See my introduction to our

Governance report Page 78

See our Board of Directors Page 80

Perspectives on 2022 results

Howdens delivered a strong performance in 2022, with good

progress on executing our strategic priorities and further

market share gains. During the year our teams have been

adept at navigating the challenges of high inflation and

supply chain disruption, while supporting our customers with

a market leading product range, high stock availability and

outstanding customer service.

Our markets are large and fragmented which gives us a long-

term opportunity for growth. In response, we are continuing

to expand our depot network, improve our product range,

optimise our manufacturing and supply chain, and develop our

digital capabilities. We see potential for around 1,000 depots

in the UK and we are now selectively expanding our business

model internationally in France and the Republic of Ireland.

Our robust financial position underpins our strategy,

funding investment in our growth initiatives, expanding our

manufacturing and supply chain capabilities, and supporting

ongoing cash returns for shareholders.

Operational highlights

We achieved another record sales performance in our peak

trading period in the autumn.

We opened 30 new depots in the UK, bringing the total to 808

at period end. We revamped 82 older UK depots during the

year with around 50% of UK depots now trading in the updated

format. We also opened 25 new depots in France (and closed

5) bringing the total to 60 at the period end, and we opened 5

new depots in the Republic of Ireland.

We made further progress on new product introductions

including 21 new kitchen ranges in the period. Sales of new

products introduced in 2021 and 2022 represented 22% of UK

product sales in 2022.

We invested in upgrading our manufacturing capacity and

capabilities to support future growth. This included solid work

surfaces, architrave and skirting products.

We largely completed the roll-out of the regional cross-docking

network (XDC) serving most of our UK mainland depots,

improving product availability.

We invested in our digital platform which saves our trade

customers time and money and supports them in optimising

the procurement process for end users.

Howdens delivered a strong

performance in 2022, with

good progress on executing our

strategic priorities and further

market share gains.

Chief Executive’s

statement

Andrew Livingston

Chief Executive Officer

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / Chief Executive’s statement18

Strategic Report Strategic ReportPage Title Chief Executive’s statement

We have moved our ESG agenda forward.

In 2021 we achieved carbon neutral manufacturing at our

Howden and Runcorn sites.

In 2022 we maintained zero waste to landfill across all

manufacturing and logistics, with our UK depots reaching

99.7%.

In October 2022, 96% of our UK depots switched to using

renewable energy, generated in the UK primarily from wind,

solar or hydro power.

We have committed to develop our Net Zero targets with the

Science Based Targets Initiative, signifying our intention to

significantly reduce emissions throughout our supply chain

and to achieve Net Zero by 2050, having halved our direct

emissions by 2030.

For more information on our progress on ESG, please see our

Sustainability report starting on page 46.

Importance of our business model

The results demonstrate the strength of our local,

trade-only in-stock model and we believe we took

market share again this year, following the gains

made last year.

A strong product line-up, high stock availability, industry

leading service levels and a very engaged team have all

contributed to our performance, which benefits from the

ongoing investments in our customer focused strategic

initiatives.

In 2022 our customers on average spent more with us than in

2021 and we had a record number of customer accounts as at

the year-end.

We also increased prices, which helped us defray most of

the significant rises in input costs across the year. As well

as protecting gross margin, the business delivered annual

volumes well ahead of pre-COVID times.

Sales for our peak autumn trading period, which for us

comprised periods 10 and 11, were the highest ever,

with our supply operations delivering an exemplary

level of service to our depots.

Size of the UK kitchen market

We believe the opportunities for the Howdens model

are greater than we previously thought, and we are

investing in the business accordingly.

Definitions and estimates of the size of the UK kitchen market

vary, however, based on proprietary research, we think a

reasonable estimate of the market as we think about it, was

around £7 billion by value, as at the end of 2022.

This is a larger value than we had assumed previously and

gives us plenty of room to increase our market share.

Similarly for our other product categories, which include

joinery and hardware, we now think the value of our

addressable UK market is some £4.5 billion, with our share

of such categories lower than our kitchen share.

Prior to any change in market volumes, this gives us total

addressable markets of around £11.5 billion in the UK versus

the £2.26 billion of UK sales we achieved in 2022.

Chief Executive’s statement continued

Howdens has made further

progress on its strategic

initiatives, and we expect to deliver

profitable growth and market

share gains over the medium term.

The four strategic initiatives are:

1) Evolving our depot model

2) Improving our product range and supply

management

3) Developing our digital platforms

4) Expanding our international operations

1) Evolving our depot model

High service levels, including local proximity and

immediate availability are very important to our

customers and we have continued to extend our UK

depot footprint in 2022.

We are opening all new depots in our updated format which

is designed to provide the best environment in which to do

business and to make space utilisation and productivity

gains in a cost-effective way, by using vertical racking in the

warehouse section of the depot.

In 2022, we opened 30 new depots and we believe there is

potential for around 1,000 depots in the UK, including c.25 in

Northern Ireland and we plan to open around.30 new depots

in 2023.

We have also continued with our revamp programme

for existing depots, and the programme is delivering

additional sales and has received very positive

feedback from depots and customers.

During the year, including relocations, we reformatted 82

depots, taking the total number of reformatted depots to 185

at the year-end.

The scale and scope of the revamps has been refined and,

in 2023 we will shorten the reformatting timetable in some

cases, reducing disruption to the refit and lowering, where

appropriate, costs by modifying the scope and scale of some

revamps to maintain incremental returns.

Overall, we will continue to target a payback of up to 4 years

for these projects. Including relocations, we plan to revamp

around 80 more depots in 2023.

By the end of 2023 we expect to have around 50%

of all UK depots, trading in the updated format.

Update on strategic initiatives

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

20 21

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / Chief Executive’s statement

Strategic Report Strategic ReportPage Title Page Title

The updated depot format

Updated front area creates the best environment for

our customers to do business in. Better warehouse racking

delivers more stock, in less space, with reduced picking times.

“ Based around our core building blocks of Trade Service &

Convenience, Trade Value and Product Leadership, we have

initiatives in place to exploit opportunities in a challenging market”

Range management

As product lifecycles shorten, managing the number

of kitchen ranges efficiently is crucial for both

our customers, who want best availability, and

for profitability.

We are managing range introductions and clearances so

that our 2023 current range count is around 90, organised in

10 families. New products for 2022 featured 21 new kitchen

ranges with total sales ahead of 2021 and 2019 with more

emphasis on higher priced kitchens and on ensuring more of

our most popular styles were accessible to all budgets.

Total sales of all product introduced in 2021 and 2022

represented around 22% of our UK product sales. During

2022, we focused on building out our ranges of higher priced

kitchens, where we are under-represented. Sales in this

category grew strongly in the period and contributed to the

percentage increase in average kitchen invoice value.

We also grew our market share significantly in the solid work

surface category. These products are often associated with

sales of higher priced kitchens, and the acquisition of the

Sheridans business along with additional investments has

expanded our range and manufacturing capacity to support

this significant opportunity.

Value for money consistently drives consumer buying

decisions and is likely to be more of a feature in 2023 given

mounting pressures on household budgets. We also expect

some consumers to reallocate how they spend their budget for

example, between cabinetry, worktops and appliances.

As a result, in 2023 we will increase the net number of ranges

aimed at entry and the mid-market segments, making more

kitchen looks and styles accessible to all budgets.

This is also important as kitchens from these segments are a

major contributor to keeping our unit costs of manufacture low.

2) Improving product range and supply management

Chief Executive’s statement continued

Manufacturing and supply chain

Our dedicated manufacturing and supply chain is

critical to the success of our in-stock offer.

We supply all product, whether manufactured or sourced, to

all depots. Since the COVID-19 pandemic we have continued

to hold enhanced safety stock as a contingency against

unexpected demand patterns and interruptions to supply

tosupport our customers.

We keep under review what we believe it is best to

make or buy, balancing cost and overall supply chain

availability, resilience and flexibility.

In 2019, we invested in manufacturing technology to enable

us to make the doors for our popular Hockley kitchen ranges.

Since then, we have invested in new lines which will enable us

to make frontals for more of our kitchen ranges, at the same

quality as we can source externally but at a lower cost and

at a reduced lead time. The new lines, located at our Howden

site, are now manufacturing frontals and will be moving up to

full scale production during the course of 2023. Our second

architrave and skirting line is also now operational, enabling

us to service in-house more of the substantial increase in

demand we have seen for these products.

Last year we announced our plans to expand, over the

next few years, our kitchen manufacturing capacity and

capabilities and to reconfigure some of the supporting

infrastructure at our Howden factory and we are continuing

toprogress the investments required to achieve this.

New product for 2023 will feature around 23 new

kitchen ranges.

Features of our 2023 new product introductions will

include:

• Extending our entry ranges with more colour options

including Greenwich in Reed Green, Witney in Pebble

and Navy and Allendale in Dusk Blue plus new frontals

for Greenwich and Witney to match the new ‘Croft Grey’

kitchen cabinet we are introducing this year.

• Refreshing the look of our bestselling shaker family, which

we have named Halesworth and adding a new mid-priced

beaded shaker family called Bridgemere, initially available

in three colours.

• Maintaining a similar range count to last year in higher

price kitchens, with the same number of families but

introducing additional new colours for 2023. We are also

adding more decors to our solid surface offering and

refining the template to fit service to ensure the best

service to our customers.

• Introducing more new products in other categories both

for everyday lines and kitchen products. This includes

more colours and bolder styles at all price points in doors,

expanding our flooring ranges and further additions to our

Lamona brand, which is the leading integrated appliance

brand in the UK. We are also adding more styles, colours

and finishes in sinks and taps.

Update on strategic initiatives continued

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

22 23

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / Chief Executive’s statement

“ We keep under review what we believe it is best to make or buy,

balancing cost and overall supply chain availability, resilience

and flexibility”

Regional cross-docking centres (XDCs)

The roll out of our XDC programme was completed

early in the new financial year and the service is

now available to nearly all UK mainland depots.

This approach improves stock replenishment through regional

hubs that supplement the depots’ core weekly replenishment

with a next day service.

XDCs also optimise the service levels our depots can deliver to

customers by rebalancing inventory and freeing up more time

and resources to focus on sales and service while reducing

the need for inter-depot stock transfers.

This year we will continue to optimise the service balancing

cost and availability with providing the best service to

support our trade customers’ daily needs. By rebalancing

where we hold stock and changing the delivery pattern of

some lines to depots, depots can allocate more warehouse

space to faster selling lines and can reduce stocks of slower

moving lines while providing a high level of service across the

productrange.

XDC is now seen as a key point of differentiation by

both customers and our depot teams versus the best

competitorofferings.

Chief Executive’s statement continued

4) Expanding our international operations

Our international operations, predominantly based

in France continue to make good progress. The

business model for France is similar to the UK with a

market size in kitchens of around €4.3bn (excluding

appliances).

The French market has low penetration rates of integrated

kitchens and most are purchased through DIY outlets and

specialist small independent businesses.

Since 2019, we have been opening depots in small clusters

within cities which benefit from word of mouth between

customers and our ability to build a local and trusted brand.

Clustering also helps to build the Howdens culture within our

business teams.

By the end of 2022 we increased the number of depots trading

in France and Belgium to 60 with a significant proportion in

the Paris metro area. We are continuing to selectively invest in

expanding the business and expect to open around 30 depots

in the next two years with around 10 new depots in2023.

We believe appreciation of the advantages of our trade-only

in-stock model, our service levels and competitive pricing is

growing, and with around 90% of product common to our UK

ranges this helps us realise scale benefits.

We are using a similar approach to that in France,

adapted to fit the population distribution of the

Republic of Ireland and with the depots supported

by our UK infrastructure.

During 2022 we opened our first 5 depots clustered around

Dublin. Our arrival in the Irish market has attracted much

attention locally and we are encouraged by depot sales todate.

In 2023, we plan to have at least 10 depots trading by the end

of the year. This city-based approach fits with Irish population

distribution and the depots can be supported by the UK.

3) Developing our digital platforms

Our digital strategy reinforces our model of strong

local relationships between depots and their

customers by raising brand awareness, supporting

the business model with new services and ways to

trade with us and delivering productivity benefits for

depot employees and customers.

In 2022 we added to our capabilities for the builder, including

new functions which improves our digital offerings.

The Trade App which puts more aspects of the local depot in

the hands of our customers was launched in February last

year. This replicated core features of the online trade platform

including customers’ account details and credit status,

making them readily accessible on the move.

Customers can also view their open orders, and new features

include rapid check in at any depot, order status updates and

an easy order collection function.

We continue to see high levels of engagement with

our web platforms and growth in our social media

presence which also stimulates interest in viewing

our products and services on Howdens.com.

New registrations totalled nearly 80,000 and around 45% of

our customers had an online account by the end of 2022.

‘Impressions’ were present in 15% more organic search results

a month with site visits at 21 million. The time users spent

looking at pages increased by 51% and the number of pages

viewed per session also increased.

Across our social media sites our follower base was c.455,000,

up 14%, with 1.6 million users actively engaging monthly.

In 2023 we will be adding new services and capabilities

which collectively improve lead quality, stock and account

knowledge, promote frequency of trading and reduce time

consuming manual tasks in depots, including stock allocation.

Update on strategic initiatives continued

XDCs

Maintaining our in-stock offer, delivering superior customer

service, and freeing up time and resources in our depots.

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

24 25

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / Chief Executive’s statement

Strategic Report Strategic ReportPage Title Page Title

“ We have made an encouraging start to 2023

and we are confident in our business model

across changing market conditions”

Prospects for 2023

Given prevailing macroeconomic circumstances,

including on-going inflationary cost pressures, we are

expecting a more challenging marketplace in 2023.

However, we have prepared for this and our customers, mainly

self-employed people, are adept at managing their businesses

through such times.

Delivered by our highly entrepreneurial and well incentivised

teams across the business, I believe that our service-

orientated, trade-only, in-stock, local model is the right one

to deliver sustainable market share gains across changing

market conditions.

Our model is difficult to replicate and compete with, and

we have initiatives in place to make it more so, in markets

where the longer-term opportunities for us are larger than

we previously thought. We are prioritising investment in the

business on this basis.

We are well planned on our strategic initiatives which

are aimed at increasing our market share profitably.

High stock availability is a major contributor to our

performance and in 2023 we will continue with our safety

stock policies but at more normalised levels.

Most of our new kitchen ranges for 2023 will be in stock by the

end of June, well ahead of peak autumn trading, and with more

emphasis on entry and mid-price points.

We have a programme of ‘Rooster’ promotions in place to

keep Howdens at the front of the trade’s mind together with

our ‘Bang on the Money’ price initiative.

We will continue to make improvements to service and

availability, including by utilising XDCs efficiently. We are

increasing the range of services and functionality we offer

online to the benefit of our depot teams, customers and

end-users.

We will be making more in the UK, as our new kitchen door and

skirting lines commence fuller-scale manufacturing, and our

solid surface business grows.

During 2023 we plan to open around 30 depots in the UK and

refurbish around another 80 existing depots to the updated

format.

In France we plan to have around 70 depots trading by the

end of 2023, and to have around 10 trading in the Republic

of Ireland.

Whilst it is early days, we have made an encouraging

start to 2023 and we are confident in our business

model across changing market conditions

We aim to retain a profitable balance between margin and

volume, whilst aligning operating costs and working with

suppliers to keep product and input costs controlled.

Sales in periods one and two increased versus the comparable

ones last year and our feedback is that builders currently

remain busy.

We are mindful of the challenges current macro-economic

conditions including ongoing inflationary cost pressures, and

we are trading against record prior year comparators.

However we have, at present, the momentum for another

successful year in 2023 and we will continue to invest in our

key capabilities and growth opportunities which are pivotal to

the longer-term development of the business.

Andrew Livingston

Chief Executive Officer

6 March 2023

Chief Executive’s statement continued

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / Chief Executive’s statement26

Strategic Report Strategic ReportPage Title Page Title

100%

Key performance indicators

Strategy

Risk

Remuneration

Links to:

Executive Committee and senior management bonuses

are directly linked to cash generationtargets

Financial Non-Financial

Return surplus cash to shareholders

Invest in our strategic priorities

Prudent financial management

Sales

Why we measure it

We believe that there are considerable opportunities to grow

sales. As sales grow, we believe there are economies of scale

which will also allow us to grow long-term profitability.

Links to strategy, risks and remuneration

Profit before tax

Why we measure it

Profit before tax is a simple and widely understood

measure. We consider that it gives a complete picture

of our performance as it includes all of our operating,

selling and distribution, admin and financing expenses.

Links to strategy, risks and remuneration

Depot openings

Why we measure it

We believe that there is some way to go before the UK market is

saturated. We continue to identify possible sites for new depots

whilst at the same time keeping our model flexible, and allowing

us to take account of economic conditions and phase the speed

of our growthaccordingly. We plan to expand our depot network

in the UK, France and the Republic of Ireland in 2023.

Links to strategy, risks and remuneration

Use of FSC® or PEFC

certified materials

Why we measure it

We use almost a third of a million cubic metres of chipboard

and MDF in our factories. FSC

and PEFC are the two

maincertification bodies. Ensuring that all our MDF and

chipboard is certified by them gives us assurance over

their provenance. See pages 66 and 67 for more details.

Links to strategy, risks and remuneration

Production waste

recycling

Why we measure it

One of the pillars of our business model is our efficient

production, which gives us a significant cost advantage.

Recycling as much of our waste as we can benefits stakeholders

as it reduces our emissions and our costs.

Links to strategy, risks and remuneration

Health & Safety

Why we measure it

We have over 12,000 employees working in our factories,

our logistics operation, our support sites and our depots and

we need to keep them all safe at work.

Links to strategy, risks and remuneration

Cash

Why we measure it

We aim to cover our investment needs, to retain at least one

year’s working capital requirement, to pay a progressive

dividend and to return surplus cash to shareholders (see

page33 for details of our capital allocation model).

Links to strategy, risks and remuneration

Progress

Total Group sales of £2.3bn in 2022, up 10.8%.

Progress

Profit before tax in 2022 increased to £406m.

Progress

We ended 2022 with 30 more depots in the UK, 20 more in France

and we opened our first 5 depots in the Republic of Ireland. We

plan to continue to expand our network in 2023.

Progress

Our rate of RIDDOR-reportable injuries decreased significantly

from 2021 to 2022, and is also significantly below the HSE all-

industry average for the year. Seepage 64 for more detail.

Progress

We are pleased to maintain the result that 100% of

ourproductionwaste was reused recovered or recycled.

Seepage 68 for moredetails.

Progress

We have invested £155m in capital expenditure and acquisitions

for future growth and have also returned £365m in dividends and

buybacks, ending the year with £308m net cash.

Depot staff bonuses are directly linked to their depot’s sales

Reach more builders Failure to maximise growth potential

Executive Committee and senior management

bonuses are directly linked to PBT

Operational excellence

Failure to maximise growth potential

Prudent financial management

Deterioration of model & culture

Failure to maximise growth potential

Deterioration of model & culture

Reach more builders

Operational excellence

Health & Safety

100% of wood-

based material

used in our

manufacturing

processes from

FSC

or PEFC

certified sources

Product innovation

Product relevance Continuity of supply

Prudent financial management

Operational excellence

2018 2018

2018

2019 2019

2019

2020 2020

2020

2021 2021

2021

2022 2022

2022

98.5%

100%

99.8%

100%

2018 2019 2020 2021 2022

£1.5bn

£239m

£1.5bn

£185m

£1.6bn

£261m

£2.1bn

£390m

£2.3bn

£406m

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

28 29

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / Key performance indicators

Strategic Report Strategic ReportPage Title Page TitleKey performance indicators

Financial results for 2022

Revenue

Group revenue of £2,319.0m was ahead by 10.8% (2021:

£2,093.7m) and 46.4% higher than the same period in 2019,

with the growth rate in the second half increasing versus 2019

at a higher rate than the first half.

UK depot revenue grew 10.4% to £2,256.1m (2021: £2,043.3m)

and increased by 7.7% on a same depot basis

to £2,193.3m

(2021: £2,035.8m); this excludes the additional revenue from

depots opened in 2022 and 2021 of £62.8m (2021: £7.5m).

Revenue in the international depots was £62.9m (2021:

£50.4m). On a local currency basis, revenue at our depots

in France and Belgium increased by 14.8% on a same depot

basis

(excluding the 35 depots opened in the last two years).

In April, we entered the Republic of Ireland market for the first

time. In all, we opened 5 new depots in the Dublin area by the

end of 2022 with good engagement from local builders.

Gross profit

We continued to maintain sector leading margins by

appropriately balancing pricing and volumes in a higher

inflationary environment. Gross profit was £122.2m higher

at £1,411.2m (2021: £1,289.0m). The lower gross margin

percentage of 60.9% (2021: 61.6%) was predominantly due

to the dilutive impact of the successful growth of solid work

surfaces, following the acquisition of Sheridan last year. These

products, which are often associated with sales of higher

priced kitchens, make an attractive cash margin contribution

but have a lower gross margin percentage than most

Howdens’ kitchen products.

Operating profit

Operating profit was ahead of last year and 2019 at

£415.2m (2021: £401.7m) and 59.7% ahead of pre-COVID

levels (2019: £260.0m).

Operating expenses increased by 12.3% to £996.0m (2021:

£887.3m; 2019: £726.2m). As expected, costs increased due

to continued investment in our growth initiatives across the

business and input cost and energy price inflation. Compared

to 2021 this included £42m on existing depots, £17m on new

UK depots opened in 2021 and 2022 and £8m on international

depots opened in the period and prior year. We also invested

£31m in warehouse and transportation initiatives including in

regional cross docking facilities (XDCs).

The net interest charge was £9.4m (2021: £11.4m) and,

as a result profit before tax of £405.8m was 4.0% ahead

of the prior year (2021: £390.3m) and 55.7% ahead of 2019

(2019: £260.7m).

• Strong results with further

market share gains

• Continued investment in our

strategic initiatives

• Good cash generation and

robust balance sheet

• 20.6p 2022 full year dividend

and £50m share buyback

programme announced

Financial review

Tax, profit after tax and basic

earnings per share

In recent years the UK Government has introduced the Patent

Box Tax Relief Scheme which allows companies to benefit

from investments made in intellectual property including

new product innovations. In 2017, Howdens applied for, and

was granted, a patent for the design of a new multi-part,

adjustable cabinet leg that is used in many of our cabinet

ranges, which makes them faster and easier to adjust and fit.

Discussions were opened with HMRC late in 2020 and in 2022,

after seeking non-statutory clearance on some technical

matters, HMRC agreed in principle to Howdens submitting a

claim for the product.

The Group has prepared the financial statements for the

year ended 24 December 2022 to include the impact of the

claim. A prior year current tax credit of £36.1m has also been

recognised for the prior financial periods 2017 to 2021. The

success of the claim is subject to review and confirmation

by HMRC. If successful the Company expects, assuming

prevailing marginal tax rates, a benefit to the underlying

effective tax rate of around 3% in subsequent years. The cash

benefit will be realised following approval by HMRC.

As a result, the tax charge on profit before tax was £31.6m

(2021: £75.8m) and represented an effective tax rate of 7.8%

(2021: 19.4%). Excluding the patent box claim the underlying

effective tax rate was 16.7% (2021: 19.4%).

Consequently, profit after tax was £374.2m (2021: £314.5m)

and, reflecting the above and the reduced share count

following the share buyback, basic earnings per share

wereahead by 23.7% at 65.8p (2021: 53.2p).

Cash

The net cash inflow from operating activities was £546.5m

(2021: £530.7m).

Net working capital increased by £51.7m with stock £70m

higher as a result of cost increases and additional safety

stock to support our customers. Debtors at the end of the

period were £24m higher than at the end of the previous

period with ageing in good shape. Creditors were £42m higher.

Capital expenditure was £130.4m excluding the Sheridans

land acquired (2021: £85.9m) and the total cash outflow for

the Sheridans acquisition was £25m which included £10m

to acquire the site. Corporation tax payments were £101.5m

(2021: £73.1m), and dividends amounted to £115.0m (2021:

£133.6m). Share buybacks totalled £250.5m (2021: £50.0m)

and the difference between the cash paid and the operating

charge for the Group’s pension schemes was an inflow of

£2.0m (2021: outflow of £18.5m). The interest and principal

paid on lease liabilities totalled £79.2m (2021: £85.8m).

Reflecting the above, there was a net cash outflow of £207.3m

(2021: cash inflow of £84.6m), leaving the Group with cash at

the year end of £308.0m (25 December 2021: £515.3m).

In September, the Company signed a new £150 million,

five-year, multi-currency revolving credit facility replacing

the previous asset backed lending facility. The new facility

remains undrawn.

Revenue

£m 2022 No. of depots 2021

Group: 2,319.0 873 2,093.7

Howden Joinery UK depots – same depot basis

2,193.3 747 2,035.8

UK depots opened in previous two years 62.8

61 7.5

Howden Joinery UK depots – total sales 2,256.1 808 2,043.3

Howden Joinery Continental European depots 62.9 65 50.4

Revenue €m

France and Belgium – same depot basis

59.5 30 51.8

Depots opened in previous two years 12.3 35 0.4

Revenue from closed depots 0.7 (5) 6.2

Republic of Ireland (from April 2022) 1.3 5 –

France and Belgium – total sales 73.8 65 58.4

1 The information presented relates to the 52 weeks to 24 December 2022 and the 52 weeks to 25 December 2021 unless otherwise stated.

2 Same depot basis for any year excludes depots opened in that year and the prior year.

3 2022 includes additional 3rd party sales generated by the Sheridans solid work surface business acquired in the period.

1 The information presented relates to the 52 weeks to 24 December

2022 and the 52 weeks to 25 December 2021 unless otherwise stated.

2 Same depot basis for any year excludes depots opened in that year

and the prior year.

Paul Hayes

Chief Financial Officer

Howden Joinery Group Plc / Annual Report & Accounts 2022

30 31

Financial Statements

Additional Information

Strategic Report

Governance

Howden Joinery Group Plc / Annual Report & Accounts 2022

Strategic report / Financial review30

Strategic Report Page TitleFinancial review

How we make cash and how we spend it

Capital allocation and returns

toshareholders

We have a well-established policy for capital allocation. We

focus on achieving sustainable profit growth by investing in

and developing our business. We also want to maintain and

grow our ordinary dividend in line with earnings to reward

shareholders with an attractive ongoing income stream. After

allowing for these uses of cash, Howdens remains committed

to returning any surplus capital to shareholders.

Within its definition of surplus capital, the Board’s objective

is for the Group to be able to operate through the annual

working capital cycle without incurring bank debt, noting that

there is seasonality in working capital balances through the

year, particularly in advance of our peak trading period in the

second half. We also take into account that the Group has a

significant property lease exposure for the depot network,

and a large defined benefit pension scheme. Our policy

remains that when year end cash is in excess of £250m we

expect to return surplus cash to shareholders. This provides

sufficient headroom to support organic growth, our seasonal

working capital requirements and ongoing investments in our

strategic initiatives, while maintaining a strong balance sheet.

Financial review continued

On this basis, the Board has decided that the Group will

undertake a further £50m share buyback programme.

A£250m share buyback programme was announced

andcompleted last year.

Taking into account the Group’s prospects and strong

financial position, in July 2022 the Board declared an interim

dividend of 4.7p per ordinary share (2021: 4.3p per ordinary

share). The Board is recommending a final dividend for 2022

of 15.9p per ordinary share (2021: 15.2p per ordinary share),

resulting in a total dividend of 20.6p per ordinary share (2021:

19.5p per ordinary share). The total dividend represents a

year-over-year increase of 5.6% and the final dividend will

be paid on 19 May 2023 to shareholders on the register on

11April 2023.

Acquisitions

In February 2022, Howdens acquired Sheridan Fabrications

Ltd, for a total consideration of £25m including £10m for

the purchase of the site. Sheridans is a leading industry

specialist for the manufacture, fabrication, laser templating

and installation of premium worksurfaces. The acquisition

supports our ambition to develop our Howdens Work

Surfaces (HWS) operations as the market leading supply and

fit business. We are continuing to invest in expanding our

capacity and we have now rolled out HWS to all regions and

solid surface worktop orders have significantly increased on

the prior period.

Pensions

At 24 December 2022, the defined benefit pension scheme

was in a deficit position of £42m on an IAS 19 basis compared

to a surplus of £141m on 25 December 2021. This movement

from a surplus to a deficit was primarily a result of an increase

in the net discount rate resulting in a reduction in the liabilities

of £571m, and a decrease in asset valuations of £754m. The

extreme market volatility in September 2022 led to changes

in the Plan’s investments to meet collateral requirements and

high inflation experienced through 2022 also increased the

liabilities. The defined benefit pension scheme is closed for

future accrual.

The pension has returned to a small deficit on a technical

provisions basis from November 2022 and, as a result,

deficit contributions of £2.5m a month re-commenced in

January 2023. It is possible that the scheme could return to

a surplus position on a technical provisions basis. If this were

the case for more than two consecutive months then deficit

contributions would cease. The next full triennial valuation of

the scheme will be carried out as at 31 March 2023.

Return surplus cash

to shareholders:

• After organic investment needs

• Seasonal working capital movements

• Fund pension scheme

• Distribute cash >£250m

Modest investment

in adjacencies:

• Vertical integration e.g. solid surfaces

• Land purchases for expansion

Progressive ordinary dividend growth

• Sustainable growth through the cycle

Investing in organic growth:

• Open new and revamp existing depots

• Disciplined range management

• Optimise manufacturing & logistics

• Grow digital platform

Howdens’ approach to capital structure

£600

£m

£1,000

Operating

cash flows

– pre leases

Opening

net cash

Closing

net cash

Working

capital

changes

Lease

Payments

Capex and

acquisition

Other

£200

£400

£800

Cash generation and use

Uses of cash

-£79m

-£52m

£2m

-£102m

-£155m

-£250m

-£115m

+£547m

-£3m

Tax

paid

repurchased

Dividends

paid

Pension

contribution

2022

2021

Pension deficit DividendCapex Share buyback

£18.5m

£155m

£85.9m

£115m

£133.6m

£250m

£50m

£308m

£515m

2221

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

32 33

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / Financial review

Strategic Report Strategic ReportPage Title Page Title

Counterparty risk

Group Treasury policy on investment restricts counterparties

to those with a short-term credit rating at least equivalent to

Standard and Poor’s A-1 or Moody’s P-1. It also places limits

on the maximum amount which can be invested with a single

counterparty. The Group continuously reviews the credit

quality of counterparties, the limits placed on individual credit

exposures and categories of investments.

Funding and liquidity

The Group’s objective with respect to managing capital is

to maintain a balance sheet structure that is both efficient

in terms of providing long-term returns to shareholders

and safeguards the Group’s ability to continue as a going

concern. As appropriate, the Group can choose to adjust its

capital structure by varying the amount of dividends paid to

shareholders, the returns of capital to shareholders, the level

of capital expenditure, or by issuing new shares.

The Group has a committed, multi-currency, revolving credit

facility which allows borrowing of up to a maximum of £150m.

The facility was not used at any point during 2022 and is in

place until September 2027. More details of this facility are

given in note 19 to the financial statements.

The Group’s latest forecasts and projections have been

stress-tested for reasonably possible adverse variations in

trading performance and show that the Group will operate

within the terms of its borrowing facility and covenants for the

foreseeable future.

At the 2022 year end, the Group had £308m of net cash and

£150m of funds available to borrow under the committed

borrowing facility.

Financial review continued

Current trading and outlook for 2023

Current trading

The following table shows sales in the first two periods of the

new financial year to 18 February 2023 in absolute terms, on a

same depot (LFL) basis

Revenue growth (%)

Periods 1–2

% LFL%

UK depots 6.1% 4.7%

International depots

* 19.4% 7.8%

* 5 depots were opened in the Republic of Ireland and 5 French depots were

closed in 2022.

We are on track with our plans for 2023 to capitalise on the

significant ongoing opportunity to gain further market share.

During 2023 we will face strong prior year comparatives and,

particularly in the first half, the full year impact of inflationary

cost increases and our ongoing investments in our strategic

initiatives. This includes 61 new UK depots opened in the past

two years, expanding our manufacturing and supply chain

capabilities including XDC, ongoing digital development to

support our customers and new depot openings in France and

the Republic of Ireland. In 2023, capital expenditure will be

around £130m, at similar levels to last year.

While it is still early in the new financial year, sales in the first

few weeks have been encouraging in the UK. We continue to

seek to maintain a profitable balance between pricing and

volume and have implemented a price increase from the start

of the year to recover rising input costs. We have a strong

product line up and will place considerable emphasis on new

product introductions with around 23 new kitchen ranges

planned. We are increasing the number of ranges we offer in

entry-level and mid-priced kitchen ranges and have refreshed

our line-up of higher-priced kitchens, a segment of the market

where we are under-represented.

While mindful of ongoing macroeconomic uncertainty,

we are investing in the business for the long-term and the

fundamentals of our business model remain robust and

attractive. Howdens is in good shape and we are well prepared

to address the opportunities and challenges ahead in 2023

Use and management of financial

instruments, and exposure to financial risk

The Group holds financial instruments for one principal

purpose: to finance its operations. The Group does not

currently use derivative financial instruments to reduce its

exposure to interest or exchange rate movements.

The Group finances its operations by using cash flows from

operations, and it has access to a £150m revolving credit

facility if additional financing is required. Treasury operations

are managed within policies and procedures approved by

the Board. The main potential risks arising from the Group’s

financial instruments are foreign currency risk, counterparty

risk, funding and liquidity risk and interest rate risk, which are

discussed below.

No speculative use of derivatives, currency or other

instruments is permitted. The Treasury function does not

operate as a profit centre and transacts only in relation to the

underlying business requirements.

Foreign currency risk

The most significant currencies for the Group are the US

dollar and the euro. It is the Group’s current policy that routine

transactional conversion between currencies is completed at

the relevant spot exchange rate. This policy is reviewed on a

regular basis.

The net adverse impact of exchange rates on currency

transactions in the year was £0.7m. The principal exchange

rates affecting the profits of the Group are set out in the

following table.

Interest rate risk

The Group has not had any borrowings during 2022 and does

not consider interest rate risk to be significant atpresent.

New accounting standards

None of the new accounting standards that came into effect

during 2022 had a material implication for the Group.

Cautionary statement

Certain statements in this Annual Report are forward-looking.

Although the Group believes that the expectations reflected

in these forward-looking statements are reasonable, we can

give no assurance that these expectations will prove to have

been correct. Because these statements contain risks and

uncertainties, actual results may differ materially from those

expressed or implied by these forward-looking statements.

We undertake no obligation to update any forward-looking

statements whether as a result of new information, future

events or otherwise.

By order of the Board

Paul Hayes

Chief Financial Officer

6 March 2023

1 Same depot basis for any year excludes depots opened in that year

and the prior year.

2 As previously indicated FY2023 has an additional 53rd week in December

representing around £17m of additional operating costs with no

incremental sales.

1.16

United States dollar (US$) Euro (€)

Principal exchange rates versus UK pound (£)

Average rate 2022 Year-end 2021 Year-end

0.75

1.25

0.50

0.25

1.00

1.50

1.14

1.18

1.21

1.33

1.23

1.17

1.38

21 2122 22

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

34 35

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / Financial review

Strategic Report Strategic ReportPage Title Page Title

•

Risk management and principal risks Risk management

Our principal risks Our risk appetite is adaptive

Our most significant

emerging risks

Our risk heat map

Low

If the risk presents a hazard to our

operations or strategy

Higher

If the risk presents us with a sale or

service improvement opportunity

Balanced

For all other risks we carefully balance

the risk and our mitigation efforts with

the potential reward

Geopolitical

Digital

Climate-related risk:

• Transitional risks as the world moves

toward a zero carbon economy; and

• Physical risks presented by the

changing climate

See page 39

Our approach to risk

When we look at risks, we specifically think about internal and

external drivers of operational, hazard, financial and strategic

risk areas over short, medium and long-term timescales. We

consider the effects they could have on our business model,

our culture and our strategy which we set out starting at

page 8, and which we encourage you to refer to as you read

thissection.

Risk appetite

‘Risk appetite’ describes the amount of risk we are willing to

tolerate, accept or seek. Our risk appetite is determined by the

nature of the risk and how that risk could affect us.

We have a higher appetite for risks that present us with a clear

opportunity for reward, and we actively seek out those that

provide the greatest opportunities.

We have some appetite for risks with a possible opportunity for

reward. With these risks, we carefully balance our mitigation

efforts with our view of the possible rewards.

We have a very low appetite or tolerance for risks that only

have negative consequences, particularly when they could

adversely impact health & safety, our values, culture or

business model. We aim to eliminate these risks with our

mitigation efforts.

The Board sets and regularly reviews their risk appetite for

key and principal risks. This appetite is used by the Executive

Committee when considering risk mitigation strategies.

At a glance Our approach to risk, and emerging risks

Climate-related risk – an emerging risk which is not a principal risk

We handle climate risk in the same way as our other risks,

albeit that time horizons may be longer. We have continued

to develop our climate risk approach during 2022, more

detail on our this can be found in our TCFD section at page

54. Over 2022 our key climate risk developments include:

Risk identification

We have engaged with some of our key stakeholders,

including our insurers, to understand how their focus on

climate risk is likely to change going forward and the impact

it will have on us.

Risk management

We have developed a risk assessment approach that is

modelled on the British Standard (BS EN ISO14091) and

tailored to meet our needs, that enables robust prioritisation

of risk exposures for treatment.

Integration into our risk management framework

We have integrated climate risks into our operational risk

registers which benefit from clear ownership and formal

review as part of our regular risk process.

Emerging risks – none of which are principal risks

We consider emerging risks as part of our risk management

approach using both internal expertise and external

resources to identify emerging issues and their potential

impact. We consider risk over three different time horizons:

Horizon One – (Current issues out to 12/18 months) –

Typically operational in nature and robustly covered by the

current process.

Horizon Two – (12/18 months to 5 years) – Includes those

risks that may impact on achievement of our strategic

objectives as well as new risks our strategic objectives may

present to the business.

Horizon Three – (5years plus) – Risks that may shape our

strategic direction beyond the next 5 years.

Where appropriate, emerging risks are escalated to the

Executive and Board as part of our regular risk reporting.

Key areas of emerging risk remain:

Climate

We have an established Sustainability Committee, devolved

from the Board, who support them in establishing our

climate strategy, identifying, and managing climate risk and

setting metrics and targets – see TCFD reporting page 54.

Digital

As we continue to develop our digital capabilities to

provide our customers with the services they need, we

will come across new risks that will need managing to an

acceptablelevel.

Geopolitical

As a global business we are exposure to geopolitical risks

around the world and the political environment has been

presenting challenges over 2022 that may continue into

2023 and beyond. We include geopolitical risk in our risk

review process and consider the impacts they could have

on our risk profile in areas such as Supply Chain, Growth and

MarketConditions.

Market conditions

Maximising growth

Cyber security

Supply chain

Health and Safety

Product

Business continuity & resilience

People

Business model & culture

We consider tax risks and our tax strategy as part of our operational risk management. We operate a specific tax risk register with risks owned by senior staff members

and with Executive oversight. We do not consider taxation as a principal risk to Howdens. Our Group UK tax strategy may be found at www.howdenjoinerygroupplc.com/

governance/group-uk-tax-strategy

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

36 37

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Strategic report / Risk management

Strategic Report Page TitleRisk management and principal risks

Impact

Likelihood

Higher

Lower

Higher

Lower

Risk management continued

The risk management process

The main steps in the process are set out below:

4 Monitoring and reporting

We provide a consolidated key risks report to the

Executive Committee and Board for review, using

escalation criteria previously set by them. Mitigation

plans and the progress against them are also reported.

The Board considers and agrees the key risks, appetites

and mitigation strategies which are fed back to risk

owners. We conduct this exercise twice yearly and it is

used to determine the Group’s principal risks.

3 Response

Risks that require a response have additional

mitigation strategies agreed and a future action

plan drawn up together with a timeframe. We assign

responsibility for implementation of action plans.

2 Assessment

We assess risks using a Group-wide scoring mechanism

that considers both the likelihood of occurrence and the

potential impact. We prioritise them by their risk score and

an assessment of the level of exposure against our risk

appetite is conducted. Risk that exceed our appetite

may require additional risk response.

1 Identification

Functional management and leaders formally identify

risks twice a year providing both a bottom-up and a

top-down perspective. We record these in functional risk

registers for each area of our business. We also conduct

ad hoc reviews of new and emerging risks throughout

the year as theyarise.

Key activities People

responsible

Reports/documents

Risk monitoring and reporting

• We determine our principal risks from

the key risk report and agree them with

Executive Committee and Board.

• Executive Committee and Board challenge

and agree the Group’s key risks, appetites

and mitigation strategies twice yearly.

• Key risks, assessments and responses are

consolidated into a key risk report.

Risk response

• Where risks exceed our appetite, mitigation

plans are drawn up by functional leaders

and agreed with the Executive Committee.

Risk assessment

• Risks are prioritised using a Group-wide

scoring mechanism and are compared to

our riskappetite.

Risk identification

• We conduct operational risk register reviews

regularly to monitor current and emerging

risks.

• We review internal/external emerging issues

prior to each register review.

Principal risks

We consolidate the principal risks from the

key risk report. These are those risks that we

consider could have a potentially material

impact on our operations and/or achievement

ofour strategicobjectives.

Key risk report

We consolidate our key risk report from the

risk registers. This report outlines the highest

scoring risks, emerging risk issues, the biggest

influences to our risk profile and changes to the

risks reported. The key risk report also provides

a Group-wide perspective on risks escalated.

Risk register

We record risk registers for each functional

area, aligned with the operating model of

the business. The register includes all of the

information required to accurately capture the

risk and is maintained on our risk management

information system. We identify an owner

for each risk register responsible for its

maintenance as well as the risks it contains.

Board

Executive

Committee

Audit Committee

Risk team

Functional

leaders

Operational

management

Risk team

Risk governance

Top-down

Bottom-up

Risk

Market conditions

Supply chain

Maximising growth

People

Health and safety

Cyber security

Business model

& culture

Product

Business continuity

& resilience

Principal risks

Risk heat map

To help visualise our principal risks, we have plotted them on the heat map below.

The individual risks are described in more detail on the following pages.

• No new principal risks

• 1 risk score has increased – Market conditions

• 1 risk score has decreased – Business model & culture

Principal risks and uncertainties

We continue to actively monitor the ongoing relationship

between the EU and UK and reconsider our mitigation plans

and potential impacts as part of our risk process.

COVID-19

Whilst the impact of COVID-19 was lower in 2022 than in

previous years, we remained vigilant and promptly dealt with

any issues that arose during the year. Our learnings of what

risks to expect and how to deal with them gained over

2020–21 helped us effectively manage these issues over 2022

and will continue to help us be prepared going forward.

Brexit

Any breakdown of this agreement has the potential to bring

with it some risk for all companies operating in the UK and

the European Union. The main areas of potential risk for

Howdens include:

• Free trade & customs risks

— Loss of free trade status.

— Exit from the customs arrangements.

— No regulatory co-operation.

• Strategy & business plan risks

— Consumer/Investor uncertainty.

— Currency and stock market volatility.

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

38 39

Financial Statements

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Strategic Report

Governance

Strategic report / Risk management

Strategic Report Strategic ReportPage Title Page Title

The arrows alongside each risk show the year on year change

2022 Principal risks

1. Market conditions

Over 2022 the scoring of this risk has increased because of continuing economic uncertainty.

Risk and impact

• Our products are mostly

sold to small builders and

installed in owner-occupied

and private and public sector

rented housing, mainly in

the repair, maintenance and

improvement markets. If

activity falls in these markets,

it can affect our sales.

Mitigating factors

• We have proven expertise in managing both selling prices and costs. This continues to be

a main area of focus.

• We have a good record of dealing with changes in market conditions. We monitor activity

across our supply chain and depots closely, using the good relationships we have to give

us early warnings of changing conditions. This enables us to take swift mitigating action

to emerging market risk factors.

Mitigation actions in 2022

• Closely monitored the UK and global geopolitical environments, the impact on the cost of

living and of operating our business.

• Frequent scenario planning based on latest information to ensure our plans were

appropriate to changing market conditions.

Risk appetite

Shifts in the market conditions can impact small builders, and therefore our sales. We manage this risk through active

market analysis and competitor review, and then optimising selling prices and our costs. We have a low appetite for market

conditions risks and maintain close relationship with the small builder to identify movements early to enable appropriate

action to be taken.

Reach more builders Operational excellence Product innovation Prudent financial management

Links to strategy

2. Supply chain

Risk and impact

• Any disruption to our

relationship with key

suppliers or interruption

to manufacturing and

distribution operations

could affect our ability to

deliver the in-stock business

model and to service our

customers’ needs. If this

happened, we could lose

customers and sales.

Mitigating factors

• We build strong relationships with our suppliers, focused on integrity, fairness, and

respect, and which are worthwhile for all concerned.

• Where appropriate we enter long-term contracts to secure supply of key products,

services, and raw materials.

• Wherever possible we have multiple-sourcing strategies for our key products, to reduce

the effect of a supply failure.

• We have invested in our supply chain operations and this investment gives us increased

capacity and agility.

• We are also investing in new warehouse space to support our distribution capabilities

and equip them for growth.

Mitigation actions in 2022

• Closely monitored the UK and global geopolitical environments and the impacts on our

supply chain.

• Maintained our Authorised Economic Operator (AEO) preferred importer/exporter status

to reduce potential customs delays.

• Optimised our safety stocks levels, to reduce the potential risk of global supply

constraints.

• Improved manufacturing planning and scheduling to ensure stock availability ahead of

demand, supporting our in-stock business model.

Risk appetite

Howdens is an in-stock business. Our customers expect this and rely on it. Because of this we have a very low appetite for

supply chain risk and will put extra effort in identifying them early and putting in place appropriate mitigation to prevent

stock issues at our depots.

Principal risks and uncertainties continued

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

40 41

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Strategic report / Principal risks and uncertainties

Strategic Report Strategic ReportPage Title Page Title

The arrows alongside each risk show the year on year change

2022 Principal risks continued

5. Health and safety

Risk and impact

• Howdens is about people

and relationships. We have

over 850 depots, 12,000

employees, hundreds of

suppliers and hundreds of

thousands of customers.

• If we do not ensure safe

ways of working across

the business, this could

compromise the safety and

wellbeing of individuals and

the reputation and viability of

the business.

Mitigating factors

• Since the beginning of our business, we have invested in safe ways of working.

We have developed dedicated health and safety teams and formalised systems

that help us stay safe.

• We monitor, review, and update our practices to take account of changes in our

environment or operations and in line with best practice and changing legislation.

• Most importantly, we make sure we keep talking about health and safety at every level

of the business, led by the Executive Committee.

Mitigation actions in 2022

• Transitioned to ISO45001 standards across all Trade Operations.

• Maintained COVID-19 safe practices in line with government advice.

Risk appetite

Care for the health & safety of employees, customers, suppliers and everyone who comes into contact with Howdens is

integral to our values and to our behaviours. We put a great deal of effort into identifying and managing health & safety

issues before they occur and have a very low appetite for Health & Safety risks.

6. Cyber security

Risk and impact

• If we experienced a major

security breach, this could

result in a key system

being unavailable causing

operational difficulties,

and/or sensitive data to be

unavailable or compromised.

This could also lead to breach

of customer data.

Mitigating factors

• We place continuous focus on training our people in cyber security, as we recognise that

these risks are dynamic, not always technical and awareness is our first point of control.

• We employ complex technical IT security controls to protect our information and our key

systems. We regularly engage external specialists to validate the effectiveness of our

controls against industry best practice.

• We have robust disaster recovery and business continuity plans, and we test them

regularly.

• We adopt a continuous improvement approach to IT security and continue to invest in

the security of our systems.

Mitigation actions in 2022

• We reviewed and tested our cyber security posture with engagement of third party

expertise to provide insight, assurance and guidance.

• We improved our 24/7 monitoring with the introduction of additional robust controls.

Risk appetite

We depend on a core set of critical IT systems which are fundamental to the day to day running of the business. These

systems are at risk from increasingly sophisticated security threats. We have a very low appetite for cyber security risk

and manage IT security closely to secure the confidentiality, integrity and availability of these systems.

3. Maximising growth

Risk and impact

• If we don’t innovate,

recognise and exploit our

growth opportunities in line

with our business model

and risk appetite, or if we

don’t align structures and

skills to meet the challenges

of growth, we won’t get

maximum benefit from our

growth potential.

Mitigating factors

• The opportunities and challenges related to growth are a major area of focus throughout

the business, at all levels.

• We continue to invest in our depot environment, people, services, and systems, and our

manufacturing and distribution capabilities to equip them for growth.

• Growth activities are reviewed in the light of our risk appetite, values, business model

and culture.

• Plans to continue with our expansion of our operations in France, and other territories.

Mitigation actions in 2022

• Converted a further 82 UK depots to the new depot environment.

• Opened a further 30 depots in the UK.

• Opened 20 additional depots in France.

• Opened 5 depots in Republic of Ireland.

• Further strengthening of our solid worksurface offering with the acquisition and

integration of Sheridan Fabrications into the Howden Work Surfaces team.

Risk appetite

We see a significant potential for growth which brings with it both opportunities and challenges. We have a medium

appetite for risk when it comes to growth, we are willing to accept some risk where we see a growth opportunity, carefully

balancing the risk we are taking with the potential reward that the opportunity presents.

4. People

Risk and impact

• Our operations could be

adversely affected if we were

unable to attract, retain and

develop our colleagues; or if

we lost a key member of our

team.

Mitigating factors

• We invested heavily in our employee value proposition, always striving to provide the

best possible working environment and growth opportunities for all our colleagues.

• We support our colleagues with a wide variety of apprenticeships, accreditations and

development programmes across all areas of our business.

• We use the Remuneration Committee to ensure that key team members are appropriately

compensated for their contributions and incentivised to continue their careers with us.

• We work continuously to ensure that appropriate continuity and succession plans are in

place. We will continue to focus on leadership development and succession planning.

• Equality, diversity & inclusion (EDI) Programme in place with specific goals established.

Mitigation actions in 2022

• Wellbeing programme continued, with further training made available for all our people.

• Continued to increase our apprenticeship offerings.

Risk appetite

The success of our business is driven by our people and their unwavering customer focus. We have a low appetite for

people risk and work hard in ensuring that they feel valued, rewarded appropriately, and have opportunities to develop

andprogress in their Howdens career.

Reach more builders Operational excellence Product innovation Prudent financial management

Links to strategy

Principal risks and uncertainties continued

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Financial Statements

Additional Information

Strategic Report

Governance

42 43

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

Strategic report / Principal risks and uncertainties

Strategic Report Strategic ReportPage Title Page Title

Principal risks and uncertainties continued

The arrows alongside each risk show the year on year change

2022 Principal risks continued

8. Product

Risk and impact

• Kitchen technology and

design do not stand still, and

our products must reflect

that.

• If we do not support the

builder with new products

that their customers want, we

could lose their loyalty and

sales could diminish.

Mitigating factors

• Our dedicated product team regularly refresh our offerings to meet builders’ and end-

users’ expectations for design, price, quality, availability and sustainability.

• We work with external design and brand specialists and attend product design fairs to

monitor likely future trends.

• Our local depot staff have close relationships with their customers and end-users, and

we actively gather feedback from them about changes in trends.

• We work with our suppliers, to develop new and improved products for the future, some

of which are unique to Howdens. Several new products were introduced during the year

across all product categories.

Mitigation actions in 2022

• 21 new kitchen ranges launched.

• Sheridan Fabrications solid worksurface offering acquired and integrated into Howden

Worksurfaces.

• Restructured our Product and Marketing teams, providing greater insight and resilience.

• Continued to develop our website & marketing offering to builders and end-users to

provide new tools to make their lives easier.

Risk appetite

Ensuring that we have product that meet the design, price and quality needs of the small builder and their customer is a

key focus of the business model and is a critical element of our future success and growth aspirations. In meeting this we

accept that a measured amount of risk must be taken when selecting new products and we have a medium appetite for

product risk.

9. Business continuity & resilience

Risk and impact

• We have key business

operations and locations

in our infrastructure that

are critical to business

continuity. They include

areas such as, our Credit

Control Department, our

Manufacturing & Logistics

operations and key IT

systems.

Mitigating factors

• We maintain and regularly review our understanding of what our critical operations are.

• We ensure resilience by design, building high levels of protection into key operations and

spreading risk across multiple sites where possible.

• We ensure appropriate business continuity plans are in place for these and have a Group

wide incident management team and procedures established.

• We regularly review our continuity plans covering our sourcing and logistics approaches

to support peak trading.

Mitigation actions in 2022

• Closely monitored the UK and global geopolitical environments and the impacts to the

continuity of our operations.

Risk appetite

Our key operations are essential for ensuring our customers can get the product and services they want when they need

them. To secure this we maintain a very low appetite for Business Continuity risk, ensuring that critical functions are

resilient and appropriate business continuity plans are in place to protect them.

7. Business model & culture

Over 2022 the likelihood of this risk has reduced because of on-going focus of the management teams on our unique model and

culture.

Risk and impact

• If we lose sight of our values,

model, or culture we will

not successfully service

the needs of the local small

builder and their customers,

and our long-term

profitability may suffer.

Mitigating factors

• Our values, business model and culture are at the centre of our activities and decision-

making processes, and they are led by the actions of the Board, Executive Committee,

and senior management.

• The Board and Executive Committee regularly visit our depots and factories, our logistics

and support locations and hold events to reinforce the importance of our values, model,

and culture.

• Regular ‘Town Hall’ meetings are held to bring together teams and discuss our successes

and challenges ahead.

• Worthwhile foundation in place to further develop our charitable efforts.

Mitigation actions in 2022

• Continued our ESG programme enhancement, focusing on re-enforcing our core values

and further embedding our equality, diversity and inclusion standards.

• Events to recognise and reward, for example our annual, ‘Golden Rooster’ employee

awards event and our Apprentice Graduation Ceremony.

Risk appetite

Our future success depends on continuing to maintain our values, our unique business model, and our locally enabled,

entrepreneurial culture. To secure this we have a very low appetite for risks that can adversely impact on our business

model and culture and put great emphasis on identifying issues and addressing them early.

Reach more builders Operational excellence Product innovation Prudent financial management

Links to strategy

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44 45

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Additional Information

Strategic Report

Governance

Strategic report / Principal risks and uncertainties

Strategic Report Strategic ReportPage Title Page Title

Sustainable product

New product development, product

re-engineering, sustainable

sourcingstrategy.

Why sustainability matters

Our sustainable business model and culture.

Our material areas, KPIs and commitments.

Our people

Health, safety and wellbeing. Career

opportunities and support for development.

Sustainable supply chain

Certified wood, responsible purchasing,

efficient distribution.

Our impact on our stakeholders

A summary of our social and

environmentalfootprint.

6248

Our environment and

SECR reporting

Reducing waste, lowering net emissions.

Net Zero commitment

We have identified the major steps to

achieve Net Zero emissions.

100%

Manufacturing

& distribution

Zero waste

to landfill

Our four ESG commitments

Update on progress.

50 52

Sustainability matters

Worthwhile for

all concerned

Our TCFD reporting

Climate risks and opportunities.

Our communities

Local projects and national partnerships.

48 Why Sustainability matters to us

50 Our four ESG strategic

commitments

52 Net Zero commitment

54 Our TCFD reporting

62 Our impact on stakeholders

64 Our people

66 Sustainable supply chain

67 Sustainable product

68 Our environment and SECR

70 Our communities

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

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Additional Information

Strategic Report

Governance

Additional Information GovernanceFinancial Statements

46 47

Howden Joinery Group Plc / Annual Report & Accounts 2022Howden Joinery Group Plc / Annual Report & Accounts 2022

Strategic report / Contents

Strategic Report Strategic Report Page TitleSustainability matters

Sustainability generates long-term value

Howdens is a growing business. Sustainable behaviour

helps us grow in a way that preserves our culture, supports

our business model, increases business resilience, mitigates

our risks and addresses the needs of our stakeholders.

Sustainability is part of our culture

We talk about the Howdens culture as being ‘worthwhile for all

concerned’ and ‘creating the conditions that allow everyone

to succeed’. Our business needs to be worthwhile for our

staff, our customers, our suppliers, the environment and the

communities we work in.

Sustainability supports our business model

Sustainable behaviour gives us a competitive advantage and

builds business resilience.

Lowest cost production in our own UK factories leads naturally

to minimising waste, energy and raw materials. Our mission

statement aim of ‘no-call-back quality’ means that we need to

produce and source product which is durable and safe.

Being trusted partners to our suppliers and customers means

that our relationships need to be worthwhile for all parties over

the long term.

We have over 850 depots in the UK and Europe. Each one of

them relies on strong local relationships to trade profitably, so

we need to be a good neighbour in each of those communities.

Sustainability mitigates our risks

We discuss our principal risks beginning on page 39.

Sustainable behaviour helps us to address some of

thoserisks.

For example, we invest in keeping our people safe, developing

their skills, and offering them a great place to work. We do

this because it’s the right thing to do, but it also mitigates our

‘Health & Safety’ and ‘Loss of key personnel’ risks.

Developing and maintaining sustainable supplier relationships

mitigates our ‘Interruption to continuity of supply’ risk. Energy-

efficient, safe and durable product mitigates our ‘Product

design relevance’ risk.

The Board and Executive Committee lead

our commitment to sustainability

The importance of sustainable behaviour is recognised right

through the business. You can see the Board’s Statements

of Intent on Health & Safety and Sustainability at:

www.howdenjoinerygroupplc.com/sustainability/group-

health-safety-and-sustainability-policies. The Board’s

Sustainability Committee met regularly throughout the year

and their report begins on page 144.

TCFD reporting

We see TCFD as a useful framework to build climate resilience

in the business. We are using it to talk about how we identify

and manage climate risks and opportunities, how we build

them into our strategy and how we measure our progress.

Our TCFD reporting begins on page 54.

The material sustainability areas for

us and our stakeholders

On pages 64 to 70 we report on progress in our five material

sustainability areas:

People: keeping them safe, offering rewarding careers.

Sustainable supply chain: certified wood, responsible

purchasing, efficient distribution.

Sustainable product: developing new sustainable products,

re-engineering existing products, having a sustainable

sourcing strategy.

Environment and operations: reducing waste, responsible

operations, lowering emissions.

Communities: local community projects, our nationwide work

with Leonard Cheshire Disability and I can & I am.

We last reviewed our material sustainability areas in 2020 as

part of a wide-ranging ESG Strategic Review. We have begun

a project to revisit and reassess our material areas in line with

the progress that we’re making in areas such as TCFD and our

path to Net Zero, and we look forward to communicating the

findings to you in our next report.

Our sustainability KPIs, commitments

andtargets. ESG and remuneration.

Our sustainability KPIs cover safety, use of wood from certified

sources, and avoiding sending waste to landfill. You can find

them on pages 64 to 68.

Our 2020 ESG strategic review resulted in four strategic

commitments, which we report on at pages 50 and 51. It

also resulted in a number of additional targets and research

projects in each of our material areas, which we report on

under the relevant area.

As we work towards the commitments, learn more about the

targets and research projects, and move further down our

road to Net Zero this may lead to new KPIs and key metrics in

the future.

Our 2023 PSP share plan will include ESG-related vesting

targets. Please see page 131 for details of the targets.

Why Sustainability matters to us

Our vision

UK’s leading responsible

kitchen business

A sustainable product offering,

responsibly manufactured or sourced,

that meets the needs of the builder and

the end-consumer

A unique and

sustainable culture

Maintaining and building on our culture

of being worthwhile for all concerned.

Continuing to grow a sustainable

business that appeals to current and

future stakeholders.

Leader in risk and

resilience governance

An agile and resilient business,

proactively managing ESG risks,

with transparent high-quality

stakeholderreporting.

Our four strategic commitments

Zero waste

to landfill

Maintain zero waste to

landfill in manufacturing and

distribution. Zero waste to

landfill in depots over time,

with target of less than 5%

by end of 2022.

Carbon neutral

manufacturing

Achieve carbon neutral

manufacturing by the end of

2021, and maintain that status

as the business grows.

Best practice in UK

behavioural safety

and wellbeing

Maintain international

safety standard ISO 45001

in our manufacturing and

distribution operations.

Achieve ISO 45001 in our

depot network.

Highly effective

ESG reporting and

disclosure

Progressive, phased

implementation of high-

quality reporting.

See more on pages 50 and 51.

Our material sustainability areas

People

Keeping our 12,000

employees safe and

well. Supporting

their growth, offering

them great rewards

for success, and

opportunities to grow

with us.

Sustainable

supply chain

Certified raw materials

from sustainable

sources. Responsible

purchasing, working

with our international

network of over

250 main suppliers.

Efficient distribution.

Sustainable

product

Continuous research

and evolution of

our products and

packaging. Refining our

efficient manufacturing

processes and working

with our suppliers on

bought-in product.

Our

environment

Reducing waste,

lowering emissions,

working with the

Carbon Trust to

achieve continuing

improvements.

Communities

Being a responsible

member of over 850

local communities

in the UK and

internationally.

Supporting a range

of local and national

charities.

See more, starting at page 64.

Represented by:

Underpinned by:

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Strategic Report

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Strategic report / Why Sustainability matters to us

Strategic Report Strategic Report Page TitleWhy Sustainability matters to us

100%

Manufacturing

& distribution

100% 100%

Manufacturing

& distribution

UK depot

network

100%

Achieved in 2021Depots

99.7%

TCFD and ISS reporting

in place. ESG 360

implementation in

progress.

Our four ESG strategic commitments

Progress on our four ESG strategic commitments

Zero waste to landfill Best practice in UK Behavioural

Safety and wellbeing – ISO 45001

Carbon neutral manufacturing Highly effective ESG reporting

and disclosure, including KPIs

Environment

UK’s leading responsible kitchen business

Governance

Leader in risk and resilience governance

Social

A unique and sustainable culture

Progress in 2022

In 2020 we achieved zero waste to landfill in our

manufacturing and distribution, and we have maintained

that in 2022. Rather than sending our waste offsite to be

burnt for energy recovery, we took the slower but more

responsible method of using the principles of the ‘Waste

Hierarchy’ and maximising the amount that we can reuse,

recover or recycle.

It’s a lot more challenging to achieve zero waste to landfill

in our network of over 800 UK depots. From a baseline

of 60% of depot waste avoiding landfill in 2019, we set

the target of getting to over 95% by the end of 2022. We

exceeded that target in 2021, and at the end of 2022 we

have 99.7% of depot waste avoiding landfill, and we are

busy trying to find solutions for the remaining 0.3%.

Progress in 2022

Our commitment was to achieve the international

safety standard ISO 45001 across our manufacturing,

distribution and depot network by the end of 2021.

We achieved the ISO in our factories and distribution

network in 2020. In 2021 we completed the work in our

depots but were not able to achieve accreditation before

the end of the year due to COVID-19 restrictions on

auditors visiting our depots.

We are very pleased to report that we were able to

reschedule the depot audits which had been delayed

by COVID in 2021, and we achieved ISO 45001 in our UK

and Republic of Ireland network of over 800 depots in

early2022.

Progress in 2022

Our commitment was to achieve carbon neutral

manufacturing by 2021, which we had confirmed by the

Carbon Trust (with evidence provided in accordance with

PAS 2060:2014 – Specification for the demonstration of

carbon neutrality).

Manufacturing accounts for a significant proportion of

our total Scope 1 and 2 emissions, and is entirely under

our control, so it makes sense for us to start there. Our

approach was to reduce emissions as much as possible

with current technology or renewable energy, and then

to offset residual emissions with Gold Standard carbon

offsets (shown on the independent GSF Registry here:

https://registry.goldstandard.org/projects/details/583).

Progress in 2022

This year’s TCFD reporting starts on page 54.

We implemented the ISS ESG reporting platform in 2021,

to benchmark against peers and provide stakeholders

easier access to detailed ESG information. In 2022 we

have been making sure our data is up to date.

We’ve implemented ‘ESG 360’ in 2022, a platform that we

will use to collect our own energy consumption data and

the Scope 1, 2 and 3 emissions of our top 30 suppliers. We

will also use it to collate and analyse physical risk data for

our own locations and those of our supplier base, to model

climate scenarios and project the emissions reductions

and cost implications of various decarbonisation options

linked to science-based Net Zero targets.

Alignment to UN SDGs

Our material SDGs Our material SDGsUN SDG description and relevant targets under each SDG UN SDG description and relevant targets under each SDG

Worthwhile for all concerned Worthwhile for all concernedWorthwhile for all concerned Worthwhile for all concerned

‘ Promote sustained, inclusive and sustainable economic growth,

full and productive employment and decent work for all’

SDG targets: 8.4, 8.5, 8.6, 8.7, 8.8.

‘ Take urgent action to combat climate change and its impacts’

SDG targets: 13.1, 13.2.

‘ Ensure sustainable consumption and production patterns’

SDG targets: 12.2, 12.5, 12.6, 12.7.

‘ Protect, restore and promote sustainable use of terrestrial ecosystems,

sustainably manage forests… and halt biodiversity loss’

SDG targets: 15.1, 15.2.

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Governance

Strategic report / Our four ESG strategic commitments

Strategic Report Strategic Report Page TitleOur four ESG strategic commitments

450,000

tCO

e (estimated)

2030

30% reduction from baseline

Net Zero

2040

2050

350,000

250,000

150,000

50,000

Scope 3 (Categories 1 & 2

only)= approx 400,000 tCO

400,000

300,000

200,000

100,000

Scopes 1&2

= 45,000 tCO

2021 Baseline

Net Zero commitment

“We are developing the options to optimise meeting targets”

A – Distribution

LPG and HVO Trials underway

Electric vehicles where feasible

– test and develop business case

Engaging logistics providers

for solutions

Scope 1 & 2 Scope 3

D – Supply chain

Focus on top 27 suppliers –

c.80% of all emissions

Roll out ESG 360 system:

Capture emissions data

Establish reduction plans /metrics

Identify risks and opportunities

We have identified the major steps

to achieve Net Zero emissions

On track to set near and long-term targets

• 42% reduction in Scope 1 & 2 by 2030

• 25% reduction in Scope 3 by 2030

• 90% reduction in all emissions by 2050 – including growth

Suppliers are critical to achieving

our targets

• Top 27 suppliers are circa 80% of all our emissions

• Primarily European based, some in the Far East

• Making more product ourselves and controlling our own

freight helps reduce emissions

B – Renewable energy

Switch all operations sites and

depots to 100% renewable

C – Electric fleet

Company car transition to

100% electric

Costs of change

Key activities

• Comprehensive supply chain mapping

• Detailed internal emissions mapping

• Key suppliers engaged on emissions data and climate risks

1) Minimal cost of change so far – including moving depots

to renewable energy tariff in 2022

2) Driving energy efficiency is an opportunity to tackle

escalating cost

3) Gives confidence that suppliers will be able to achieve

2030 targets without significant adverse cost impact

Howdens signed up to the Science Based Targets Initiative (SBTi)

Net Zero Ambition in 2022. We hope to receive approval of our

targets in 2023, and to report in more detail in our 2023 report.

Inthe meantime, we present a summary of our findings and

plansso far.

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Governance

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

Strategic report / Net Zero commitment

Strategic Report Strategic Report Page TitleNet Zero commitment

Task Force on Climate-Related Financial Disclosures –

building climate resilience

Our approach to TCFD

Rather than seeing it as a compliance exercise, we see

TCFD as a useful framework to build climate resilience in the

business. We are using it within the business to talk about

our identification and management of climate risks and

opportunities, to build them into our strategy and to measure

our progress.

We have continued to make good progress on TCFD-related

actions in 2022. We have started to use specialist technology

to collect both physical and transition climate risk and

opportunity data across our value chain. This technology

will be connected with our key suppliers so we can build a

collective picture of the challenges and solutions together.

We will continue to collect this data in 2023, which will help

us to understand the granular impact of climate risks and

opportunities and to implement associated mitigation actions.

We have also committed to SBTi Net Zero and will be

submitting our targets for approval in 2023. We have started

to collect real Scope 3 emissions data throughout our value

chain, which is a complex exercise. We have also engaged our

top 30 suppliers and have held a specific supplier conference

to build a coalition of partners on the journey to Net Zero.

No identified significant short or medium-

term climate-related risks

The results of our scenario modelling agreed with the results

of our existing business risk management process (described

starting on page 37, in that they did not identify any significant

short or medium-term climate-related risks.

We are reviewing our full supply chain and are not currently

aware of any material short or medium-term physical risks, nor

do we anticipate any such risks. We evaluate physical risks for

time horizons between 2020 and 2050.

Compliance with the TCFD

recommendations

The following pages set out the 11 TCFD recommended

disclosures, showing where we are now, the progress we’ve

made this year, and our main areas of focus for the future.

We consider that we’re fully complaint with the TCFD

recommendations under the Governance, Strategy and Risk

Management sub-headings, and that we’re partially compliant

with the recommendations for Metrics and Targets.

As we set out on page 48, we have metrics and targets which

we measure and disclose. However, we expect to refine and

revise them in the near future as, for instance, new priorities

develop as we get our SBTi targets approved and we carry out

repeated iterations of our climate scenarios. We anticipate that

we will be introducing revised metrics over the next two years.

On Scope 3 emissions, we expect them to be a material

part of our total emissions, and we are currently working on

calculating reliable and robust estimates for our main sources

of Scope 3 emissions, but this is a complex area, involving

several assumptions and estimates, and we don’t yet have

a full picture. We will aim to disclose full Scope 3 emissions

within the next year.

TCFD recommended

disclosure Our disclosure and developments in 2022 Focus areas for 2023 and beyond

GOVERNANCE CONTINUED

B. Describe

management’s

role in assessing

and managing

climate-related

risks and

opportunities.

• It is the Executive Committee’s (ExCo) responsibility to

execute Group strategy and implement programmes to

manage and mitigate climate risks and take advantage of

opportunities. The role of the ExCo is set out on pages 84

and 85 of the Corporate Governance report.

• The ExCo are therefore responsible for delivery of the

climate-related targets determined by the Board, which are

considered in detail in this Sustainability report.

• The Director of ESG advises both Board and ExCo and

reports to the Sustainability Committee at each of their

meetings on progress against targets and other initiatives.

He presented at both of the Sustainability meetings in 2022.

• ExCo reviewed the TCFD materiality impact assessments

and scenario analysis in 2022.

• The Director of ESG worked with ExCo to develop sustainable

strategies during the year.

• ExCo engaged our top 30 suppliers and held a specific

supplier conference to build a coalition of partners on the

journey to Net Zero.

• ExCo members will be assigned

key responsibilities on managing

climate risks and opportunities.

• We will continue to engage with

our supply chain in 2023.

STRATEGY

A. Describe the

climate-related

risks and

opportunities the

organisation has

identified over the

short, medium,

and long-term.

• We scrutinised and tested the results of our initial climate

risk and opportunity assessment with operational areas,

ExCo and Board. No significant short or medium-term

climate-related risks were identified.

• We deployed technology to collect climate-related risk and

opportunity data directly from our key suppliers.

• We give more detail on the potential risks and opportunities

starting at page 58.

• Further quantification of climate

risks and opportunities after

obtaining further data from the

value chain.

B. Describe the

impact of climate-

related risks and

opportunities on

the organisation’s

businesses,

strategy, and

financial planning.

• We did a physical climate risk assessment over various

timeframes in 2021, and we have reviewed the initial results.

• We have continued to explore ways of building potential

risks and opportunities into strategic and financial planning.

• We give more detail on possible impacts starting on page 58.

• We discuss our Net Zero commitment on page 52. Once we

have approval and external validation of our SBTi Net Zero

targets as being aligned with the Paris agreement, we look

forward to publishing them.

• An ESG/climate screening,

including use of scenarios, will

be incorporated into the due

diligence process for major

capital expenditure decisions.

• Direct data collection from

the value chain is currently in

progress to establish a clear

picture of various risks and

opportunities.

TCFD recommended

disclosure Our disclosure and developments in 2022 Focus areas for 2023 and beyond

GOVERNANCE

A. Describe the

Board’s oversight

of climate-

related risks and

opportunities.

• The Board looks at material climate-related risks and

opportunities when setting and monitoring Group strategy,

and considers climate risks as part of its overall risk review

processes described in detail starting at page 37.

• This process is led by the Board’s Sustainability Committee,

whose report is at page 144.

• The Sustainability Committee met twice during 2022 and

made recommendations to the Board as appropriate. The

Director of ESG* reported to the Sustainability Committee at

each meeting, and provided updates on the climate-related

targets and goals which are considered in more detail in this

Sustainability report.

• When considering any investment proposition, the Board

considers the likely climate-related consequences of any

decisions. The best example of this is in the investment in in-

house manufacturing. The associated environmental benefit

of this investment is an estimated reduction of 200 tonnes of

due to fewer loads being transported internationally.

• The Sustainability Committee

will meet regularly in 2023 and

will make recommendations to

the Board as appropriate on key

climate actions.

• The Director of ESG will provide

regular updates on the progress

to Net Zero roadmap to the

Committee.

* The Director of ESG is a management role and is not a Director of the Board of Howden Joinery Group Plc.

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Governance

Strategic report / TCFD – building climate resilience

Strategic Report Strategic Report Page TitleOur TCFD reporting

TCFD recommended

disclosure Our disclosure and developments in 2022 Focus areas for 2023 and beyond

STRATEGY CONTINUED

C. Describe the

resilience of the

organisation’s

strategy, taking

into consideration

different climate-

related scenarios,

including a 2°C or

lower scenario.

• We constructed draft climate impact scenarios in 2021,

based on our initial assessment of material risks, including

a scenario aligned with below 2°C.

• In 2022 we tested the draft scenario results, discussed with

management, ExCo and Board, and started the process of

building financial models from the scenarios (with a focus

on carbon price).

• The results of our testing showed the resilience of our

current strategy, in that no significant short or medium-

term climate-related risks were identified.

• Further iterations of the

scenarios, with quantification

of risks and opportunities.

• Identifying the implications

carbon pricing with various

scenarios including various

options for decarbonisation.

RISK MANAGEMENT

A. Describe the

organisation’s

processes for

identifying and

assessing climate-

related risks.

• We combine our long-standing, bottom-up risk process with

improved identification of medium and longer-term climate

transitional and physical risks through horizon scanning.

See pages 37 and 38 for more detail.

• We assess and prioritise climate risk using an approach

that is modelled on British Standards (BS EN ISO14091),

based on risk impact (the expected adverse effect that may

occur from exposure to the risk) and our adaptive capacity

(our ability to adapt to potential consequences and to take

advantage of opportunities).

• We have built the outputs of our inherent climate risk

assessment into operational risk registers. We have

adapted our risk process to capture key climate metrics and

targets.

• We have engaged with our stakeholders, including our

insurers, to understand how their focus on climate risk is

likely to change going forward.

• Continue to improve our

risk identification process,

incorporating more data streams

and trends.

• Assess key metrics and targets,

and the operational plans to

meetthem.

• Review the external environment

for changes in climate risks

and new mitigation strategies

(through our brokers, insurers

external professional bodies

andforums).

• Board will formalise a risk

appetite for climate-related risk.

B. Describe the

organisation’s

processes for

managing climate-

related risks.

• We manage climate-related risks in the same way as our

other risks (see pages 37 and 38), albeit that time horizons

may be longer.

• A member of the ExCo owns each risk and leads the

relevant operational teams as they control day-to-day risk

management and mitigation.

• In 2022 we carried out a specific, climate-focused round of

risk register reviews to educate operational teams with the

aim to ensure that we manage climate risks as effectively as

other risks.

• Challenge the business on the

effectiveness and accuracy

of mitigation plans, including

evidence of progress.

• Climate risks remains an

emerging risk currently,

emerging risks are escalated

as necessary to the Group ExCo

andBoard.

TCFD recommended

disclosure Our disclosure and developments in 2022 Focus areas for 2023 and beyond

RISK MANAGEMENT CONTINUED

C. Describe how

processes for

identifying,

assessing, and

managing climate-

related risks are

integrated into

the organisation’s

overall risk

management.

• They have always been part of our overall risk identification

and management process described in detail at pages 37

and 38.

• They are recorded in our Group and functional risk registers

alongside our other operational, financial and strategic

risks.

• They are formally reviewed twice a year as part of this

process to ensure they accurately reflect our current risk

exposure.

• One key difference between climate-related risks and other

risks is that we typically use longer time horizons when

looking at climate risks.

• In 2022 we implemented a new emerging risk identification

and management approach, with dedicated reporting to

Exec and Board. We also started a project to capture Board

risk appetite for climate risks.

• Continue with specific climate-

focused risk register reviews.

• Continue to develop reporting to

Exec and Board.

METRICS AND TARGETS

A. Disclose the

metrics used by

the organisation

to assess climate-

related risks and

opportunities

in line with its

strategy and risk

management

process.

• We have long-standing KPIs on use of FSC

and PEFC raw

materials and on production waste recycling – we report on

these at page 66 and page 68.

• In 2022 we reviewed the outputs of our detailed 2021 TCFD

project to see if this suggests extra or alternative KPIs, as

well as to identify whether there are any other important

climate-related metrics.

• We developed the first iteration of an ESG metrics

dashboard for internal review and stakeholder consultation

of any potential new KPIs.

• We began consideration of how climate-related metrics

might build into consideration of future investment

decisions.

• Further internal review and

stakeholder consultation of

potential new KPIs will take place

with formalisation of key metrics.

• An external TCFD readiness

assurance project has been

carried out with satisfactory

results.

• As part of the ESG due diligence

process for investment decisions,

specific metrics will be created as

part of the ESG strategy.

B. Disclose Scope

1, Scope 2 and,

if appropriate,

Scope 3

greenhouse gas

(GHG) emissions

and the related

risks.

• See our SECR reporting, starting on page 68.

• We consider the risks relating to emissions as part of our

overall climate risk reporting, summarized above.

• We have estimated our material sources of Scope 3

emissions (category 1).

• Selected appropriate assumptions and started to

investigate which of our Scope 3 emissions we can try to

gather reliable data on.

• We are currently in the process

of collecting and measuring

the full Scope 3 emissions (15

categories) and will complete our

baseline year (2021) calculations

by Q1 2023.

C. Describe the

targets used by

the organisation

to manage

climate-related

risks and

opportunities

and performance

against targets.

• We are currently researching and developing these targets

as part of the overall TCFD implementation process.

• We have carried out research and development of potential

new TCFD metrics and targets, based on the outcomes of

the TCFD implementation project so far.

• Finalising quantitative metrics

and targets for material climate

risks and opportunities and assign

to the senior executive team.

TCFD – building climate resilience continued

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Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / TCFD – building climate resilience

Strategic Report Strategic ReportPage Title Page Title

Main risks and opportunities from our scenario modelling so far

Details of the scenarios

We began our work on climate scenario planning in 2021.

We looked at both physical and transition risks and held

a series of workshops with stakeholders from across the

business to identify and discuss potential significant risks

and opportunities. Our discussions concentrated on the time

period to 2030, which we further split into short-term (to 2023),

medium-term (to 2026) and long-term (to 2030).

We developed three scenarios to frame our discussions of

potential climate risks and opportunities:

1) Less than 2ºC scenario: Where governments and

regulators act quickly and take the lead with a series

of measures aimed at achieving the Paris Agreement

targets. This scenario envisages swift action, a high

level of legislation and emphasis on mechanisms

such as carbon pricing and financial incentives for

decarbonisation.

2) Where lack of agreement between governments leads

to an initially slow pace of change, but where a series of

social tipping points see a response to climate change

which is led by citizens putting pressure onto governments

and companies to act.

3) Where there is some commitment from governments,

companies and citizens to a Net Zero transition, but where

these commitments aren’t always fully developed or

enforced, and may sometimes be overridden by political,

commercial, or individual concerns in the short and

medium-term, requiring more severe policy action and

enforcement in the longer-term.

Results and next steps

Our initial scenario modelling work has given us an increased understanding of the qualitative impacts of climate change on

our business across various time horizons, although we recognise that it is an iterative and dynamic process. The results of our

scenario modelling agreed with the results of our existing business risk management process, which we describe in more detail

starting on page 37, in that they did not identify any significant short or medium-term climate-related risks.

Under each scenario there were several possible medium and long-term risks and opportunities, which we have summarised

below. Over time we will continue to develop this analysis, which will include quantifying any potential material impacts and

setting a strategic direction to mitigate any potential significant risks and maximise the potential opportunities.

The results of our testing showed the resilience of our current strategy, in that no significant short or medium-term climate-

related risks were identified.

Overview of opportunities Time horizon Impact Mitigation actions

OPPORTUNITY: Area of impact – Brand

Delivering on our aim to be the UK’s leading

responsible kitchen business and creating

a brand that is recognised as a leader in

managing climate-related risk could result in

increased sales, greater brand awareness,

increased market share and increased

attractiveness to current and future employees.

Medium to long-term

(2025–2030)

Increased sales.

Greater brand

awareness.

Increased market

share.

Stronger employee

retention/ relations.

Upskilling staff and promoting

awareness of our stance

regarding SBTi and Net Zero

ambitions.

Sustainable customer offering

and bringing the suppliers on

the Net Zero and sustainability

journey with us.

OPPORTUNITY: Area of impact – Cost reduction

Continuing to focus on energy efficiency,

pushing through our targeted improvements

and taking future steps on the path to

decarbonisation could lead to a lower cost base.

Relevant factors could be things such as:

• Access to grants, subsidies and favourable

tax treatment for adopting decarbonisation

technologies

• Absolute reductions in energy consumption

will lower costs, particularly in times of

rising energy prices, extended application

of carbon pricing and an increase in the

underlying carbon price.

Grants and subsidies:

short to medium-term

(2022–2025)

Absolute reductions in

energy consumption:

medium to long-term

(2025–2030)

Deployment of

Decarbonisation

technologies such as

hydrogen: medium to

long-term (2025–2030)

Capitalise on energy

opportunities:

installation of solar/

wind etc., will help

in reducing costs

and lead to carbon

emission savings.

Own energy

generation:

by accessing grants

and subsidies and

deploying latest

decarbonisation

technologies.

Reducing energy consumption

will help mitigate the impact of

rising energy prices/ carbon

pricing.

Deploying new renewable

technologies with grants

will lower the own capex

requirements and improve

energy security.

OPPORTUNITY: Area of impact – Access to capital

Building a climate resilient strategy and

communicating it effectively to the market

could increase the demand for our shares and

could also give us access to lower-cost bonds

and loans.

Short to medium-term

(2022–2025)

Increased demand

forshares.

Access to sustainable

finance opportunities.

Clearly communicating our

sustainability and climate

resilient actions to our existing

and future investors.

OPPORTUNITY: Area of impact – Product design

Taking the lead in producing sustainable

products before our competitors could increase

our competitive advantage and market share.

Medium to long-term

(2025–2030)

The future

sustainability of

our assets: develop

sustainability metrics

to be employed at the

point of design.

Implementing circular

practices will promote the

‘worthwhile’ image of our

brand and will help us lead by

example.

TCFD – building climate resilience continued

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Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / TCFD – building climate resilience

Strategic Report Strategic ReportPage Title Page Title

Overview of risks Time horizon Impact Mitigation actions

RISK: Area of impact – Sourcing

Future physical or legal barriers

arising from climate change

could bring challenges to

sourcing some of our products

in the future – principally items

which we currently source from

overseas.

Causes could be things such as:

• Carbon pricing

• Pressure on supply chains

to decarbonise, especially in

emerging markets

• Some current raw materials

could increase in cost or

become unavailable in the

future, so alternatives would

have to be found.

Carbon pricing:

medium to long-term

(2025–2030)

Pressure on

supply chains

to decarbonise:

medium to long-term

(2025–2030)

Raw materials

cost increase/

unavailability:

medium to long-term

(2025–2030)

Carbon pricing: £2.9m –

£5.1m (assumption of £50

per tonne of CO

e carbon

price).

Pressure on supply chains

to decarbonise: as climate

change is a global issue, our

supplier base will also be

impacted with the drive to

decarbonise.

Raw materials cost

increase/ unavailability:

theremay be adverse

impact on availability of

certain raw materials in

thefuture.

We have signed up for SBTi Net Zero

targets and we are currently formulating

a fully-costed Net Zero action plan, which

will help with mitigating the impact of

future carbon prices due to absolute

reductions in our emissions.

We have deployed technology to collect

data directly from our suppliers, which will

help us understand the granular impacts

and to implement subsequent actions for

resilience.

The data collected from suppliers will

provide clarity on the criticality of certain

raw materials and help us formulate a

mitigation strategy.

RISK: Area of impact – Operations

The physical risk to our

operations from climate

change can include extreme

weather events and rising sea

levels. These risks could require

additional capital expenditure

or could interrupt operations.

The physical risk

assessment:

identifies potential

risks in the short,

medium and long

term (2022–2050).

However, no

significant physical

risks were identified

in the short or

medium term. We are

currently working

with suppliers for

more granular data

throughout the

supply chain – this

work is ongoing.

Interruption to operations:

physical impacts of climate

change could cause supply

chain disruption/ physical

route disruptions.

Additional capital

expenditure: physical

climate risks may require

us to improve/ update our

infrastructure, which will

increase our capex.

To further understand the risks at a

granular level, we have deployed a two-

phased Physical Risk Assessment of our

own locations in the UK and our suppliers’

locations around the world.

Phase 1 identified the physical risks such

as coastal flooding, rising sea levels, heat

stress and drought in certain regions and

locations, using timeframes up to 2050.

Phase 2 of our physical risk assessment,

which we are currently embarking upon,

will deliver a vulnerability and resilience

option assessment and it will allow us to

determine our Value at Risk for physical

exposure and understand our suppliers’

adaptive capacity.

TCFD – building climate resilience continued

Overview of risks Time horizon Impact Mitigation actions

RISK: Area of impact – Decarbonisation

Decarbonisation of our

distribution and depot fleets

could require transitional

investment and/or adjustments

to current working practices.

Adjustments to

current working

practices: short

to medium-term

(2022–2025)

Transitional

investment:

medium to long-term

(2025–2030)

Additional capital

expenditure: to

decarbonise our own

operations e.g. our

buildings and fleet.

We are currently carrying out a Net Zero

feasibility study with high level cost

implications, which will clarify levers of

decarbonisation available to us.

We are also Implementing and ESG/climate

screening into the due diligence process

prior to asset acquisition.

RISK: Area of impact – Customer expectations

Failure to meet customer

demands for sustainable

products could reduce market

share.

Failure to meet

demands: medium

tolong-term

(2025–2030)

Impact on future sales:

from inability to meet

customer needs.

We plan to be a leader in sustainability in

the kitchen business and will leverage our

Net Zero strategy to achieve this goal.

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60 61

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / TCFD – building climate resilience60

Strategic Report Strategic ReportPage Title Page Title

Environment

260,000m

of chipboard from sustainably

managed UK forests

100%

of manufacturing waste reused

recycled or recovered

10,000

tonnes of waste sawdust converted

to energy to heat our factories

The wider economy

£508m

of tax generated or collected.

Corporation tax, NI PAYE and VAT

£327m

of working capital extended to over 430,000

small businesses in our peak trading period.

No fees, up to 8 weeks to pay

Over 430,000

small businesses in our peak trading period.

No fees, up to 8 weeks to pay

People

603

apprentices in training

1 in 12

of our current employees started their

Howdens career as an apprentice

of our employees are apprentices

335

apprentices were appointed to

permanent roles in 2022

603

internal promotions made in 2022

People

Over

12,000

full-time jobs with prospects. In manufacturing,

in over 850 local depots, and in distribution,

systems and support

850

local communities where we employ people

£624m

salaries and benefits paid to our employees in 2022

£257m

cash contributed to our pension schemes

in the last 5 years

100%

of UK employees in share ownership schemes

10th

in the 2022 Best Big Companies to work for awards

Shareholders

£115m

dividends paid

£250m

share buybacks

Community & charity

18th

year of our national partnership with Leonard

Cheshire. Supporting disabled young adults to

find valuable roles within their communities

£1.3m

in donations to local charities and community

activities across our network in the UK

andEurope

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

Financial Statements

Additional Information

Strategic Report

Governance

Additional Information

Financial Statements

Governance

Howden Joinery Group Plc / Annual Report & Accounts 2022

Our impact on stakeholders

Sustainability matters

Strategic report / Our impact on stakeholders

Strategic Report Strategic Report Page TitleOur impact on stakeholders

• Our safety KPI has decreased from 196 RIDDOR

reportable

injuries per 100,000 employees in 2021 to 140 in 2022. This is also

significantly below the 2021/2022 HSE All-Industry rate of 222.

• Our injury severity rate has also significantly decreased from 2021

to 2022 at 26.2 hours lost per 100,000 hours worked (2021: 33.4

hours/100,000 hrs worked).

• Our network of over 800 depots in the UK and Republic of Ireland

was awarded the ISO 45001 certification in early 2022. This was

achieved by implementing simple and visual safety management

systems and actively encouraging the participation of all staff to

help continuously improve Health & Safety (H&S) performance. We

had already held ISO 45001 certification across our manufacturing

and distribution network since 2009.

• We have developed our construction-based H&S systems for our

Solid Work Surface Installations and Contracts operations, which are

rapidly-expanding areas of growth.

• At the beginning of May 2022, our Supply division launched its first ever Safety Climate Survey created by the HSE.

The survey was open for four weeks and colleagues in Howden Manufacturing, Runcorn, Howden Work Surfaces and

Transport operations were asked to tell us what they thought of how we manage H&S, engage our people and promote

participation. We received over 600 responses which gave us an in-depth insight into our cultural strengths and where

we can improve. The outputs of the survey have been used by our operational leadership teams to establish H&S

objectives for 2023.

• We continue to prioritise our employees’ health and wellbeing. Following feedback through our employee engagement

survey, we increased our support and investment in this area, taking a more holistic approach that includes physical,

mental and financial wellbeing. We introduced a Wellbeing Committee for Operations, with 24 reps from across our sites.

We introduced the AXA Health app for all employees, encouraging them to take regular steps to becoming healthier.

We continue to promote relevant services available through our Employee Assistance Programme (EAP), and provided

access to free blood pressure and resting heart-rate checks. We partnered with specialist organisations to provide

workplace support for mental health and women’s health issues.

Our people

Keeping our people safe and healthy Rewarding careers, opportunities to develop and thrive

• We remain focused on creating an engaging place

to work with fulfilling jobs and a strong culture that

supports everyone to do their best. Listening to our

employees is key. Over 65% of our employees completed

the Best Companies engagement survey in March.

Based on their feedback, we ranked 10th in the 2022

Best Big Companies to Work For list, up four places since

we last participated in 2020. We’re using the feedback

to make Howdens an even greater place to work for our

employees.

• To ease the pressure from the rising cost of living, in

September, we gave employees a £500 one-off payment.

We also increased our employer pension contributions.

We provided access to information and tools to enable

employees to better manage their finances and plan for

their future. This includes practical online advice through

our Employee Assistance Programme.

• Howdens has a long-standing commitment to

apprenticeships and the development of ‘homegrown’

talent. In 2022, we recruited 555 new apprentices and, in

December, had 603 on programmes across the business.

We’re proud that one in 12 of our current employees

started their Howdens career as an apprentice, and

we continue to champion apprenticeships through our

sponsorship of the National Apprenticeship Awards.

In June, Howdens was ranked 17th in the UK’s Top 100

Apprenticeship Employers.

• We reviewed our learning and development offer to

ensure it was aligned to the skills and roles required for

our growth strategy. We introduced a more interactive

induction, blending both Company and local information

that gives new employees a warm welcome and strong

launch pad for a successful Howdens career. The new

L&D approach launches in February 2023.

ISO 45001

Achieve ISO 45001 across our manufacturing,

distribution and UK depot network.

2022 update: See page 51, and above. We obtained ISO

45001 certification for our UK and Republic of Ireland depot

network in 2022. We had already achieved ISO 45001 across

our manufacturing and distribution network in 2020.

EQUALITY DIVERSITY AND INCLUSION (EDI)

To develop our EDI roadmap and strategy to 2025.

2022 update: Howdens is a place where everyone is welcome, and

everyone has the opportunity to thrive. We believe that a diverse

workforce is more innovative, more creative, more collaborative and,

as a result, enables our continued success. For this reason, we are

committed to making Howdens an even more diverse and inclusive

workplace – not just for our employees, but for our customers and

communities, too.

We have made good progress with our EDI and strategy. Our

executive sponsors are leading employee working groups for the

three priority themes: gender, disability and ethnicity.

The groups have engaged specialist organisations that are helping

to articulate our vision for each theme, create action plans and gain

relevant accreditation.

Our aim is to embed inclusion so EDI is not seen as a standalone

initiative. As of December 2022, 87% of people managers have

received EDI awareness training.

We are pursuing accreditation as a Disability Confident Employer

and as a Menopause-Friendly Workplace, supported by Leonard

Cheshire and Wellbeing for Women respectively. We hope to achieve

these in 2023.

Our employees support our commitment to create a more inclusive

workplace. We used the engagement survey process to collect

anonymous diversity data. Over 5,000 employees voluntarily

provided personal information about gender identification,

disabilities and ethnicity, and we are using it to shape how we can

best support our employees.

BEHAVIOURAL HEALTH & SAFETY

Continue with our behavioural safety

and safety culture approach across the Group.

2022 update: We are the final stages of delivering our Senior

Management H&S behavioural training programme in our

depot network. This is a comprehensive training package which

emphasises the importance of leading by example, establishing a

generative culture and winning hearts and minds through effective

communication and participation of all staff within the business.

SOCIAL MOBILITY

To improve social mobility through the career

development we offer.

2022 update: Social mobility is an integral part of our founding

principle, ‘worthwhile for all concerned’, and we continue to improve

social mobility for our employees through career and personal

development. In 2022, we took a ground-breaking step towards

improving social mobility in the UK more generally by supporting

apprenticeships outside of Howdens.

We have committed to transferring 20% of our apprenticeship levy

to fund construction apprenticeships in small businesses across

the UK. More specifically, we target the investment in deprived

communities that we serve.

By doing this, we address the skills gap in the construction industry,

support small businesses – our customers – to grow and create

jobs, and tackle social mobility challenges across the UK. This is in

addition to the work we already do to actively recruit care leavers.

In recognition of this work, Howdens received the UK Social Mobility

Award for Innovation in October.

BRITISH COUNCIL 5-STAR SAFETY STANDARD

Achieve this standard at all manufacturing and

logistics sites by the end of 2026.

2022 update: We value the 5 star audit process as it drives

excellence in health, safety and wellbeing with a significant focus

on H&S culture which is aligned to our own medium-term H&S

objectives. We remain committed to achieving the 5-star standard,

although we have changed our timescale from 2023 to 2026 in

order to align with the timescale of our medium-term objective.

WELLBEING

Develop a Group wellbeing strategy.

2022 update: We have taken a more holistic approach,

incorporating physical, mental and financial wellbeing. This

provides greater support for our employees, whose needs are

evolving post-pandemic and during a cost-of-living crisis.

Sustainability matters

Update on areas of focus from our 2020 ESG Strategic Review

2022 highlights 2022 highlights

1 ‘RIDDOR injuries’ are injuries reportable to the HSE under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013.

Reportable injuries/100k

employees – Reportable injury

rates decreased in 2022

HSE all-industry rate

Howdens

100

200

300

150

250

2017 20192018 2020 2021 2022

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Additional Information

Strategic Report

Governance

Strategic report / Our people

LOOKING AHEAD TO 2023

In 2023, we want to bring together our ambitions for EDI with the work

we are doing to address social mobility, all of which reinforce that

Howdens is ‘open for all’. Moreover, we believe that consolidating

our efforts will have an even greater impact for our employees, our

customers, our stakeholders and the communities we serve.

As part of this, we’ll actively work to diversify our talent pool, using

new channels and targeted marketing campaigns to attract a wider

range of potential candidates. We’ll launch our refreshed careers

website in the first half of the year, which will promote Howdens’

inclusive workplace. We will continue to develop partnerships with

more regional organisations to support people of all ages and

backgrounds into employment.

We’ll share our updated strategy for diversity and inclusion, which

will include social mobility, in next year’s Annual Report.

Strategic Report Strategic Report Page TitleOur people

100% of chipboard & MDF

used in our manufacturing

processes is from FSC

PEFC™ certified sources

100%

Our ambition is to create sustainable products that we’re proud of. We make over 4.5 million cabinets a year in our own UK

factories, so thisis a product where our choices can make areal difference.

We buy our chipboard from sustainably managed UK forests. For every acre of trees used, an acre or more isplanted.

When the cabinet has come to the end of its life in the home it can be recycled and broken down to produce more chipboard,

which can be used to make more cabinets in the future.

We don’t only want to do things to an incredibly high standard – we want them to besustainabletoo.

Sustainable supply chain Sustainable product

Certified wood, efficient distribution, responsible purchasing High-quality, sustainable product that we’re proud of

SUPPLIER CODE OF PRACTICE: Introduce code of

practice for all timber suppliers, clarifying our

commitment and expectations regarding ESG

standards throughout the supplychain.

2022 update: Our new Supplier Code of Conduct has been issued

to all suppliers, and mandates that they use the SEDEX sourcing

platform. See page 68 for more details.

Sustainability matters Sustainability matters

Results of our 2020 ESG Strategic Review – Future commitments, targets and ongoing work

REDUCING FUEL CONSUMPTION

MPG improvement targets for our distribution

fleet. Targeting a 3% improvement by 2023.

2022 update: We are slightly ahead of our 2023 target.

Against a 2020 baseline of 9.89 MPG, we have achieved a

3.3% improvement with our 2022 12 month rolling average of

10.21MPG.

• 100% of kitchen range SKUs

now FSC

or PEFC™ certified

• FSC

/PEFC™ certified timber

in joinery and flooring SKUs

increased from 38% to 63%

• Continuing to embed

sustainability as a pillar of our

product development process

• Creating a new role of

Sustainable Product Developer

to deliver further benefits in

packaging and product design

in 2023 and beyond

• Removal of polystyrene from

Clerkenwell frontals produced

on our new production line

• Launched our first own-brand

Lamona product with EPS-free

packaging

• A+ energy rated products in all

extractor designs

FSC© & PEFC™ TIMBER: 100% of our kitchen

frontals to have FSC

or PEFC™ timber

certification by the end of 2022.

2022 update: 100% of all our kitchen frontals were made from FSC

or PEFC™ certified materials. All the frontals which we manufacture

ourselves are certified, and we insist on certification for all new

frontals which are manufactured by third parties.

INCREASING ENERGY EFFICIENCY

Introducing new CO

KG/km emission targets for

our distribution fleet.

2022 update: This is a new target in 2022. The target is a 15%

reduction by 2026, against a 2021 baseline of 0.721 CO

Kg/Km.

Results of our 2020 ESG Strategic Review – Future commitments, targets and ongoing work

Other product highlights

of the year

PACKAGING: Removal or reduction in environmental impact of plastic we use in product and packaging.

2022 update: We are aiming to remove 17 tonnes of plastic packaging from glazed moulded skin doors replacing this with a corrugated

solution that is recycled, recyclable and FSC® certified. We will also build on the work to remove polystyrene from our packaging across

product categories through 2023 whist looking for opportunities to remove or reduce plastic from our product. In 2022 we removed over

300,000 pieces of polystyrene from our packaging, replacing them with a paper-based alternative that is recycled and recyclable. This is

enough polystyrene to fill eight 44-tonne lorry trailers.

The sustainable cabinet

• We used over 260,000 cubic metres of chipboard and

65,000 cubic metres of MDF in our factories in 2022 –

enough to fill the Albert Hall more than 3 times – so it’s

natural that we have a long-standing KPI requiring this

wood to be 100% certified.

• FSC

or PEFC™ certification means that the wood comes

from responsibly-managed forests and that we have

independent documented evidence of an unbroken chain

of ownership all the way from the forest to us – via the

mill, the importer and our suppliers.

• We are also members of Timber Development UK and are

recognised by them as a ‘Responsible Purchaser’, which

means that we have third-party assurance on our timber

purchasing due diligence systems.

• Our transport fleet drove over 18 million miles in 2022, so we need it to be both efficient and

safe. All of our trucks comply with the latest emissions standards, and we’ve fitted refinements to the standard build to

increase efficiency and reduce emissions even further. In 2022 we began using Hydrotreated Vegetable Oil (HVO) as part

of our fleet fuel mix. HVO is a sustainably sourced second-generation biofuel. It is plant-based and can replace diesel

without requiring engine modifications. It reduces CO

by 90% compared to diesel, and also has lower nitrogen oxide and

particulate emissions. We have also begun to trial trucks which run on Bio-LNG, a fuel produced by anaerobic digestion

of organic waste, manure and sewage which produces 80% less CO

than diesel.

• We invest in safety and energy-efficiency training for our drivers. We combine this with the latest in-cab telemetry and

a system of daily debriefs where driver behaviour is assessed against energy-efficiency and safety targets. We reward

drivers who reach the highest standards, and we work with any drivers who need help to improve. In recent years, we

have invested in training our own new drivers via a driving apprenticeship scheme. This helps to encourage our high

standards from the beginning of a driver’s career.

• All of our buyers and our compliance team have taken and passed the Chartered Institute of Procurement and Supply’s

Ethical Procurement & Supply training, and we have a rolling programme of refresher training on Modern Slavery and

Anti-Bribery.

• Recognising that our highest exposure to modern slavery is through our supply chain, we have taken a robust approach

to ethical and sustainable procurement. We continue our partnership with SEDEX (Supplier Ethical Data Exchange); and

over 90% of our current suppliers are registered and completed their self-assessments on the platform. During 2022 we

continued to risk rate all our suppliers by using the SEDEX RADAR tool. Over 35% of suppliers are classed as low risk and

a further 59% are classed as moderate risk. The remaining 6% of suppliers, classed as high risk, have had a third party

ethical audit in last 3 years. Using SEDEX insight, we are continuing to work with suppliers to deliver improvements in

working practices across our supply chain. Currently 264 supplier sites share their ethical data with us.

• Since last year we have improved our supplier onboarding process and we are implementing SAP Ariba SLP (Supplier

Lifecycle and Performance) to enhance supplier qualification to align with anti-corruption, human rights goals,

sustainability and the Company’s code of ethics.

• Our modern slavery statement can be found here: www.howdenjoinerygroupplc.com/governance/modern-slavery-

statement.

2022 highlights

Wood from

sustainably

managed

UK forests

Egger receives

recycled wood

from the

cabinet

Our own fleet takes the

cabinets to our depots

At the end of

its life, the

cabinet can

be recycled

Our supply partner,

Egger, makes the wood

into chipboard

We make the chipboard

into cabinets in our

UK factories

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

66 67

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / Sustainable product

Sustainable productSustainable supply chain

100% of production

and warehouse

waste reused,

recovered or

recycled

100%

Our environment and SECR reporting

Reducing waste, responsible operations, lowering emissions SECR – Emissions reporting

SECR Reporting

Sustainability matters

Absolute carbon emissions reduced 3.5% against 2021

Emissions reporting methodology

Footprint calculations performed in accordance with the WRI GHG Protocol and market-based emissions are reported

in accordance with the GHG Protocol Scope 2 Guidance – An amendment to the GHG Protocol. Emissions are reported in

accordance with HMG Environmental Reporting Guidelines including Streamlined Energy and Carbon Reporting (SECR). All

footprint calculations are subject to internal quality checks at source data and final report stages.

We have used the Operational Control boundary which includes all UK and International operations with the exception of Sheridan

Fabrications Ltd, which we acquired during 2022. There are no process emissions within Howdens, as defined in the GHG protocol,

and fugitive emissions from air conditioning systems are omitted due to insignificant materiality to the overall footprint.

Total CO

emissions (Tonnes)

2022 2021

Scope 1 – Direct: Gas 13,032 15,707

Scope 1 – Direct: Owned Transport (LGV/Van/Car) 28,302 27,626

Scope 1 – Direct: Other fuels 1,354 1,684

Scope 1 – Direct: Biomass 469 642

Scope 1 – Direct: Total 43,157 45,659

Scope 2 – Indirect: Electricity – location-based 12,067 11,585

TOTAL Scope 1 and 2 absolute emissions – location-based 55,224 57,243

Scope 2 – Indirect: Electricity – market-based 101 7,460

TOTAL Scope 1 and 2 – market-based 43,258 53,118

Carbon offsets tCO

e (11,363) (12,648)

TOTAL (Scope 1 and 2) net emissions 31,895 40,470

Turnover (£m) 2319 2093.7

Carbon intensity ratio (tCO

e per £m) gross, location-based 23.8 27.3

Inflation adjusted intensity ratio (tCO

e per £m) gross, location-based 28.4 29.9

Additional carbon intensity ratio (tCO

e per £m) net, market-based 13.8 19.3

Additional inflation adjusted intensity ratio (tCO

e per £m) net, market-based 16.4 21.1

Energy consumption used to calculate above emissions (kWh) 321,588,787 308,287,239

Proportion of CO

emissions generated in the UK: 98.6% 99.0%

Proportion of total energy consumed (kWh) in the UK: 98.5% 98.6%

Our record over the past five years is shown on the chart below:

Energy efficiency initiatives

Over 10 years, our carbon intensity ratio tCO

e / £m turnover

has decreased by 58%. Reducing energy consumption and

maximising efficiencies has become business as usual,

focused on where our large consuming assets are. This is

predominantly in our manufacturing sites at Howden and

Runcorn.

Our energy reduction strategy has been targeted towards

high consumers such as extraction and compressed air

systems with energy efficient drives and variable demand

optimisation. LED Lighting, new asset specification and asset

automation continues to significantly contribute to these

ongoing reductions. Our other main area of focus has been on

our transport fleet, which we discuss on page 66.

Use of renewable energy sources and carbon offsets

Our commitment to renewable energy use expanded in

2022 to include substantially all our depot and office estate.

Our manufacturing, distribution and depot network now

use grid electricity from renewable sources backed by

Renewable Energy Guarantees or Origin (REGO). Each year,

this will avoid around 10,000 tonnes of indirect carbon

emissions. The impact of this can be seen in our market-based

reportingfigures.

Biomass heat generation has been a feature of our Howden

and Runcorn sites for almost 25 years with a combined

heat output of 46,000MWh pa, we can heat 1msqft of

manufacturing space with 98% less carbon emissions.

In 2021 we achieved carbon neutral manufacturing at

our Howden and Runcorn sites. We committed to annual

recertification and in 2022, we retired 11,363 Gold Standard

Carbon offsets. Independent registry and verification details

can be found on page 50.

2022 highlights

ZERO TO LANDFILL: Zero to landfill across our UK

depot network over time, with a target of less

than 5% to landfill by the end of 2022.

2022 update: Exceeded the 2022 target at 99.7%. See page 50.

CARBON NEUTRAL MANUFACTURING: Carbon

neutral manufacturing by the end of 2021.

2022 update: Achieved in 2021 and maintained in 2022.

See page 50.

Results of our 2020 ESG Strategic Review – Future commitments, targets and ongoing work

• Maintaining zero to landfill in 2022 in our

manufacturing and logistics operations. We were very

pleased to achieve this in 2020 through our approach

of removing or minimising the use of resources in the

first instance, and then maximising the amounts of

waste that we can reuse, recycle and recover. We have

maintained this performance in 2021 and 2022 and this

is our target for the future.

• Less than 1% to landfill in our UK depots in 2022. This

metric is part of one of our main ESG commitments, and

we’ve made significant progress in 2022, ending the year

with 99.7% of depot waste avoiding landfill. See page 50

for more details.

• ISO 14001. Our manufacturing, warehousing and transport are certified to ISO 14001 Environmental Management

System. This assures us that we have sustainable processes in place and encourages us to look for improvements.

• Sawdust-to-heat. In 2022 we converted over 10,000 tonnes of sawdust into energy in biomass boilers at our Runcorn

and Howden factories. This is enough sawdust to fill 13 Olympic swimming pools, and it would otherwise have to have

been transported elsewhere to be reused. Using it to heat our factories also saves us money. The energy generated our

biomass boilers was equivalent to the average electricity consumption of over 10,000 households.

40.0

30.0

0.0

10.0

20.0

50.0

60.0

2021 20222018 2019 2020

Carbon intensity ratio (tCO

e per £m) – Gross (location-based)

Total carbon emissions (‘000s tCO

e) (market-based)

Total absolute carbon emissions (‘000s tCO

e) (location-based)

Additional carbon intensity ratio (tCO

e per £m) net (market-based)

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

68 69

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / Our environment and SECR reporting

Strategic Report Strategic Report Page TitleOur environment and SECR

Our communities

Local and national donations and partnerships

Sustainability matters

Going concern and Viability statements

The Directors have adopted the going concern basis in

preparing the financial statements and have concluded that

there are no material uncertainties leading to significant doubt

about the Group’s going concern status. The reasons for this

are explained below.

Going concern review period

The going concern review period covers the period of

12 months after the date of approval of these financial

statements. The Directors consider that this period continues

to be suitable for the Group.

Assessment of principal risks

The Directors have reached their conclusion on going concern

after assessing the Group’s principal risks, as set out in detail

in the ‘Principal risks and uncertainties’ section, starting on

page 39.

Whilst all the principal risks could have an impact on the

Group’s performance, the specific risks which could most

directly affect going concern are the risks relating to

continuity of supply, changes in market conditions, and

product relevance. The Group is currently holding additional

amounts of faster-moving inventory as a specific mitigation

against supply chain disruption, and the Directors consider

that the effects of the other risks could result in lower sales

and/or lower margins, both of which are built into the financial

scenario modelling described below.

Review of trading results, future trading

forecasts and financial scenario modelling

The Directors have reviewed trading results and financial

performance in 2022, as well as early weeks’ trading in

2023. They have reviewed the Group balance sheet at

December 2022, noting that the Group is debt-free, has cash

and cash equivalents of £308m, and appropriate levels of

workingcapital.

They have also considered three financial modelling scenarios

prepared by management:

1. A ‘base case’ scenario. This is based on the final 2022

Group forecast, prepared in November 2022 and including

the actual results of the 2022 peak sales period.

This scenario assumes future revenue and profit in

line with management and market expectations as well

as investments in capital expenditure and cash outflows

for dividends and share buybacks in accordance with our

capital allocation model (see pages 32 and 33) .

Going concern

2. A ‘severe but plausible’ downside scenario based on the

worst 12-month year-on-year actual fall ever experienced

in the Group’s history. This is more significant than the

combined effect of COVID and Brexit on 2020 actual

performance.

This scenario models a reduction in most of the variable

cost base proportionate to the reduction in turnover.

It includes lower capital expenditure at a lower level

than in the base case, but which is still in line with our

announced strategic priorities for growth, namely: new

depot openings and refurbishments; investment in our

manufacturing sites, investment in digital and expanding

our international operations. It also includes dividends

and share buybacks in line with the Group’s stated capital

allocation model.

In this scenario the Board considered the current

economic conditions that the Company and its customers

are facing, and noted that the downside scenario included

allowances for reduced demand and increased costs to

reflect such adverse conditions.

3. A ‘reverse stress-test’ scenario. This scenario starts

with the severe but plausible downside model and reduces

sales even further, to find the maximum reduction in sales

that could occur with the Group still having headroom over

the whole going concern period, without the need to take

further mitigating actions.

Capital expenditure in this scenario has been reduced to

a ‘maintenance’ level. Variable costs have been reduced

in proportion to the reduction in turnover on the same

basis as described in the severe but plausible downside

scenario. It assumes no dividends or share buybacks.

Borrowing facility and covenants

The Group has a five-year, committed, multi-currency

revolving credit facility of up to £150m which expires in

September 2027 and which was not drawn at the period end.

A summary of the facility is set out in note 19 to the December

2022 Group financial statements.

As part of the scenario modelling described above, we have

tested the borrowing facility covenants and the facility

remains available under all of the scenarios. We have

therefore included the credit available under the facility

in our assessment of headroom.

2022 highlights

Partnerships

Howdens actively partners with like-minded organisations

who share our ambitions to improve people’s lives.

Our partnership with Leonard Cheshire Disability entered

its 18th year. As well as donating kitchens during the year,

Leonard Cheshire Disability provided support on our

equality, diversity and inclusion programme, sharing their

expert knowledge on disability and skills.

We also continued our partnership with ‘I Can & I Am’,

the charity whose purpose and passion it is to inspire

confidence in young people and to help them to maintain

good mental health by offering pastoral services via a

converted double decker bus (www.icanandiam.com/

the-bus/).

Three exciting new partnerships were launched in 2022

that promote young people and skills. Howdens sponsored

the Donmar Warehouse’s ‘Take the Stage’ programme,

which invites young people who may not have access to

theatre to devise a new work that is in response to a Donmar

production and is reflective of their perspectives of the

world. Take the Stage gives access to a leading team of

theatre makers, with their performance being shared on

the Donmar stage in front of an invited audience (www.

donmarwarehouse.com/donmar-local/take-the-stage/).

Howdens also funded the Queen Elizabeth Scholarship Trust

(QEST) and National Saturday Club’s new ‘Craft&Making’

Saturday Club, which launched in January 2023. The

Craft & Making Saturday Club will give young people

the opportunity to explore and engage with craft-based

activities, developing their creativity and hand-making skills

(www.saturday-club.org/subject/craft-making/).

Howdens also launched the ‘Game Changer’ programme

in partnership with the Football Association (FA). This

exciting new initiative involves Howdens donating £1million

of kitchens each year for three years to grass roots

football clubs. This programme will have nationwide reach

and will benefit local clubs who are so often the heart of

thecommunity.

Howdens Worthwhile Foundation

Our community and charitable activities will continue to

transition to the Howdens Worthwhile Foundation during

2023. The Foundation will build on the exciting partnerships

already in place with the primary purpose of supporting

skills, inspiration, young people and inclusivity. It will also

facilitate the local donations and fundraising that has

always been central to our communities strategy.

Giving back to local communities

Our employee-led communities strategy continued in 2022

with Howdens donating £1.3m to charities and community

groups. The largest proportion of our giving is decided by

our people who chose to donate cash and stock to a diverse

group of causes, including hospices, colleges, health and

mental health charities as well as local sports clubs, youth

groups and community projects. Unsurprisingly, there

was more focus in 2022 on groups helping with the cost of

living crisis with food banks, housing trusts and homeless

charities receiving bigger donations than everbefore.

Local donations and fundraising will continue to form the

backbone of our 2023 communities strategy.

Supporting our employees support the causes

that matter to them

Howdens donated to thousands of different charities

and community groups during 2022 but our employees

continued to fundraise for the causes that meant the most

to them. Early in the year, Howdens employees raised over

£42,000 for the Disasters Emergency Committee (DEC)

Ukraine appeal, with a significant proportion donated via

payroll giving. Howdens matched all employee funds raised

and donated an additional £7,000 through a separate

initiative. In total over £91,000 was raised for the DEC appeal.

One of our Area Managers, Ed Gregory, completed his goal of

raising £100,000 for The Children’s Hospital Charity, Sheffield.

Initially giving himself 10 years to achieve this ambitious

target, Ed completed it in five years. By fundraising with

colleagues, via collection buckets in depots and with a little

help from Howdens at the end, these donations will support

key projects at the children’s hospital going forwards.

In December, our employees raised money for Nurture a

Child’s Christmas appeal. Nurture a Child is a Hull based

charity close to our factory in Howden. Their appeal relies

on volunteers to produce Christmas gifts for local older

children and teenagers in care who otherwise would receive

little or nothing on Christmas Day. Thanks to the efforts of

our people, 382 gifts were donated last Christmas.

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

70 71

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / Going concern and Viability statements

Strategic Report Strategic Report Going concern and Viability statementsOur communities

Going concern and Viability statements continued

Results of scenario testing

In the base case and the severe but plausible downside

scenarios, the Group has significant headroom throughout

the going concern period after meeting its commitments. 

In the reverse stress-test scenario, the results show that sales

would have to fall by a significant amount over and above the

fall modelled in the severe but plausible downside scenario

before the Group would have to take further mitigating actions.

The likelihood of this level of fall in sales is considered to

beremote.

Conclusion on going concern

Taking all the factors above into account, the Directors believe

that the Group is well placed to manage its financing and

other business risks satisfactorily and have a reasonable

expectation that the Group will have adequate resources to

remain in operational existence for the going concern review

period set out above. Accordingly, they continue to adopt the

going concern basis in preparing thesefinancial statements.

Assessment of long-term prospects

The Directors have assessed the Group’s long-term

prospects, solvency and liquidity, with particular reference

to the factors below:

Current position

• History of profitable trading, with strong net profit margins.

• Cash and cash equivalents balance at 24 December 2022

of £308m.

• Debt-free. Consistently cash-generative. Proven ability to

maintain strong cash balances whilst also investing for

growth and returning cash to shareholders.

• £150m committed borrowing facility, due to expire in

September 2027. Unused, but available if needed.

• Strong relationships with suppliers and customers.

• Proven ability to flex the operating cost base in a severe

economic downturn.

• Robust disaster recovery and business continuity

framework.

Strategy and business model

• Proven, successful business model.

• Demonstrated agility and resilience of the business

model to adverse economic conditions.

• Clear strategic direction.

Robust assessment of principal risks

• The Directors’ role in the risk identification, management,

and assessment process is outlined on pages 36 to 45,

together with details of the principal risks and mitigations.

• The Directors are satisfied that they have carried out a

robust assessment of the Group’s principal risks over the

viability period on the basis already described in the going

concern disclosure directly above.

Assessment of viability

Time period and scenario modelling

The Directors’ review of the Group’s long-term viability used

a three-year period to December 2025. This was considered

to be the most suitable period as it aligns with the Group’s

strategic planning process.

The financial modelling to support the assessment of viability

was based on the three scenarios used for the going concern

assessment and detailed above. We have tested the borrowing

facility covenants and the facility remains available under

all of the viability scenarios. We have therefore included

the credit available under the facility in our assessment of

headroom.

1. The base case scenario takes the base case described

in the discussion of going concern above and extends it

over the viability assessment period. It assumes future

revenue and profit in line with management expectations,

investments in capital expenditure and cash outflows for

dividends and share buybacks in accordance with our

capital allocation model (see pages 32 and 33).

2. The severe but plausible downturn scenario takes the

same decline over the going concern period as described

in the discussion of going concern above, and then

assumes a phased recovery over the rest of the three-year

period. It assumes capex at a lower level than in the base

case but which is still in line with our announced strategic

priorities for growth, and dividends and share buybacks in

line with our capital allocation model.

3. The reverse stress-test scenario assumes a phased

recovery of margin and profit on the same bases as for

the severe but plausible downturn scenario. This is then

stress-tested to find the maximum amount by which sales

in the first year would have to fall before the Group would

no longer have headroom at any point in the viability

assessment period, without taking further mitigating

actions. It assumes capex at a maintenance level and no

dividends or share buybacks.

The Directors consider that the reasonably foreseeable

financial effects of any reasonably likely combination of the

Group’s principal risks are unlikely to be greater than those

effects which were modelled in the severe but plausible

downside and reverse stress-test scenarios.

Results of scenario testing

The results of the base case and plausible downside scenario

modelling showed that the Group would have sufficient

headroom over the viability assessment period.

The reverse stress-test showed that the level of fall in sales

required in the first year of the viability assessment period

was significantly more than the fall modelled in the severe but

plausible downturn scenario before the Group would have to

take further mitigating actions. The likelihood of this level of fall

in sales is considered to be remote.

Conclusion on viability

Having considered the Group’s current position, strategy,

business model and principal risks in their evaluation of the

prospects of the business, and having reviewed the outputs

of the scenario modelling, the Directors concluded that they

have a reasonable expectation that the Group will continue

to operate and to meet its liabilities in full and as they fall due

during the three-year period to December 2025.

Long-term prospects and viability continuedGoing concern continued Long-term prospects and viability

Further reading relevant to going concern and viability

Principal risks and mitigations Pages 39 to 45

Trading results Pages 19 to 35, and the

Financial Statements

Balance sheet Page 165

Details of our £150m borrowing facility Page 188

Auditor’s report, with details of their work and conclusions on going concern and viability Pages 150 to 163

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

72 73

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / Going concern and Viability statements

Strategic Report Strategic ReportPage Title Page Title

Statement of Directors’ responsibilities

The Directors are responsible for preparing the Annual Report

and the Group and parent Company financial statements in

accordance with applicable law and regulations. Company

law requires the Directors to prepare Group and parent

Company financial statements for each financial year. Under

that law they are required to prepare the Group financial

statements in accordance with international accounting

standards in conformity with the requirements of the UK-

adopted international accounting standards and applicable

law and have elected to prepare the parent Company

financial statements in accordance with UK accounting

standards and applicable law, including FRS 101 Reduced

DisclosureFramework.

Under Company law the Directors must not approve the

financial statements unless they are satisfied that they give

a true and fair view of the state of affairs of the Group and

parent Company and of the Group’s profit or loss for that

period. In preparing each of the Group and parent Company

financial statements, the Directors are required to:

• select suitable accounting policies and then apply them

consistently;

• make judgements and estimates that are reasonable,

relevant, reliable and prudent;

• for the Group financial statements, state whether they

have been prepared in accordance with international

accounting standards in conformity with UK-adopted

international accounting standards;

• for the parent Company financial statements, state

whether applicable UK accounting standards have been

followed, subject to any material departures disclosed and

explained in the parent Company financial statements;

• assess the Group and parent Company’s ability to continue

as a going concern, disclosing, as applicable, matters

related to going concern; and

• use the going concern basis of accounting unless they

either intend to liquidate the Group or the parent Company

or to cease operations, or have no realistic alternative but

to do so.

The Directors are responsible for keeping adequate

accounting records that are sufficient to show and explain

the parent Company’s transactions and disclose with

reasonable accuracy at any time the financial position of the

parent Company and enable them to ensure that its financial

statements comply with the Companies Act 2006. They are

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, and have general responsibility for taking

such steps as are reasonably open to them to safeguard

the assets of the Group and to prevent and detect fraud

andotherirregularities.

Directors’ responsibility statement

We confirm to the best of our knowledge:

• the financial statements, prepared in accordance with the

relevant financial reporting framework, give a true and fair

view of the assets, liabilities, financial position and profit

or loss of the Group and Company, and the undertakings

including the consolidation taken as a whole;

• the Annual Report and Accounts includes a fair review of

the development and performance of the business and the

position of the Group and Company and the undertakings

including the consolidation taken as a whole, together with

a description of the principal risks and uncertainties they

face; and

• the Annual Report and Accounts, taken as a whole, is

fair, balanced and understandable and provides the

information necessary for shareholders to assess the

Group’s and Company’s performance, business model

and strategy.

This responsibility statement was approved by the Board of

Directors and is signed on its behalf by:

Andrew Livingston Paul Hayes

Chief Executive Officer Chief Financial Officer

Under applicable law and regulations, the Directors are also

responsible for preparing a Strategic Report, Directors’

Report, Directors’ Remuneration Report and Corporate

Governance Statement that complies with that law and those

regulations. The Directors are responsible for the maintenance

and integrity of the corporate and financial information

included on the Company’s website. Legislation in the UK

governing the preparation and dissemination of financial

statements may differ from legislation in other jurisdictions.

Section 172(1) statement

The Board reviews all matters and decisions through the

consideration and discussion of reports which are sent in

advance of each of their meetings and through presentations

to the Board. When the Directors discharge their duty as set

out in section 172 of the Companies Act 2006 (‘section 172’ or

‘s.172’), they have regard to the other factors set out on page

82 and they also consider the interests and views of other

stakeholders, including our pensioners, regulators and the

government, and the customers of our trade customers.

The Directors are required to include a statement of how they

have had regard to stakeholders and the other factors set

out in section 172(1)(a) to (f) when performing their duty. The

full s.172(1) statement may be found on pages 86 and 87. On

pages 88 to 95, we have set out examples of how the Directors

have had regard to the matters in s.172(1)(a) to (f) when

discharging their section 172 duty.

Non-financial reporting

In order to consolidate our reporting requirements under

sections 414CA and 414CB of the Companies Act 2006 in

respect of Non-Financial Reporting, the table on page 147

shows where in this Annual Report and Accounts to find each

of the disclosure requirements.

Disclosure of information to the auditor

Having made the requisite enquiries, the Directors in office at

the date of this report have each confirmed that, so far as they

are aware, there is no relevant audit information (as defined by

section 418 of the Companies Act 2006) of which the Group’s

auditor is unaware, and each of the Directors has taken all the

steps they ought to have taken as a Director to make themself

aware of any relevant audit information and to establish

that the Group’s auditor is aware of that information. This

confirmation is given and should be interpreted in accordance

with the provisions of section 418 of the Companies Act 2006.

Other Directors’ statements

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

74 75

Financial Statements

Additional Information

Strategic Report

Governance

Strategic report / Other Directors’ statements

Strategic Report Strategic Report Page TitleOther Directors’ statements

Andrew Livingston

Chief E xecutive Officer

Paul Hayes

Chief Financial Officer

Peter Ventress

Chairman

Louise Fowler

Non-Executive Director

Andrew Cripps

Non-Executive Director

Debbie White

Non-Executive Director

Geoff Drabble

Senior Independent Director

Karen Caddick

Non-Executive Director

Forbes McNaughton

Boar d of Director s

Executive Directors

Comp any Secret ary

Executive Committee

Julian Lee

Operations Director

Theresa Keating

Group Finance Director

Mark Slater

Commercial Director

Richard Sutcliffe

Supply Chain Director

Andy Witts

COO: Trade

David Sturdee

Chief Customer Officer

INDIRECT

DIRECT

Total Executive Director – Fixed vs Variable Pay

Fixed

Variable

Corporate governance report

Board of Directors

78 80

UK Corporate Governance Code

application and compliance

Executive Committee

and Company Secretary

Nominations Committee report

102

2021

112

Remuneration Committee

report

144

Sustainability

Committee report

136

Audit Committee report

Section 172(1) statement and

stakeholder engagement

How we

preserve value

Governance

Key Board activity

2022

78 Corporate governance report

80 Board of Directors

82 Key Board activity

84 Executive Committee and

Company Secretary

86 Directors' duties (Section

172(1) statement)

88 Stakeholder engagement

96 2018 UK Corporate Governance

Code: application and

compliance

102 Nominations Committee report

112 Remuneration Committee

report

136 Audit Committee report

144 Sustainability Committee

report

146 Directors’ report

Governance Page Title

Governance

Additional Information Financial Statements

Strategic Report

77Governance / Contents

Howden Joinery Group Plc / Annual Report & Accounts 2022Howden Joinery Group Plc / Annual Report & Accounts 2022

2023 Annual General Meeting (AGM)

Details of the 2023 AGM may be found in the

'Additional information' section on page 214.

Share capital and significant agreements

Disclosures may be found in the ‘Additional information’

section on pages 214 and 215.

Using the corporate governance report

Part 1: Board and Executive Committee profiles and key

Board activity during the year.

Part 2: Directors' duties and section 172 disclosure.

Part 3: Stakeholder engagement.

Part 4: UK Corporate Governance Code compliance.

Introduction from the Chairman

In my Chairman’s statement at the beginning of this Annual

Report (pages 16 to 18), I spoke of the importance of integrity

and trustworthiness in business in the modern world. Good

governance practices are the bedrock for these principles and

I’m pleased to report that I have joined a highly experienced

and high-performing Board.

The Board’s agenda focuses on the best outcomes for all

our stakeholders. It is varied, as you will see on the following

pages, and balanced between our commercial imperative

and governance safeguards. It gives me great pleasure to

join a Board and a Company in such an exciting phase of

its development and I look forward to building on the Board

agenda from my predecessor, Richard Pennycook.

Strategic initiatives

In April, the Board considered the updated ‘Raised Ambition’

strategic plan. These plans were subsequently presented to

me by management during my induction into the business.

I am pleased that the Board was able to continue to support

management’s strategic initiatives during the year. The

acquisition of the Sheridan solid surface worktop business,

additional land purchases at the Howden site and investment

in a new ‘paint to order’ line were all investments approved by

the Board.

My first Board meeting in July was in France and the Board

spent time in the French business with the local management

team. The investment in the international business is one of

the Board’s main strategic initiatives and it was pleasing to see

the Howdens model performing well outside of the UK.

When considering investment opportunities, the Board has

regard to a wide range of different stakeholder considerations.

Sometimes there are conflicting considerations and the

Board must balance these in a fair and considered way. More

information on the way we balance Directors’ duties can be

found on page 87.

Stronger governance

I was pleased that health and safety was already on the

agenda of all Board meetings and it will remain our primary

concern during the decision making process. It is also first on

the agenda at Executive Committee meetings and operational

Regional Board meetings, demonstrating that it is deeply

embedded in our culture.

The Board also spent a significant amount of time on employee

engagement during the year. Presentations were received

from the Group HR Director and Howdens participated in the

Best Companies survey in 2022, ranking in the top 10 best

big businesses to work for. The Board took time to consider

the results of the engagement survey and are working

with management to address areas for improvement. The

survey also provided the opportunity to capture (voluntarily)

information about our employees which will assist with our

equality, diversity and inclusion programmes. Employees are

a key stakeholder and the Board was pleased to support the

additional payment of £500 per employee recommended by

management. We will continue to look for ways to improve our

employee engagement during 2023.

Roles

Further information about the

role of the Board, the Executive

and Non-Executive Directors,

external advisors and individuals

may be found on our website:

www.howdenjoinerygroupplc.

com/governance/division-of-

responsibilities

Andrew Livingston

Chief Executive Officer

Paul Hayes

Chief Financial Officer

Peter Ventress

Chairman

Louise Fowler

Non-Executive Director

Andrew Cripps

Non-Executive Director

Debbie White

Non-Executive Director

Geoff Drabble

Senior Independent Director

Karen Caddick

Non-Executive Director

Forbes McNaughton

Board meeting attendance

Peter Ventress (3/3) Appointed 1 July 2022

Richard Pennycook (6/6) Retired 17 September 2022

Karen Caddick (8/8)

Andrew Cripps (8/8)

Geoff Drabble (8/8)

Louise Fowler (7/8)

Paul Hayes (8/8)

Andrew Livingston (8/8)

Debbie White (7/8)

1 Louise was unable to attend the June Board meeting due to a pre-existing

commitment. The June Board meeting comprised updates from the

CEO and CFO but did not have a wider agenda. The Company Secretary

updated Louise following the meeting.

2 Debbie was unable to attend the March Board meeting due to a

conflicting work commitment. The March Board meeting was an

additional meeting to the Board’s usual calendar to consider the

appointment of the new Chair. Debbie received the Board papers in

advance of the meeting and was able to feed back her views to the

Senior Independent Director before the meeting.

Board of Directors

Executive Directors

Company Secretary

Executive Committee

Board and Executive Committee structure

Corporate

governance report

During 2023, the Board approved the move from a secured to

an unsecured credit facility. This was significant as it removed

one of the final legacy issues and encumbrances from the

restructuring of the old MFI business. The new facility, more

information on which can be found in note 19 on page 188,

provides the Board with greater optionality and flexibility when

considering strategic opportunities in the future.

The Board in 2023

I look forward to developing and improving the Board’s agenda

in 2023. As you can see on pages 82 and 83 of this report, we

are introducing ‘spotlight sessions’ to the majority of Board

meetings. These sessions look to build on the Board’s existing

agenda and will give the Board time with the wider Executive

team and their direct reports to discuss the fundamentals of

the business model, strategy and future plans.

We also look forward to working with the Pension Trustees

during the year in reshaping their strategy. In the 2021 Annual

Report, we reported that the Defined Benefit Pension Plan

(the 'Plan') funding position had improved so that it was

in surplus on a technical provisions basis and therefore

Company contributions to the deficit had ceased.

Julian Lee

Operations Director

Theresa Keating

Group Finance Director

Mark Slater

Commercial Director

Richard Sutcliffe

Supply Chain Director

Andy Witts

COO: Trade

David Sturdee

Chief Customer Officer

Sadly, following the shock volatility in the gilts market in

the autumn, the Plan’s investment strategy came under

significant stress and deficit contributions have since

recommenced.

We will also be taking more time to consider our wider equality,

diversity and inclusion programmes at all levels of the

business, promoting career paths and focusing on employee

engagement.

We live in interesting times. At the beginning of 2022, there

were still widespread lockdown restrictions and virtual

Board meetings, and whilst these restrictions have largely

disappeared, Howdens is not immune to the impact of shocks

be they from international events or market volatility closer

to home. It is our resilient business model, strong governance

and the principle that everything we do must be worthwhile for

all concerned that will mean Howdens continues to grow from

strength to strength.

Peter Ventress

Chairman

Howden Joinery Group Plc / Annual Report & Accounts 2022

Strategic Report

Financial Statements

Additional Information

Governance

Governance Governance Page Title

Corporate governance report

Governance / Corporate governance report

Andrew was appointed to

the Board as Chief Executive

Officer on 2 April 2018.

Peter was appointed to the

Board in July 2022 and became

Non-Executive Chairman and

Chairman of the Nominations

Committee and Sustainability

Committee in September 2022.

Karen was appointed to the Board

in September 2018 and became

Chair of the Remuneration

Committee in September 2019.

Louise was appointed to the

Board in November 2019.

Andrew has a strong track

record of performance,

execution and driving

change through improving

digital capability, ranges

and new site openings. He

also has knowledge of key

European geographies, is a

competent French speaker,

and has an entrepreneurial

mindset. This mindset fits

the Howdens culture which

has served the Company

well and is fundamental to its

success. He was previously

the CEOofScrewfix and has an

MBA from the London Business

School.

As former Chairman of

Galliford Try plc and current

Chairman of Bunzl plc, Peter

has in-depth knowledge of

UK listed companies and the

associated high corporate

governance standards

required by such companies.

He was also formerly Chief

Executive Officer of Berendsen

plc and has held several senior

executive roles including

International President of

Staples Inc and Chief Executive

Officer of Corporate Express

NV, meaning he has extensive

experience in international

distribution businesses and

brings a wealth of relevant

commercial, financial and high-

level management experience

to the Board.

Karen’s professional experience

provides her with a strong

diversity of perspective and

cultural fit to help with the

leadership of the Howdens

business. Having served as

the Group Human Resources

Director of large listed

organisations such as Saga

Plc and RSA Insurance Group

Plc (now RSA Insurance Group

Limited), Karen has particular

strengths in organisational

development, delivery of

diversity programmes, and

executive remuneration. These

attributes have stood Karen in

good stead for her role as Chair

of the Remuneration Committee

and has made her a valuable

addition to the Nominations

Committee.

Louise has over 25 years’

customer, brand and digital

experience at a senior level.

Her experience encompasses

publicly listed and private

businesses, the mutual sector

and not-for-profit organisations.

Louise’s strong background

in consumer experience and

reputation is valuable to the

Company as it strives to provide

a strong aftersales service

to further support the builder

customer. Her digital experience

also provides valuable insight

given the investment the

Company continues to make in its

digital programme. Louise is an

Honorary Professor in Marketing

at Lancaster University

Management School.

Paul was appointed to the

Board as Chief Financial Officer

on 27 December 2020.

Geoff was appointed to the

Board in July 2015 and became

Senior Independent Director in

September 2019 and Non-

Executive Responsible for

Workforce Engagement in 2019.

Andrew was appointed to the

Board in December 2015 and

became Chair of the Audit

Committee in May 2016.

Debbie was appointed to the

Board in February 2017.

Paul is an experienced finance

executive and has a proven

track record in consumer and

manufacturing businesses.

From 2017 until its acquisition

by Recipharm AB in February

2020, Paul was CFO of Consort

Medical Plc, a leading drug

and device manufacturing

business. Before this, he was

the Group Finance Director

of Vitec Group plc from 2011

to 2017. Paul has extensive

experience in senior finance

roles at a number of UK and

US listed companies including

Signet Jewelers, RHM Plc

and Smiths Group Plc. He is a

Chartered Accountant having

qualified with Ernst & Young and

has a first class Masters degree

in Mechanical Engineering,

Manufacture & Management.

Geoff brings extensive

experience of the building

products and construction

markets having spent over a

decade as CEO of Ashtead Group

Plc in addition to his current

appointment as Chairman

of Ferguson Plc. He also has

extensive experience from his

time as an executive director

at the Laird Group, where he

was responsible for the Building

Products division. Geoff

understands and has managed

businesses with multi-site

depot operations and he has

strong business-to-business

sector experience. Geoff is also

Chairman of DS Smith Plc, the

global provider of sustainable

packaging solutions, paper

products and recycling services.

Andrew brings extensive

experience as a non-executive

director and audit committee

chair with particular knowledge

of branded consumer

and business-to-business

products, manufacturing

and distribution in the UK

and continental Europe.

His experience of multisite

wholesale distribution to

small business customers at

Booker Group Plc is valuable to

the Board’s decision-making

process. He is a Chartered

Accountant and former

Finance Director with extensive

recent and relevant financial

experience.

Debbie has extensive

experience in the B2B sector

from her time leading Interserve

Plc and the Sodexo global

healthcare and government

businesses. She has in-depth

knowledge of a number of

markets, specifically the UK

and France, both of which are

key to Howdens. Her previous

experience as a CFO and her

current experience as Chair

of the Audit Committee of

a NASDAQ-listed business

enables her to bring strong

financial awareness and

competence to the Board.

Debbie was previously interim

HR Director at BT Plc and has

also supported Howdens

management in the formation

and delivery of its Equality,

Diversity and Inclusion (EDI)

programme.

Corporate governance report continued

Board of Directors

Non-Executive Directors

Independence

The Board considered that all of the Non-Executive Directors

were independent for the full duration of the period being

reported on and that Peter Ventress was independent upon

his appointment as Chairman.

Key to Board Committee membership

Chair of Committee

Nominations Committee Sustainability Committee

Remuneration CommitteeAudit Committee

Andrew Livingston

Chief Executive Officer

Peter Ventress

Independent Non-Executive

Chairman

Karen Caddick

Independent

Non-Executive Director

Louise Fowler

Independent

Non-Executive Director

Paul Hayes

Chief Financial Officer

Geoff Drabble

Senior Independent Director and

Non-Executive responsible for

workforce engagement

Andrew Cripps

Independent

Non-Executive Director

Debbie White

Independent

Non-Executive Director

Non-Executive Director of

LondonMetric Property Plc

Chairman of Bunzl Plc None Non-Executive Director

of Assura Plc

None Chairman of Ferguson Plc

Chairman of DS Smith Plc

None Non-Executive Director

of PAVmed Inc, Lucid

Diagnostics Inc

, and Spire

Healthcare Group plc

Contribution to the long-term

sustainable success of the Company

Contribution to the long-term

sustainable success of the Company

Other listed company appointments Other listed company appointments

Neither Executive Director is a member of any Board Committee.

Committee Membership Committee Membership

Appointed Appointed

1 The Board considered Debbie’s proposed appointment as Non-Executive Director of Spire Healthcare Group plc and Director of Lucid Diagnostics Inc (a

subsidiary of PAVmed Inc, of which Debbie was already a director). The Board was satisfied that Debbie had the requisite time available to commit to her

responsibilities in her role as Non-Executive Director of Howdens. Further information is available on page 98.

Executive Directors

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Strategic Report

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Additional Information

Governance

Governance Governance Page TitleBoard of Directors

Governance / Corporate governance report

Corporate governance report continued

Key Board activity

January

• Health and safety

• 2022 budget review

• Capital allocation

• Investor relations update

• Principal risks review

January

• Health and safety

• 2023 budget

• Investor relations

• Principal risks

• Whistleblowing report

Spotlight

Trade service

and convenience:

Digital strategy

Spotlight

Product leadership

Spotlight

Trusted trade

relationships:

Customer

Spotlight

Trade service

and convenience:

Depot evolution

Spotlight

Trade value:

Vertical integration

March

• Appointment of new

Chairman

April

• Health and safety

• DB pension plan update

• Shareholder feedback

following 2021 Full Year

results

• Broker update

• Ukraine crisis update

• Strategic planning

(separate session)

April

• Health and safety

• Strategic opportunities

and long-term planning

• Pensions

• Investor relations

May

• AGM – further details may

be found on page 214.

June

• AGM feedback

• Consumer and market

update

July

• Health and safety

• Draft 2023 Interim results

• Key risks

• Broker update

• Whistleblowing report

• Director training session

(to be provided by the

Group’s corporate lawyer)

May – AGM

All resolutions were passed

with the requisite majority.

Further details about the

meeting may be found on

page 94.

February

• 2022 budget approval

• Draft 2021 preliminary

results

• Draft 2021 Annual Report

and Accounts and 2022

AGM documents

• Dividend and capital

returns

• Non-Executive Directors’

fees

• Principal advisors

• Whistleblowing report

February

• Health and safety

• Board evaluation

• Draft 2022 preliminary

results, draft 2022 Annual

Report and Accounts and

2023 AGM documents

• Shareholder and capital

returns

• NED fees

• Group policies

• Principal advisors

July

• France and Belgium

Business update

• New factory line approval

• HR update

• Investor relations update

• Draft interim results

and announcement

• Key risks review

• Whistleblowing report

September

• Health and safety

• Employee engagement

• Investor relations

September

• Health and safety

• 'Cost of living' help for

employees

• Employee survey update

• Supply Chain and

Operations update

• Investor relations update

• Broker presentation,

market update

November

• Health and safety

• Pensions

• Corporate governance

• Board Committees’ Terms

of Reference

• Schedule of Matters

Reserved for the Board

• 2024 Board calendar

November

• Health and safety

• Operations, Commercial

and Supply Chain

updates

• Pensions update

• Investor relations update

• Schedule of Matters

Reserved for the Board

and Board Committee

Terms of Reference

• 2023 Board calendar

Set out below and on the facing page are highlights of the matters

the Board considered in 2022 and will consider in 2023. Not all of the

matters the Board considered or will consider are listed, therefore this

should not be considered an exhaustive list ofactivities.

In addition to the matters shown on the 2022 timeline, at each meeting

the Board received strategic, operational and financial updates from

the CEO and CFO. The Board also considered aspects of Group culture

and strategy at various points during the year.

2022

2023

Governance and risk

The Board received governance, legal, and regulatory updates at

regular intervals from the Company Secretary and the Board’sadvisors.

Risk remains a matter reserved for the Board and a detailed review of

our risk management processes and principal risks can be found on

pages 36 to 45. We have reviewed our risk management processes

and remain satisfied that they are robust and effective.

Reporting from our whistleblowing helpline is also considered by

the Board on a biannualbasis.

Shareholder engagement

Information about how we engage with shareholders can be found

in our section on stakeholder engagement on pages94 and 95.

Executive Committee presenters: Executive Committee presenters:

Executive Committee presenters:

KH RS JL

AW MS RS

1 The Company’s actuaries reported

to the Board on routine funding

and investment matters

and the Chair of the Pension

Trustees attended to provide an

overview of the Trustees’ funding

and investment strategy and to

seek approval from the Board of its

long-term strategy proposal.

Executive Committee

presenters

Kirsty Homer

(Group HR Director)

Julian Lee

(Operations Director)

Mark Slater

(Commercial Director)

Richard Sutcliffe

(Supply Chain Director)

Andy Witts

(COO: Trade)

Spotlight sessions

Spotlights sessions, introduced for the first time in 2023, are sessions with the wider Executive team and their direct reports to

discuss the fundamentals of the business model, strategy and future plans. Topics will focus on the five pillars of the business:

• Trade service & convenience

• Product leadership

• Trade value

• Entrepreneurial culture

• Trusted trade relationships

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Additional Information

Governance

Governance Governance Page TitleKey Board activity

Governance / Corporate governance report

Executive Committee members

Corporate governance report continued

Executive Committee and Company Secretary

Andrew and Paul’s profiles

may be found on page 80.

Theresa joined Howdens in

September 2000 and has been

a member of the Executive

Committee since February

2012.

Mark joined Howdens in June

2019 as a member of the

Executive Committee.

Andy joined Howdens in July

1995 and has been a member

of the Executive Committee

since September 2008.

Theresa was appointed Group

Finance Director in May 2014,

having been Group Financial

Controller since 2007. She

joined the Group Finance team

in 2000 having previously held

various commercial finance

roles at Waterstones, HMV and

Heals. Theresa is also a trustee

of E-Act, a multi-academy trust.

Theresa's role as Group

Finance Director includes

leading the key controls

project, which is improving the

business's capability to identify

operational, IT and financial

controls which mitigate our key

and principal risks.

Mark has over 25 years’

experience in retail and trade

businesses working in senior

commercial, marketing and

strategy roles. Prior to joining

the business, Mark held senior

commercial positions with Travis

Perkins Plc, The Walt Disney

Company and Dixons Carphone.

Mark's role as Commercial

Director includes range

management, which is one of

the business's key strategic

initiatives. Balancing choice and

new product with disciplined

range management is crucial to

ensuring both availability and

profitability.

Andy was one of the founding

members of the Howdens depot

management team, having

joined from Magnet in 1995.

He was promoted from the

regional team to become Sales

Director in January 2007 and

was appointed Chief Operating

Officer of Trade in January 2014.

Andy has overall responsibility

for the performance and

culture of depots and

associated support functions

in the UK and the Republic

of Ireland. He oversees the

evolution of our depot estate,

including our strategically

important depot reformatting

and the opening of new depots.

He is key in ensuring our depots

build trusted relationships with

localtradespeople.

Julian joined Howdens in 2003

and was appointed to the

Executive Committee in July

2020.

Richard joined Howdens

in January 2019 and was

appointed to the Executive

Committee in July 2020.

David joined Howdens in March

2022 and was appointed to the

Executive Committee in May

2022.

Forbes joined Howdens in

July 2012 and was appointed

Group Company Secretary in

May 2014.

Prior to joining Howdens,

Julian worked in a number of

strategic and operational roles

within the Silentnight Group.

He joined Howdens in 2003 as

a leader of the Manufacturing

Division and from 2005 to

2009 was head of international

sourcing and supply chain in

Asia. Since 2009, Julian has

made a major contribution

to the transformation

of our supply chain and

operations and in 2020, he

was appointed Operations

Director, encompassing both

manufacturing and logistics.

Julian leads our strategic

manufacturing investments,

including increased in-house

manufacturing capability and

capacity.

Prior to joining Howdens,

Richard was Director of Supply

Chain at Screwfix. Before this,

he held senior supply chain

and business planning roles at

Hobbycraft, Wyevale Garden

Centres and B&Q.

Richard's role as Supply

Chain Director encompasses

optimising stock holdings

across the business and

ensuring Howdens maintains

market leading stock

availability. He is also leading

the XDC project, which is

delivering superior service

levels and availability to

depots.

Prior to joining Howdens, David

was Chief Customer Officer and

Chief Operating Officer at Yum!

Brands, responsible for Pizza

Hut Europe across 25 countries

and over 1,500 outlets. He was

with Yum! Brands for 14 years

with roles in the Middle East &

North Africa, Asia Pacific, and

Europe.

David is responsible for

developing a longer-term

customer strategy at Howdens

to support our depot teams in

managing their relationships

with customers and to deliver

our ambitious growth plans.

David’s role also encompasses

leading our IT, Digital, and

Marketing teams to continually

develop and grow awareness of

the Howdens brand.

Forbes joined the Company

as Deputy Company

Secretary in 2012 following

a period of secondment

from KPMG. He is a fellow of

the Chartered Governance

Institute (CGI) and is

Secretary to the Executive

Committee as well as to the

Board of Directors.

Forbes is the link between the

Executive Committee and

the Board and is responsible

for managing a number

of external stakeholder

relationships such as with

the Pensions Trustees and

external regulators. He is the

head of the legal function

in addition to his corporate

governance responsibilities.

Company Secretary

Theresa Keating

Group Finance Director

Mark Slater

Commercial Director

Andy Witts

Chief Operating Officer: Trade

Julian Lee

Operations Director

Richard Sutcliffe

Supply Chain Director

David Sturdee

Chief Customer Officer

Forbes McNaughton

Company Secretary

Executive Directors

Appointed Appointed

Contribution to the long-term sustainable success of the Company

Contribution to the long-

term sustainable success

of the Company

Andrew Livingston

Chief Executive Officer

Paul Hayes

Chief Financial Officer

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Additional Information

Governance

Governance Governance Page TitleExecutive Committee and Company Secretary

Governance / Corporate governance report

Directors' duties

Corporate governance report continued

Section 172(1) statement

Environment and community

The impact of the company’s operations

on the community and the environment.

Reputation

The desirability of the company for

maintaining a reputation for high

standards of business conduct.

Long-term thinking

The likely consequences of

any decision in the long term.

A director of a company is required to act in a way they consider, in good faith, would

most likely promote the success of the company for the benefit of its members as a whole.

In doing this, the director must have regard, amongst other matters, to the following:

Workforce

The interests of the company’s employees.

Suppliers

The need to foster the

company’s business

relationships with

(amongst others)

suppliers and…

Investors

The need for every member to be treated

fairly and for no member to be favoured

over another member.

...Customers

Howdens was founded on the principle that the business

should be worthwhile for all concerned. It's a principle that the

business continues to live into today. But balancing the needs

and views of all of our stakeholders can be challenging as there

are often competing interests at stake. This is why the Board

first and foremost considers our purpose, our culture, our

mission and our strategy to ensure all decisions have a clear

and consistent rationale. For details on the matters which the

Board discussed and debated during 2022 please see pages 82

and 83.

The Board regularly considers feedback from the Company’s

stakeholders. These are set out in detail on pages 88 to

95. This engagement is effective and in keeping with the

Company’s culture. For example, much of the feedback is

through face-to-face conversations rather than being written,

but where there is need for formality and confidentiality,

such as whistleblowing, this is also provided. Stakeholder

feedback can directly affect the Board’s decision making,

such as feedback received in relation to the application of the

Directors’ remuneration policy in 2023 and employee feedback

at Regional Board meetings, but it also provides the context

for decision making, particularly where there are competing

stakeholder interests.

As Directors, when we discharge our duty as set out in section

172 of the Companies Act 2006 (‘Section 172’), we have regard

to the other factors set out on the facing page. In addition to

these factors, we also consider the interests and views of other

stakeholders, including our pensioners, regulators and the

government, and the customers of our trade customers.

We have set out some examples below of how the Directors

have had regard to the matters in section 172(1)(a)–(f) when

discharging their Section 172 duty and the effect on certain

decisions taken by them in 2022.

£500 payment to employees

In September 2022, all UK employees (below the first two tiers

of senior management) received a one-off payment of £500.

This was in recognition of the direct impact on employees’

everyday lives of the high inflation environment and increasing

energy bills. The total cost to the Company of the one-off

payment was c.£7m.

Reward and recognition are key features of working at

Howdens and the Company scored well in the 2022 Best

Companies employee survey (further detail about which

may be found on pages 65 and 90). Following engagement

with employees and trade unions directly with our CEO

and members of the Executive Committee, the Board was

supportive of management’s recommendation that the

Company should provide the additional support for its

workforce. This was especially the case given that Howdens’

culture is that it should be a business which is worthwhile

for all concerned. Maintaining our unique culture and strong

reputation for rewarding our people fairly means that we can

both attract and retain the best people, who in turn ensure the

business’s long-term strategic aims are met.

Shareholder returns

Howdens has a prudent risk appetite towards balance sheet

management, an approach which has provided a source

of great strength through the challenges of the COVID-19

pandemic in recent years. As markets have recovered, the

Company prudently reinstated its capital priorities, including

the return to paying dividends in 2021, and the return of surplus

capital in the second half of the year. These returns were only

initiated after having repaid all government support received

early in the pandemic.

In February 2022, the Board recommended a final dividend

for 2021 of 15.2p per ordinary share, giving a total dividend

of 19.5p per ordinary share for 2021. In line with its capital

allocations policy (more detail about which can be found on

page 18), the Board also approved a £250m share buyback

programme. In making its capital returns decisions, the Board

considered its long-term strategy of continuing to invest in

depots, manufacturing and logistics capabilities and related

strategic investments while delivering a progressive dividend.

The Board takes regular feedback from shareholders on the

most appropriate method of returning capital, including at

the AGM where all shareholders, regardless of the size of their

shareholding, are invited to attend and ask questions of the

Board. Our CEO and CFO also discuss this during investor

roadshows following results announcements.

Sheridan acquisition

In February 2022, Howdens acquired Sheridan Fabrications

Limited (‘Sheridan’), which was the UK’s largest supplier

of luxury kitchen worktops. In acquiring the business,

Howdens was able to benefit quickly from the additional in-

house manufacturing capacity and Sheridan's established

experience in the solid work surface market.

In coming to its decision to acquire Sheridan, the Board

considered Howdens’ customers, who were seeing solid

work surfaces becoming a feature of modern kitchens and a

growing demand for the provision of bespoke fitted products.

The design, template, manufacture, and fitting of premium solid

kitchen surfaces therefore would support our trade customers

in selling to their customers. In addition, the Board was satisfied

that such an acquisition represented good value to its investors

as it supported the business’s long-term strategic aims.

Paint to order

In July 2022, the Board approved investment in a ‘paint-to-

order’ manufacturing infrastructure to support the provision of

a wider range of kitchen colours on certain premium product

ranges. The provision of such a service allows our trade

customers to provide more choices to their customers and

therefore to compete more effectively, whilst also allowing

Howdens to satisfy demand without carrying additional

inventory to support a broader product range.

In considering its approval of the investment, the Board

considered the payback on investment and that the investment

supported the Group’s strategic plans, which in turn

represented good value for shareholders.

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•

Corporate governance report continued

Stakeholder engagement

Howdens' stakeholders

INDIRECT

DIRECT

Stakeholder and forms of engagement

Trade customers pages 88 to 89

Workforce pages 90 to 91

Suppliers pages 92 to 93

Pensioners pages 92 to 93

Shareholders pages 94 to 95

Engagement with our trade

customers includes the following:

• Local depots

• Customer research

• Customer surveys

In 2022, trade customers participated in 'deep dive'

research into flooring and ironmongery, which led to the

improvement of merchandising and education around

flooring within depots and partnerships with new flooring

brands. They also helped us identify that our handle offering

could be expanded, so new styles were launched in 2022

and more will be launched in 2023.

In addition, in 2022, end-users participated in ad hoc

research into their purchasing journey. From this research

we learned that there were changes we could make to our

printed literature to help our customers better sell to their

customers, the end-users. We will be publishing our new

brochure in Q2 2023 in line with the changes identified by

the research.

Cabinet research builder study

In 2021, as part of our continual efforts to make builders'

lives easier, we undertook a cabinet research study with our

builder customers (see page 87 of the 2021 Annual Report),

and in 2022 several actions were implemented.

The research study helped us identify more ways to support

our builder customers, such as by making improvements to

the installation activities and configuration of our drawer

box offer. It also identified that builders' knowledge of

our cabinet offer could be improved further and so our

marketing communications were improved to give better

visibility of some items. QR codes now also link to product

information and installation guides to ensure customers

can more easily access the information they need.

Landlord research

We conducted research with our landlord customers

to ensure we remain aware of their product, price and

service needs and that we remain competitive against our

competition in all sectors of the market.

Local depots

The primary method of engaging with our trade customers

since Howdens opened its doors in 1995 has been through

conversations at the local depot. The relationship between the

depot manager and the trade customer has always been at

the heart of what we do.

Our depot managers feed back our trade customers' views

to management at Regional Board meetings (see 'Workforce'

on page 91 for further information), which the COO of Trade

is present at and which the CEO and other members of the

Executive Committee frequently attend. Feedback from

Regional Board meetings influences product and pricing

decisions. However, it also reinforces our strategic decisions

on new depot openings, ensuring that we are maintaining

excellent customer service and investing in new product. From

these meetings, managers were able to feedback directly to

the CEO, COO of Trade and other senior executives about any

matters affecting their depots and their customers.

Board members, Executive Committee members and senior

managers regularly visit depots to ensure they hear from

trade customers and the depots teams first-hand.

Trade customer surveys

We run periodic trade customer surveys to better understand

our trade customers' forecasted activity, confidence of the

industry over the next three months, and how we compare

to our competitors. We also use the surveys to ask trade

customers about 'hot topics' such as the cost of living crisis,

use of our digital platform, perception of certain products, and

sustainability, for example, 'end-of-life' issues with kitchens, so

that we can feed this back into our sustainability agenda.

We also carry out regular surveys (at least bi-annually)

with end-users online and trade customers by telephone.

The purpose is to track customer sentiment and associated

measures around the Howdens brand.

Trade customers

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Stakeholder engagement

Workforce

Engagement with our workforce

includes the following:

• Employee engagement survey

• Regional Board meetings

• Townhalls and feedback sessions

• Trade union and works council meetings

• Whistleblowing helpline

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Stakeholder engagement continued

Regional Board meetings

Regional Board meetings are a forum for the depot leadership

team and Executive Committee members to discuss strategy

and day-to-day business matters on a regular basis. Our

COO of Trade attends all meetings and all regional directors,

area managers, and depot managers attend the meetings

applicable to their region. Our CEO also attends a majority of

these meetings. Certain support functions (including Supply,

Commercial, Finance, and HR) also regularly attend. Members

of the Board periodically attend Regional Board meetings.

There are nine regions in total and one Regional Board

meeting is held per region every other period, providing many

opportunities each year for two-way discussions about critical

business issues.

Townhalls and feedback sessions

The Operations Director holds at least two business updates

each year for the manufacturing and logistics teams, and

members of the Operations Leadership Team also hold ‘Ask

away’ sessions with groups of employees. At each of our

manufacturing and logistic sites regular feedback sessions

are held with employees and it was through these channels

that employees expressed concern over the cost of living. As

a result, the Operations Director fed back these concerns to

the Executive Committee, who in turn informed the Board and

proposed the one-off payment to all UK employees below the

first two tiers of senior management. The Board approved that

the payment be made to employees in September 2022. More

information about this payment can be found on page 87.

Monthly townhalls are hosted by the Commercial Director

and Supply Chain Director. The townhalls focus on business

updates, with topics such as insights and market trends,

marketing plans, digital roadmap, new HR processes

(including equality, diversity and inclusion initiatives) and

supply chain updates being covered. Employees are given

the opportunity to ask questions throughout the meeting and

the meetings also act as an opportunity to give recognition to

employees who are going 'above and beyond' in their work.

Informal feedback sessions are hosted by area managers to

address local issues in depots. These sessions are usually

organised by job role, but may also be organised by depot or

a specific issue. Issues raised are often of a local nature and

are resolved locally. Where there are broader issues, area

managers will liaise with the wider business for a resolution.

These forums also act as an opportunity to exchange best

practice as well as to meet colleagues from other depots.

Engagement with the Trade Union and works councils

Howdens respects the collective bargaining of its

employees and actively engages with the Trade Union

and works councils collectively at least quarterly. Local

sites host Trade Union representative meetings and works

councils meetings monthly – site leadership and HR attend

these meetings.

In 2022, there were a number of significant areas of

engagement with the collective groups which included

enhancements to benefits and facilities (for example

Occupational Health provision), and the annual pay review.

The Howdens Show

In February 2022, we hosted the Howdens Show, which

welcomed over 1,000 employees to the International

Convention Centre in Wales. Our CEO and COO of Trade

hosted the event, which was a chance to set the scene

for the year ahead and it featured business, charity and

community updates from senior members of staff from

across the business.

Whistleblowing helpline

The Company uses a third-party operated, confidential

whistleblowing helpline. The helpline is multilingual and

available 24 hours a day. The Company Secretary provides

the Board with a bi-annual report which details the number

and nature of whistleblowing instances made during the

period. Whilst no specific complaints were escalated for

Board attention, the governance processes are in place

should this be deemed necessary.

Non-Executive Director responsible for

workforce engagement

In 2019, the Board appointed Geoff Drabble as the Non-

Executive Director responsible for workforce engagement.

Best Companies survey

In March 2022, employees were given the chance to have

their say and participate in the Best Companies engagement

survey. Over 7,300 surveys were completed by employees. The

results from the survey showed that, on the whole, employees

felt they are paid fairly for the work they do relative to people

in similar positions in similar organisations, and that they

believe the organisation does a lot to protect the environment.

An aspect which the survey showed required attention was

that many in the workforce wanted more support with their

wellbeing. As a result of the survey, the following actions have

been taken:

• Our Supply Operations team has formed a wellbeing

committee, with 24 representatives across our

manufacturing and logistics sites.

• We introduced a health app from an external provider to

encourage employees to take regular steps to become

healthier.

• In June 2022, we started a partnership with

ANDYSMANCLUB to support men’s mental health. 270

employees attended face-to-face and virtual presentations

from ANDYSMANCLUB.

• In July 2022, we gave employees at five of our largest

sites access to free blood pressure, heart rate, oxygen

saturation, temperature and weight checks. Over 370

employees were checked over the course of seven days.

• We are piloting menopause awareness training and have

partnered with Wellbeing of Women and Henpicked, two

menopause in the workplace specialists, giving us access

to a range of webinars and support tools.

• We are continuing to monitor and encourage the utilisation

of flexible work patterns andwill gather employee insights

on peak times of demand/productivity by role to inform

where flexibility can be offered.

As part of the survey process, we asked employees to provide

diversity information anonymously if they felt comfortable to

do so. We are now using this anonymous data to inform our

equality, diversity and inclusion strategy and action plans.

Further information on our EDI roadmap and strategy may be

found on page 65 of the sustainability matters report.

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Stakeholder engagement continued

Suppliers

Supplier conferences

Our key suppliers are invited to join senior leadership at

our supplier conference. This is an important date in our

calendar as it’s a time when the Company can communicate

its priorities and any changes in the business to its suppliers,

ensuring a consistent message is heard by all.

In 2022, we hosted our supplier conference ‘Delivering

Success in 2022 and Beyond' in-person. The conference

was used to maintain the ongoing conversation with our

key partners, informing them of our initiatives and business

priorities and to ensure we continued to take advantage of the

range of opportunities throughout the year.We also covered

ESG matters including modern slavery and other global issues

affecting us all. The conference was attended by over 100

senior executives from our suppliers who were able to network

with and ask questions of our senior leadership team and their

industry peers.

Category team relationships

and supplier management

Our internal commercial structure is organised into

categories. The use of categories provides clearer

accountabilities for product ranging decisions and with

greater internal accountability comes the fostering of

stronger relationships with our suppliers. Suppliers are

engaged with focused teams within the organisation and

this clarity brings the opportunity for even more valuable

discussions.

In addition, we have also partnered with SAP Ariba to further

strengthen the way we do business with our suppliers in an

efficient and more sustainable (paperless) way. SAP Ariba

Supplier Life Cycle Performance (SLP) will help improve

the onboarding and management of our suppliers and will

allow them to begin transacting and communicating with

usdigitally.

In addition to our general supplier conference, for the first

time we hosted a virtual ESG conference for our top 30

suppliers (calculated on a spend and emissions basis), which

was attended by our Commercial Director and Director of

ESG. The aim of the conference was to engage our suppliers

on emissions reporting, identification of climate risk to the

supply chain and plans to reduce emissions, and to embed

the importance of our sustainability agenda. The conference

provided a useful forum to raise awareness of what our

suppliers are already doing to become more sustainable. To

ensure we keep momentum on this subject, additional visits

will be made to supplier sites and further sustainability focus

sessions will be held. It is anticipated that the ESG conferences

will be held on a regular basis going forwards.

Engagement with our suppliers

includes the following:

• Supplier conferences and meetings

• Category team relationships

Pensioners

Engagement with our pensioners

includes the following:

• Board engagement with the Trustee Board

• Newsletters

• Triennial valuations

The Howden Joinery Defined Benefit Pension Plan (the

‘DB Plan’) has over 10,300 members, of whom c.6,000

are deferred members, and c.4,300 are pensioners and

dependents.

Board engagement with the Trustee Board

The Trustee Board, chaired by an independent trustee, is

responsible for investment strategy and for the day-to-

day running of the DB Plan. There are a number of matters

reserved for the Company as sponsor under the Trust deed,

and the Board invites the Chair of the Trustees to present to the

Board every year and provide an update on matters affecting

the membership.

In 2022, the Company engaged with the Trustee Board on a

number of matters outside of the normal engagement cycle

of investment and funding strategy, including rationalisation

of the corporate structure, the Company's refinancing

arrangements, information sharing protocols, transfer of

the defined contribution plan 'Top-Up' account to a Master

Trust, progressing GMP equalisation, September 2022 market

volatility, and the Trustee Board's preparation of Task Force on

Climate-Related Financial Disclosures (TCFD).

Following two consecutive periods of the DB Plan funding

falling into deficit on a Technical Provisions basis, the

Company recommenced payments of £2.5m per month

in January 2023. Should the DB Plan return to surplus on a

Technical Provisions basis for two consecutive periods, the

agreed 'switch off' mechanism will once again operate and

payments will cease.

Newsletters

In July and November 2022, newsletters were sent to all

members of the DB Plan. The newsletters provided updates

on matters such as Trustee Board changes, the transfer of

DB Plan Top-Up account to a Master Trust, the appointment of

auditors, latest funding position and financial review, and new

climate governance requirements.

Triennial valuations

Ensuring that there is an appropriate balance between

shareholder distributions and DB Plan deficit funding is a

priority for the Board. The triennial actuarial review as at

31 March 2020 was completed in April 2021.

The Company agreed to maintain deficit repair contributions

at the rate of £30m per year, with an agreed 'switch off'

mechanism if full funding on the Technical Provisions basis

was met. Full funding on this level was achieved and therefore

the deficit repair contributions were suspended in July 2021.

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Corporate governance report continued

Stakeholder engagement continued

Engagement with our shareholders

includes the following:

• Annual General Meeting

• Shareholder meetings and roadshows

• Shareholder consultations

• Asset reunification and e-comms

Annual General Meeting (AGM)

The 2022 AGM was the first AGM held since 2019 without

any COVID-19 restrictions in place. It was a pleasure to be

able to welcome shareholders back to in-person meetings

and for the Board members to be able to converse with them

and to present their updates to them directly. Members of

our Executive Committee and senior leadership team were

also present to meet with shareholders outside of the formal

business of the meeting.

During the Q&A session at the AGM, shareholders asked

questions on the following topics: environmental targets,

depot revamps, new depots, share buybacks, and gearing.

In addition to the in-person meeting, shareholders were

provided with the opportunity to submit any questions they

had of their Board of Directors through a question facility on

the Company’s corporate website. This facility remained open

throughout the year following the conclusion of the AGM.

Shareholder meetings

During 2022, we reinvigorated our approach to investor

meetings as part of the implementation of a new investor

strategy. We started by conducting external research with our

corporate brokers to identify potential target investors located

in the major investor hubs. This included domestic investors

in the UK but also international funds buying equities in North

America and Europe. For each hub Howdens has identified a

small group of potential investor targets which includes a mix

of both existing holders that are underweight in our stock and

non-holders who are already invested in distribution peers.

This targeting work was used to prioritise meetings for the

investor programme throughout the year.

Directors' remuneration consultation

The Chair of the Remuneration Committee invited the

Company's largest shareholders and shareholder

representative groups to feed back their views on proposals

for the operations of the remuneration policy for 2023.

Further information about the consultation and its

outcomes may be found on page 114 of the Remuneration

Committee report.

Asset reunification and e-communications

The Company, in conjunction with its Registrar, commenced

a proactive asset reunification programme in November

2022. The programme targeted holders of certificated

ordinary shares who had 12 consecutively uncashed

dividends and sought to reunite them with their shares and

unclaimed dividend payments.

In addition, also in conjunction with our Registrar, we wrote

to ordinary shareholders receiving hard copies of our

Annual Report and Accounts, notice of meetings, and proxy

forms and asked them to opt in if they wished to receive

these documents as hard copies in future. This process has

led to a c.81% reduction in the number of copies of the 2022

Annual Report and Accounts that need to be mailed out to

ordinary shareholders.

Following each period end, the Board is provided with an

investor relations (IR) update, which gives an overview

of investor feedback. The Director of Investor Relations

regularly provides feedback at Board meetings on the IR

programme. Following the half-year and full-year results,

more detailed feedback sessions were held with the Board to

discuss shareholder views on the results and the Company’s

strategy. In summary, investors remain very supportive of

the Company’s strategy and the resilient nature of Howdens'

'trade-only', in-stock business model.

During the year the major activities were as follows:

• Engagement with the 15 sell side analysts who cover

the Company and maintenance of Company compiled

consensus forecasts.

• Post-financial results roadshows with major institutional

shareholders and the Executive Directors and Director of

Investor Relations.

• Ad hoc in-person and virtual one-to-one meetings as

requested by shareholders and non-holders.

• Site visits to our factory in Howden and depots with small

groups of institutional holders and non holders to highlight

our key strategic initiatives.

• Supporting industry conferences held by the major banks

selling equities.

• Targeted marketing roadshows to major investor hubs

internationally.

Shareholders

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Corporate governance report continued

2018 UK Corporate Governance Code: application and compliance

The Financial Reporting Council (FRC) published its most

recent iteration of the UK Corporate Governance Code (the

‘Code’) in 2018, which applies to accounting periods beginning

on or after 1 January 2019. We are pleased to report that the

Company applied all the Principles of the Code throughout the

period, and we have reported in summary below how we have

done so. Throughout the financial period under review, the

Company was compliant with all Provisions of the Code, except

for Provisions 38, 40 and 41.

Provision 38 provides that executive director pension

contribution rates (or payments in lieu) should be in line with

those available to the workforce. Our remuneration policy

(‘Policy’), which was approved by shareholders in 2022, and

our previous Policy approved in 2019, stipulate that Executive

Director new joiners’ pension contribution rates must be in

line with that available to the wider workforce. Throughout the

2022 financial year, our Chief Financial Officer (appointed to

the Board in December 2020) received a pension contribution

rate which was in line with the wider workforce. However, our

Chief Executive (appointed to the Board in April 2018), received

a pension contribution rate that, whilst in line with the 2019

and 2022 Policies for existing Directors, was not in line with the

wider workforce until April 2022. This is because the reduction

of fixed, contractual remuneration was applied carefully and

proportionally over time. Further detail is set out on page 115

of the Remuneration Committee report. The Board confirms

that the Chief Executive's pension contribution rate will be in

line with the wider workforce throughout the financial year

ending 2023 and therefore the Company will be compliant with

Provision 38.

Provision 40 provides that when determining executive

director remuneration policy and practices, remuneration

committees should address whether remuneration

arrangements promote effective engagement with the

workforce. Provision 41 provides that the annual report of

remuneration committees should include a description of the

engagement that has taken place with the workforce to explain

how executive remuneration aligns with wider company pay

policy. The Remuneration Committee did not directly consult

with the workforce on Executive Director pay arrangements

during 2022; however, the Committee receives reports from

management on pay and benefits across the workforce to

ensure that there is good alignment on remuneration across

the organisation as a whole. In addition, in 2021, the Board

approved an update to the Company's Share Incentive

Plan (SIP), our UK all-employee share plan, which allows all

employees with shares held in the SIP trust to exercise voting

rights on those shares. This means our UK employees with SIP

shares (the majority of the workforce) are able to vote on the

Directors' remuneration report and the Directors' remuneration

policy (when applicable) at general meetings of the Company.

The Remuneration Committee will keep under review the

need to engage the workforce more directly on Executive

remuneration arrangements. Details of how Executive Director

pay is considered in the context of the workforce is set out on

page 126.

Howdens’ founding principle of being worthwhile for

all concerned supports the premise that its role is to

ensure long-term, sustainable growth and value for all

itsstakeholders.

During 2022, the Company (led by the Board) increased

shareholder returns, paid more tax, employed more people,

and contributed to the communities in which we operate.

Further information on our sustainable business model and

strategy can be found on pages 13 to 15. Our contribution to

wider society and our statement of the extent of consistency

with the TCFD framework can be found in our sustainability

matters report beginning on page 54.

Governing in an effective way ensures the framework and

controls needed to align our operations with our strategy are

in place. It is only by doing this that we can ensure long-term

strategic success of the Company for our stakeholders. We

discuss throughout the Governance section how our actions

help to preserve the value that the business generates and

how they support the strategy. For example, we have set out

the way our remuneration structure supports our strategic

aims on pages 117 to 119.

An explanation of our purpose, values and strategy are

set out in the strategic report which starts on page 8. The

Board regularly discusses the importance of Howdens’

unique culture and are mindful that it remains aligned with

its purpose, values and strategy. Workforce engagement

is also an important part of the Board’s agenda and more

information about the methods of engagement with the

workforce may be found on pages 90 and 91.

Integrity and sympathy to the Howdens culture are

paramount when the Board recruits new members to

the Board. More information about our recruitment and

inductions process can be found on pages 107 and 109.

Section 1:

Board leadership and company purpose

A successful company is led by an effective and

entrepreneurial board, whose role is to promote the long-

term sustainable success of the company, generating value

for shareholders and contributing to wider society.

The board should establish the company’s purpose, values

and strategy, and satisfy itself that these and its culture

are aligned. All directors must act with integrity, lead by

example and promote the desired culture.

Howdens has a broad group of clearly defined stakeholders

and Board members actively engage with each of these

groups regularly. A detailed explanation of our engagement

with our shareholders and wider stakeholder base, and how

this engagement has informed the Board’s decision making

processes can be found on pages 88 to 95. How the Board

members discharged their ‘section 172’ statutory directors'

duties is described on pages 86 and 87.

The Board confirms that Peter Ventress was independent on

appointment when assessed against the circumstances set

out in Provision 10 of the Code. The roles of Chief Executive

and Chairman are not held by the same individual and the

Chairman has never held the position of Chief Executive of

the Company. These factors help ensure that the Chairman

demonstrates objective judgement throughout his tenure.

The Chairman is mindful of his role in facilitating constructive

Board relations and promoting a culture of openness and

debate amongst the Board. This in turn encourages the

effective contribution of all the Non-Executive Directors.

The 2022 externally-facilitated Board evaluation concluded

that the Board was effective, supportive and doing well. There

were suggested areas for improvement with some Directors

highlighting that the Board remained in transition following the

change of Chair. Further information about the outcomes and

process of the evaluation may be found on pages 110 and 111.

The Chairman is also mindful of the need for the Directors to

receive information which is accurate, timely and clear. He is

supported in this by the Company Secretary, who ensures the

effective flow of information in a timely manner between the

Board and senior management.

The Board and its committees review workforce policies

and practices on a regular basis. A Group policy framework

has been established and is reported on to the Board on

an annual basis, as well as any updates needed for Group

policies. Part of this review includes ensuring that policies

remain aligned to the Howdens culture and support long-

term success.

One example of this is how our Remuneration Committee

considers the pay policies and practices of the wider

workforce when determining Executive reward. More

information in this regard can be found on page 126.

All employees are able to raise any matters of concern using

the confidential whistleblowing helpline. The helpline is

available 24 hours a day, it is multilingual, and it is operated

by an independent third party. The Board receives reporting

from the helpline twice a year and any matters of significant

concern are escalated as appropriate by the Company

Secretary who oversees the helpline with support from the

internal audit team.

Section 1:

Board leadership and company purpose continued

Section 2: Division of responsibilities

In order for the company to meet its responsibilities to

shareholders and stakeholders, the board should ensure

effective engagement with, and encourage participation

from, these parties.

The chair leads the board and is responsible for its overall effectiveness in directing the company. They should demonstrate

objective judgement throughout their tenure and promote a culture of openness and debate. In addition, the chair facilitates

constructive board relations and the effective contribution of all non-executive directors, and ensures that directors receive

accurate, timely and clear information.

The board should ensure that workforce policies and

practices are consistent with the company’s values and

support its long-term sustainable success. The workforce

should be able to raise any matters of concern.

The Board is satisfied that the necessary resources are in place

to ensure that the Company meets its objectives and measures

performance against them. Our KPIs and how we have

performed against them can be found on pages 28 and 29.

More information on our risk processes, including our

principal and emerging risks, can be found on pages 36 to

45. Our Audit Committee report provides a summary of our

internal control framework on page 142.

The board should ensure that the necessary resources are

in place for the company to meet its objectives and measure

performance against them. The board should also establish

a framework of prudent and effective controls, which enable

risk to be assessed and managed.

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2018 UK Corporate Governance Code: application and compliance

Corporate governance report continued

2018 UK Corporate Governance Code: application of Principles

At least half of the Board was made up of Independent

Non-Executive Directors (not including the Chairman)

throughout the reporting period. The Non-Executive

Directors that the Board considered to be independent are

shown as such on pages 80 and 81. The Board confirms that

all the Non-Executive Directors (excluding the Chairman)

were independent during the reporting period and that the

Chairman was independent on appointment.

There is a clear division of responsibilities between the

leadership in the organisation. The responsibilities of

the Chairman, Chief Executive, and Senior Independent

Director may be found on the Company’s website (www.

howdenjoinerygroupplc.com/governance/division-of-

responsibilities) and the function of the Board Committees

may be found in the respective committee terms of

reference, also available on the Company’s website

(www.howdenjoinerygroupplc.com/governance/tor-and-

schedule-of-matters).

All of the Directors of the Company have access to the

advice of the Company Secretary, who is responsible for

advising the Board on all governance matters.

The Board has implemented a Group policy framework which

is considered by the Board on an annual basis. Individual

policies and associated practices are considered alongside

the framework review process.

As stated in the Schedule of Matters Reserved for the Board

(which may be found at www.howdenjoinerygroupplc.com/

governance/tor-and-schedule-of-matters) the appointment

and removal of the Company Secretary is a decision for the

Board as a whole.

The number of Board meetings which were held during the

reporting period and the attendance at each of these meetings

may be found on page 78. Similarly, the number of meetings

of each Board Committee and the attendance may be found

on the following pages: 102 (Nominations Committee), 112

(Remuneration Committee), 136 (Audit Committee), and 144

(Sustainability Committee).

When reviewing the Nominations Committee’s

recommendation to appoint a new Director, the Board will

always assess whether the candidate is able to allocate

enough time to the role. Similarly, when assessing the

acceptability of an existing Director’s wish to take on external

appointments, the Board will assess the additional demand on

that Director’s time before authorising the appointment. This

occurs within the Board's agreed existing protocol whereby

any significant appointments taken on whilst serving as a

Director of the Company must be approved by the Board before

they are entered into. This is set out in the Schedule of Matters

Reserved for the Board which may be found on the Company’s

website (www.howdenjoinerygroupplc.com/governance/tor-

and-schedule-of-matters).

During the reporting period, Debbie White's appointment as

Non-Executive Director of the London Stock Exchange-listed

company, Spire Healthcare Group plc, was authorised by the

Board. Debbie's appointment as a director of the NASDAQ-

listed company, Lucid Diagnostics Inc (a subsidiary of

PAVmed Inc, of which Debbie was already a director), was also

authorised by the Board. Prior to the appointments, the Board

considered whether Debbie could allocate enough time to her

role as a Non-Executive Director of Howdens. The Board was

satisfied that Debbie had the requisite time to fulfil the new role

as well as her current role with Howdens, particularly given her

role at BT Plc as interim HR Director ceased in November 2022.

Members of the senior management team regularly presented

to the Board (see pages 82 and 83 for a timeline of Board

meetings and information regarding any Executive Committee

attendees), which provided an opportunity for the Board to

constructively challenge and to provide advice to our senior

management team.

Information about the management of conflicts between the

duties Directors owe the Company and either their personal

interests or other duties they owe to a third party may be found

on page 143.

G I

Section 2: Division of responsibilities continued

The board should include an appropriate combination

of executive and non-executive (and, in particular,

independent non-executive) directors, such that no one

individual or small group of individuals dominates the

board’s decision-making. There should be a clear division of

responsibilities between the leadership of the board and the

executive leadership of the company’s business.

The board, supported by the company secretary, should

ensure that it has the policies, processes, information,

time and resources it needs in order to function effectively

and efficiently.

Non-executive directors should have sufficient time to meet their board responsibilities. They should provide constructive

challenge, strategic guidance, offer specialist advice and hold management to account.

The Nominations Committee engages external search

consultancies when searching for Board position

candidates. Further information about the appointments

process is available on page 107 of the Nominations

Committee report and the Board’s diversity policy is

available on page 106.

The Nominations Committee regularly reviews the skills

matrix and the tenure of each Board member (see pages

104 and 107 respectively for further details). This ensures

the Board’s succession plan remains aligned with the

natural rotation of Directors off the Board and the strategic

objectives of the business.

The succession plans for the senior management team are

regularly reviewed by the Nominations Committee.

The Board uses a skills matrix to ensure it has the necessary

combination of skills, experience and knowledge to meet its

strategic objectives, business priorities and to ensure the

unique Howdens culture is maintained. The skills matrix may

be found on page 104.

The tenure of each Director may be found on pages 107 and

108. The Board has a good balance of new and longer-serving

Directors. As at the year end date, tenures of the Non-

Executive Directors (including the Chairman) range from six

months to 7.5years, and the average tenure is 4.7 years.

Details of the 2022 externally-facilitated Board evaluation

process and outcomes may be found on pages 110 and 111 of

the Nominations Committee report.

The specific reasons why the Board considers that each

Director’s contribution is, and continues to be, important to

the Company’s long-term sustainable success may be found

on pages 80 and 81. Reference to the specific reasons and

where to find them in the Annual Report and Accounts will

accompany the resolutions to re-elect the Directors in the

2023 AGM Notice. The Board recommends that shareholders

vote in favour of the re-election of all the Directors.

J K

Section 3: Composition, succession and evaluation

Appointments to the board should be subject to a formal,

rigorous and transparent procedure, and an effective

succession plan should be maintained for board and senior

management. Both appointments and succession plans

should be based on merit and objective criteria and, within

this context, should promote diversity of gender, social and

ethnic backgrounds, cognitive and personal strengths.

The board and its committees should have a combination

of skills, experience and knowledge. Consideration should

be given to the length of service of the board as a whole and

membership regularly refreshed.

Annual evaluation of the board should consider its

composition, diversity and how effectively members

work together to achieve objectives. Individual evaluation

should demonstrate whether each director continues to

contributeeffectively.

98 99

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Corporate governance report continued

2018 UK Corporate Governance Code: application of Principles

The Board has established formal and transparent policies

and procedures, which ensure the external auditor and

internal audit function are independent and effective and

are accountable to the Audit Committee. The Board also

monitored the integrity of the annual and interim financial

statements of the Company through the Audit Committee.

Further information about the work of the Audit Committee,

including the subjects above, may be found in the Audit

Committee report, which begins on page 136.

A statement regarding the Directors’ responsibility

for preparing the Annual Report and Accounts and

the Directors’ assessment of the Annual Report and

Accounts, taken as a whole, as being fair, balanced and

understandable and providing the necessary information

for shareholders to assess the Company’s position,

performance, business model and strategy, may be found

on pages 74 and 75.

The Board is responsible for the Group’s systems of

internal control and risk management, and for reviewing

their effectiveness. The Board is assisted with these

responsibilities by the Audit Committee. Such a system

is designed to manage rather than eliminate the risks of

failure to achieve business objectives, as well as to help the

business take appropriate opportunities. The Board has

conducted reviews of the effectiveness of the system of

internal controls through the processes described within the

'Risk management' and ‘Principal risks and uncertainties’

sections (see pages 36 to 45) and are satisfied that it

accords with the Code and with the Guidance on Risk

Management, Internal Control and Related Financial and

Business Reporting. As described in the Audit Committee

report on page 142, a key controls project is ongoing across

the Group to focus and further strengthen our overall control

framework. This work to further enhance internal controls

will lead to better assurance and efficiencies through

opportunities to formalise and automate controls and

improve visibility to the Executive Committee and Board in a

consistent way across the Group.

The assessment of the principal and emerging risks, the

uncertainties facing the Group, and the ongoing process for

identifying, evaluating and managing the significant risks

faced by the Group is set out in the 'Risk management' and

‘Principal risks and uncertainties’ sections (see pages 36

to 45. The Board confirms that it has conducted a robust

assessment of the principal and emerging risks.

Section 4: Audit, risk and internal control

The board should establish formal and transparent

policies and procedures to ensure the independence

and effectiveness of internal and external audit

functions and satisfy itself on the integrity of financial

and narrative statements.

The board should present a fair, balanced and

understandable assessment of the company’s

position and prospects.

The board should establish procedures to manage risk,

oversee the internal control framework, and determine

the nature and extent of the principal risks the company

is willing to take in order to achieve its long-term

strategicobjectives.

By order of the Board

Peter Ventress

Chairman

6 March 2023

The way the Remuneration Committee has ensured our

remuneration policies and practices are aligned with our

culture, our strategy and risk management is discussed

in the Remuneration Committee report, which starts on

page112.

The Remuneration Committee has delegated responsibility

for setting the Executive Directors’ remuneration under the

shareholder-approved Directors' remuneration policy (the

full policy is set out in full at www.howdenjoinerygroupplc.

com/governance/remuneration-policy). The Remuneration

Committee also has delegated responsibility for setting the

Chair of the Board’s remuneration and the remuneration

of senior management (i.e. the members of the Executive

Committee and the Company Secretary). No Director is able

to determine their own remuneration outcome.

The Remuneration Committee reviews workforce

remuneration and related policies when setting Executive

Director remuneration. Ensuring these factors are always

considered means our remuneration policies are clear and

as predictable as possible. Further information may be

found in the Remuneration Committee report on page 126.

The Remuneration Committee membership is made up of

only independent Non-Executive Directors.

Details of whether the Remuneration Committee exercised

its discretion during the year may be found on page 115 of

the Remuneration Committee report.

Section 5: Remuneration

Remuneration policies and practices should be designed

to support strategy and promote long-term sustainable

success. Executive remuneration should be aligned to

company purpose and values, and be clearly linked to the

successful delivery of the company’s long-term strategy.

A formal and transparent procedure for developing policy

on executive remuneration and determining director and

senior management remuneration should be established.

No director should be involved in deciding their own

remuneration outcome.

Directors should exercise independent judgement and

discretion when authorising remuneration outcomes,

taking account of company and individual performance,

and wider circumstances.

100 101

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2022 Nominations

Committee activity

Introduction from the Committee Chairman

I am pleased to present this report covering the work of the

Nominations Committee in 2022.

Despite its slightly reduced role following the introduction of

the Sustainability Committee, the Nominations Committee

continues to be one of the core governance safeguards for

the Company. Investors are now prepared to take direct action

against individual directors by voting against their annual

reappointment. This can be for a whole host of different

governance issues and it is generally the Nominations

Committee that is responsible for considering such matters

and acting upon such shareholder concerns. This report

details how the Committee seeks to avoid such issues by

engaging in transparent processes and adopting best

practice guidance.

Succession

The appointment of a new Chair, as reported in last year’s

Committee report, was the only Board change during the year.

My appointment to the Board followed a rigorous process,

which is detailed later in this report on page 109. There

followed a short handover period with the previous Chair,

Richard Pennycook, which provided a seamless transition of

the leadership of the Board. At no point was Richard involved in

the process of appointing me as his successor.

The Committee was also involved with new appointments to

the Executive Committee. Further details in respect of each of

these appointments are set out later in this report.

Composition and diversity

The Nominations Committee remains mindful of the

importance of broadening diversity within leadership and

senior management teams. Whilst we have made good

progress on our equality, diversity and inclusion agenda in

recent years, we also recognise that there is more work to

be done to make Howdens a more diverse organisation. To

that end, we have updated our Boardroom diversity policy to

include specific gender and ethnicity targets for the first time.

These targets are in line with best practice guidance and I look

forward to the Committee reporting against these targets in

future years. Our boardroom gender and ethnicity data at the

end of 2022 is set out below on this page and the facing page.

More information on the equality, diversity and inclusion

agenda is contained in the sustainability matters report and

the Sustainability Committee report on pages 65 and 145

respectively.

The Committee will spend more time reviewing the make-up of

the Board in 2023. We currently have a good mix of skills and

experience on our Board but we are aware as a Nominations

Committee that we will need to recruit to replace two of our

most senior Non-Executive Directors (who have the important

roles of Senior Independent Director and Audit Committee

Chair) in the near future. In doing so, we will need to be

mindful to ensure that we retain the skills required to support

Howdens’ continued growth, its strategic activities and its

ever broadening commitments on environmental, social and

governance matters. The Committee will also continue to work

with the Executive Directors on the skills and diversity of the

senior management teams below Board level.

Evaluation

In 2022, in line with the Board’s stated practice, an external

Board evaluation was undertaken. Unlike the previous two

reviews which circumstance dictated were conducted

remotely, the review included face to face interviews with all

members of the Board as well as observations from a full set

of Board and Committee meetings. More information on the

Board evaluation process and outcomes are set out on pages

110 and 111.

I look forward to reporting directly to shareholders at our

AGM in May.

Peter Ventress

Nominations Committee Chairman

Committee meeting (out of cycle)

• Chair succession – recommendation to the Board to

appoint Peter Ventress as a Non-Executive Director and

Chair-elect

Committee meeting

• Board evaluation process and outcomes

• Board recommendations for AGM elections

• Draft 2021 Nominations Committee report

Committee meeting

• Externally-facilitated Board evaluation approval

• Board succession planning, including consideration of

diversity, tenure and skills matrix

• Board diversity policy

• Nominations Committee Terms of Reference

Nominations

Committee report

Key activities in the year ahead

• All current Directors will stand for election

or re-election at the AGM on 4 May 2023.

• Regular updates on Executive Committee and

senior management succession and talent planning

will be provided to the Committee.

• The Committee will undertake its review of skills,

composition and size of the Board.

• Review of the Boardroom Diversity Policy.

Board gender split Board ethnicity split

1 Figures correct as at 24 December 2022.

2 Figures derived from the February 2023 FTSE Women Leaders Review.

1 Figures correct as at 24 December 2022.

2 Figures derived from the 2022 Parker Review update 'Improving the

Ethnic Diversity of UK Boards'.

February

March

September

2022 meeting attendance

Richard Pennycook (1/2)

Retired 17 September 2022

Peter Ventress (1/1) Appointed 1 July 2022

Karen Caddick (3/3)

Andrew Cripps (2/3)

Geoff Drabble (3/3)

Louise Fowler (3/3)

Debbie White (2/3)

1 Andrew and Debbie were unable to attend the March Nominations

Committee meeting due to conflicting work commitments. The March

meeting was an additional meeting to the Board’s usual calendar to

consider the appointment of the new Chair. Both Non-Executive Directors

received the Committee papers in advance of the meeting and were able

to feed back their views to the Senior Independent Director before the

meeting. Richard did not attend this meeting as it was called to discuss

hissuccession.

Peter Ventress

Nominations Committee Chairman

Howdens

director

positions

No ethnic

minority

representation

Ethnic

minority

representation

10%

FTSE 250

director

positions

Howdens

37.5%

Females:

Male

Female

FTSE 250

40.1%

Females:

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Nominations Committee report

102 Governance / Nominations Committee report

Nominations Committee report continued

Composition

Skills and experience matrix

The Nominations Committee used a skills matrix when assessing its Non-Executive Director succession plans. The matrix

highlights where the skills and experience of our Non-Executive Directors are particularly strong, where there are opportunities

to further grow the Board’s collective knowledge, and to inform the Board’s future composition as Non-Executive Directors

naturally rotate off the Board.

Diversity

Group gender diversity as at 24 December 2022

The percentages shown in brackets below indicate the change since 2021.

1 Members of the Executive Committee, excluding Executive Directors and including the Company Secretary.

2 Includes Grades 1–3 equivalents.

3 Calculated on an individual basis, not on an FTE basis. Includes UK, France, Belgium, the Republic of Ireland, and Isle of Man.

High

Importance

Medium

Group gender diversity statistics

The Nominations Committee reviews the gender statistics shown in the chart below. Where other data is available, this is

presented to the Committee in order to determine whether there are any implicit diversity issues.

Skills and experience Importance

Number of Non-Executive Directors

Direct experience Indirect experience

Industry/Sector

Business-to-business

6 0

Manufacturing

4 2

Logistics, distribution and supply chain management

4 2

Consumer goods

5 0

Geographic exposure

6 0

Europe

5 1

Governance

UK listed companies

6 0

Company chair experience

4 1

Remuneration committee chair experience

4 0

Audit committee chair experience

3 0

Policy development

4 1

Senior independent director experience

2 0

Technical

Accounting and Finance

3 3

Audit

3 1

Executive management

6 0

Risk management

5 1

HR/Remuneration

4 2

Ecommerce

3 3

Marketing

3 3

IT/Cyber security

1 3

Legal

1 2

Howdens-specific considerations

Vertical integration

4 2

Multisite depot operation

4 2

Board

Grades 1 to 3

Group

Senior Management

3 (0%)

2 (0%)

42 (+31%)

3,674 (+4%)

5 (0%)

136 (+19%)

6 (0%)

8,348 (+5%)

Male Female

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Boardroom Diversity Policy

The Board recognises the importance of ensuring that there

is diversity of perspective, background, and approach in its

management team and on its Board. Since the business was

established in 1995, it has sought to enable individuals to

progress within the organisation regardless of age, gender,

socio-economic background, or formal qualifications.

We believe that it is in the interests of the business and of

its shareholders for us to build a Board whose membership

is diverse in perspective and experience, as this facilitates

better decision-making. We are also mindful of the outputs

and recommendations from both the Parker Review and the

FTSE Women Leaders Review when making appointments

to the Board and membership of the Board is currently in line

with their targets.

However, the Board is mindful of the forward looking

recommendations of both the Parker Review and FTSE

Women Leaders Review and it is the Board’s aspiration that

it will have at least one member from an ethnic minority by

year end 2024., The Board will also target having a minimum

female membership of 40% and at least one woman director

in one of the ‘Big 4’ roles (those being Senior Independent

Director, Chair, CEO, and CFO) by year end 2025.

The Nominations Committee will continue to seek diversity

of mindset as well as of gender, race, ethnicity, and socio-

economic background when considering new appointments

in the period to 2024, and it will continue to review this policy

on an annual basis to ensure it remains appropriate.

More widely, we are committed to developing a long-term

pipeline of executive talent that reflects the diversity of

Howdens’ business and its stakeholders.

As at 24 December 2022, 37.5% of Board members were

women. Both of the Executive Directors were male. There

were no members of the Board from ethnic minority groups

as at 24 December 2022.

Nominations Committee report continued

Composition continued Succession

An integral part of the work of the Nominations Committee is to establish and maintain a stable leadership framework and to

proactively manage changes and their impacts on the future leadership needs of the Company, both in terms of Executive

and Non-Executive leadership. Ensuring the correct leaders are in place enables the organisation to compete effectively in the

marketplace and therefore to meet its various obligations to its stakeholders.

As detailed in the rest of the report, the Nominations Committee has managed succession programmes for both the Board and

senior management, which have ensured that the necessary skills, expertise and experience are present in the leadership of

theorganisation.

Board succession

The Nominations Committee regularly reviews the skills and

expertise that are present on the Board and compares these

to the expertise that it believes are required given the strategy,

business priorities and culture of the organisation.

Since Howdens began trading in 1995, its core strategy has

remained largely unchanged. The market, the size, and the

stage of maturity of our organisation however have changed,

and so our Board has needed to evolve through sensible and

well-managed succession planning that does not compromise

the stability of the Board.

The process normally used in relation to Non-Executive

Director appointments is set out below. We continue to manage

a phased succession programme for Non-Executive Directors

and are pleased with the balance of length of tenure, as well

as of diversity, background and perspective of our current

Non-Executive Directors. The process for the Chairman’s

succession is set out in the case study on page 109.

Retirement

The Nominations Committee is progressing a phased

transition on Board succession and, as part of this process,

following nearly 8 years of service, Geoff Drabble will retire

at the forthcoming Annual General Meeting (AGM). An

announcement will be made in due course regarding the

succession of the Senior Independent Director and Non-

Executive Director responsible for workforce engagement

roles that Geoff currently holds.

Appointment

Where it is identified through Board succession planning

that a Non-Executive appointment is required to the Board,

the Nominations Committee will engage an external search

consultancy to undertake the process of recruiting a

new Non-Executive Director.

The external search consultancy would be made aware of our

Boardroom Diversity Policy (if they were not already) and the

Nominations Committee would specifically task them with

producing a diverse shortlist of candidates for the position.

The skills matrix (the current version of which may be found on

page 104), together with the collective knowledge, experience

and diversity of the Board and the length of service of the

Directors, would be used by the Committee to highlight where

there were opportunities for a new Non-Executive Director to

contribute to the skillset of the Board and would inform the

search that external search consultancy undertake.

Following longlisting and shortlisting processes, and prior

to any recommendation being made by the Nominations

Committee to the Board, the preferred candidate would meet

with each existing member of the Board.

Induction

Working with the Company Secretary, new Directors

undertake an induction programme tailored to the needs of

the individual. However, they will generally include a number

of site visits and meetings with members of the Executive

Committee, key employees and advisors. Site visits include our

manufacturing sites, our distribution centre and depots. New

Directors will also be provided with a mixture of documentation

including Company publications, Board materials and some

formal information on the role and responsibilities of UK-listed

company directors.

The Group’s induction programme for newly appointed

Directors will continue to be centred on familiarisation with

the Group’s operations, key individuals and external advisors.

Group Diversity Policy

The Group promotes the importance of diversity and

adopts an Equal Opportunities Policy under which training

and career development opportunities are available to all

employees, regardless of gender, religion or race.

The Group is committed to meeting the code of practice

on the employment of disabled people and full and fair

consideration is given to disabled applicants for employment.

It aims to do all that is practicable to meet its responsibility

towards the employment and training of disabled people.

The Group welcomes, and considers fully, applications by

disabled persons, having regard to their particular aptitudes

and abilities. It is also the Group’s policy to retain employees

who may become disabled while in service and to provide

appropriate training.

Non-Executive tenure as at 24 December 2022

8 976543210

Karen Caddick

Geoff Drabble

Andrew Cripps

Debbie White

Peter Ventress

Louise Fowler

Years

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Nominations Committee report continued

Senior management succession

The Committee received regular updates regarding senior

management

succession planning. These updates included

the planning and processes involved with the appointment

of a new Trade Director. Further detail may be found below.

Trade Director

Following an extensive search over a number of years, the

Board has appointed Stuart Livingstone as Trade Director.

An Executive Committee role, the Trade Director will take over

key parts of Andy Witts’ Chief Operating Officer: Trade role,

following a handover during 2023 and will be responsible for

the day to day running of the depots thereafter.

Stuart has extensive operational experience in multi-site and

trade businesses. His former roles include: Operations Director

at Pets at Home and Director of Retail at Screwfix. Stuart will

join Howdens in the second quarter of 2023.

1 The definition of ‘senior management’ for this purpose is defined in footnote 4 of the 2018 UK

Corporate Governance Code as ‘the executive committee or the first layer of management

below board level, including thecompanysecretary’.

Succession continued

Andy Witts will remain in the business and will take on an

oversight and advisory role as Chairman of Howdens’

international businesses. In this role, Andy will be able to

provide counsel to our maturing French and Belgian business

as well as the fledgling Irish business. He will also support the

CEO on exploring further international opportunities.

Group HR Director

At the end of 2022, Kirsty Homer, Group HR Director, decided

to leave Howdens. During her two years in the business, Kirsty

made a significant impact at Howdens and we wish her well

for the future. Guy Eccles has been appointed as interim

HR Director on a temporary basis. Guy has extensive HR

leadership experience in large multinational organisations and

previously held the interim Group HR Director role at Howdens

between April 2020 and August 2021.

The Nominations Committee will continue to work with the

CEO and interim Group HR Director on senior management

succession and development in 2023.

Case study

Chairman Succession

We reported in the 2021 Nominations Committee report

that the succession process for the appointment of a new

Chairman of the Board was at an advanced stage and

that an announcement regarding the appointment of a

successor to Richard Pennycook would be made in due

course. In March 2022, Howdens announced that Peter

Ventress would be appointed to the Board on 1 July 2022 as

Chairman Designate and Non-Executive Director and would

assume the role of Chairman from 17 September 2022.

Whilst the appointment process was provided in some

detail in out 2021 report, it was incomplete and details

regarding the new Chair’s induction into the business were

not provided (as they had not been finalised). Induction

processes are vital for any new employee but particularly

so for individuals who have core decision making

responsibilities which affect the business as a whole.

With that in mind, the Nominations Committee

recommended a short handover period between the

new and incumbent Chairman to allow the new Chair to

observe how the Board and its Committees operated

before having the responsibility for chairing the meetings.

It was however agreed that too long a transition period

could lead to a lack of clarity on where the Board would

look for direction and therefore a two-month handover

period was thought most appropriate.

Following his appointment to the Board, Peter received

a bespoke induction to the business. Howdens is not

a business that can be learned by reading minutes,

it is a business that requires an acute sense of feel.

As well as depot visits, Peter visited key manufacturing

facilities and warehouses, meeting employees

andsenior managers from the business.

He received a presentation of the Group’s strategic plans

(which had been presented to the Board earlier in the

year) from the Executive Committee and he attended a

number of operational sites. Detailed updates on product,

design, innovation and sourcing were provided as well as

updates (and visits where appropriate) on key strategic

initiatives such as Howdens Work Surfaces. Peter’s first

Board meeting was in France, allowing him access to

the international senior management team and French

depotnetwork.

In recognition of his key governance responsibilities,

Peter received detailed information concerning Board

processes and Group structures. He was given unfettered

access to management responsible for governance

without other senior management present, including the

Company Secretary, Head of Internal Audit and Risk, and

Director of Investor Relations. Peter also met with the

Board’s advisors (brokers, lawyers, actuaries, external

communications and remuneration consultants) who

regularly update the Board and its Committees.

Perhaps most importantly, Peter was able to participate in

the activities that help to define Howdens’ unique culture.

This included observing a Regional Board meeting prior to

peak autumn trading and attending recognition events for

depot management and senior sales management.

Peter will continue his induction into Howdens during 2023

with further events and meetings scheduled. He is keen

to meet with shareholders during the year to share his

observations of the business and to discuss his plans for

the Board going forwards.

2824 2620 2216 1812 144 620 8 10

Executive CommitteeExecutive Directors

Years

Company Tenure Executive Committee Tenure

Andrew Livingston

Paul Hayes

Company and Executive Committee tenure as at 24 December 2022

Julian Lee

Richard Sutcliffe

Andy Witts

Theresa Keating

Mark Slater

David Sturdee

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Evaluation

Nominations Committee report continued

Methodology

The process is outlined below:

• The review of the Howdens Board was conducted following

briefings from the Chair, CEO and Company Secretary.

• Observation of the Board and Committee meetings on

19November 2022.

• Interviews were conducted with all members of the Board

and the Company Secretary to consider their views.

• The conclusions of the evaluation, including the

observations and recommendations were presented

to the Chairman.

• The detailed report and main observations were presented

to the Nominations Committee in February 2023 by the

Chairman, and a discussion, with Lisa present, is planned

for a later meeting.

In line with the Board’s policy to undertake an external Board effectiveness review every three years, and following the 2020 and

2021 reviews which were undertaken by the Senior Independent Director with support from the Company Secretary, the 2022

Board evaluation was conducted by Lisa Thomas of Independent Board Evaluation (IBE)

, an external third-party consultant. The

evaluation took a light touch approach, given the Chair’s recent appointment to the Board and Board members were asked to

focus their comments on the main areas for improvement. A fuller review of the Board’s responsibilities will be carried out later

inthe three-year cycle.

Evaluation areas of focus

Conclusions and recommendations

The feedback from the Board was positive with the majority

stating that the Board was effective, supportive and doing well

but some suggest areas for improvement, considered below,

with some members of the Board highlighting that the Board

remained in transition following the change of Chair.

The focus and balance of the agenda in 2022 was rated as

‘good’ and meetings were considered to be well organised.

Boardroom culture was described positively and the

relationship with the senior team was supportive and

transparent. In addition, there was high confidence in how the

Board is tackling the commercial agenda and universal Non-

Executive membership of the Committees of the Board was

considered helpful and efficient.

Boardroom culture and focus Board resources

Advisors to the Board

Papers and presentations

Chair succession

Board meetings

Relationship with senior management

Governance, compliance,

and risk management

Board composition and succession

Strategy

Recommended areas for development and actions

going forward

• People. Additional focus on the people agenda at the

Nominations Committee could help management better

realise talent pipeline and diversity opportunities. More

data in the Board packs could be provided to assist with

the oversight of a strong company culture, and initiatives

to reboot Employee Engagement at Board level following

the pandemic, including NED engagement visits, should be

encouraged.

• Pay. Some Remuneration Committee processes should

be reviewed following the approval by shareholders of

theDirectors remuneration policy in 2022.

• Board composition and culture. A lack of diversity of

background at Board and senior management level was

considered and would need to be addressed through a

phased transition process. The Board would also be open

tomore optionality in the debate of issues and welcome

more diverse input.

Influence on Board composition

Members of the Board discussed the recommendations of

the Parker and FTSE Women Leaders Reviews. In 2023, the

Nominations Committee will continue its focus on succession

planning and will ensure that when it looks to recommend new

appointments, that the process has been inclusive of not only

a broad range of mindsets, but also a variety of backgrounds,

including race, ethnicity and gender.

Nominations Committee evaluation

The feedback gathered indicated that the Nominations

Committee had engaged well over the year but that there were

potential areas for improvement and engagement. These

included spending more time on the people agenda, which

washighlighted as one of the main areas for development.

Senior management succession plans and the diversity

pipeline in the business were two areas where it was felt that

the Committee could add more value. The succession plan

reviews, which would be reported to the Board, would cover

long-term, contingency and business-as-usual succession

matters, whilst the pipeline discussion should focus on

diversity in senior management roles, distinct from diversity in

the wider business which could continue to be considered as a

matter for the Sustainability Committee.

In relation to Board succession, the Committee should

work on a plan for Board composition that will increase the

diversity and skills base of the Board, and likelihood of broader

challenge.

By order of the Board

Peter Ventress

Nominations Committee Chairman

6 March 2023

1 Independent Board Evaluation and Lisa Thomas do not have any other

business relationship with the Company or with any member of the Board.

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

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110 111Governance / Nominations Committee report

I am pleased to present the Howden Joinery Group Plc

Remuneration Committee report for 2022. The report has

been prepared in compliance with the requirements of the

Large and Medium-sized Companies and Groups Regulations

2013 and incorporates changes made under the updated EU

Shareholder Rights Directive (SRD II).

Using this report

We have sought to make our Remuneration Committee

report as straightforward to access as possible. The content

of the report is governed by various legislation and listed

company disclosure requirements and, on occasion, this

results in duplication of information. We have tried to reduce

this wherever possible and present the information in an

accessible and more intuitive way. The report is split into

threesections:

1. This Committee Chair’s statement

2. Summary of the Directors’ remuneration policy

3. The Directors’ remuneration report

We have divided the Directors’ remuneration report into four

parts:

Part 1 Company performance and stakeholder experience

Part 2 Application of policy in 2022

Part 3 Implementation of policy in 2023

Part 4 Additional disclosures

We believe that this format clearly differentiates each of the

relevant sections of the Remuneration Committee report,

directs users to the sections relevant to their use, and is also

fully compliant with all applicable rules.

2022

It is hard to remember a year when there has been as much

focus on pay as there has been in 2022. Rising inflation and

the subsequent cost of living crisis has caused us to rebase

our thinking on pay across the organisation. In September,

Howdens announced that it would give all UK employees

(except the most senior management) a one-off discretionary

payment of £500 per employee at a cost of c.£7m. This

payment was gratefully received by Howdens employees and

was made with total support from the Board.

During the year, the Remuneration Committee continued

to monitor changes in average FTE salaries and bonuses

across all operational and support roles to ensure that

there remained alignment on pay between our senior

management and that of the wider workforce.

We are satisfied that there remains good alignment due

to Howdens’ unique incentive culture across all roles and

when setting Executive pay, the Committee has regard to

a number of factors which include pay across the wider

workforce, CEO and gender pay gap ratios and the experience

of our shareholders. In a year where there has been so

much volatility in pricing, wages and equity markets, the

Remuneration Committee has sought to maintain a consistent

approach in line with our principles on pay.

The Committee also received updates on the wider employee

benefit landscape, including on the Group pension scheme,

where participation rates remain high, and on the all employee

share awards made under the Share Incentive Plan. It also

received an update from the Group HR Director on the Group’s

gender pay gap, data and the plans in place to address it. I am

pleased to report that, as shown in our Gender Pay Gap Report

(which can be found at www.howdenjoinerygroupplc.com/

governance/gender-pay-gap-reports) our pay gap reduced

year on year from 4.5% to 3.9%. There is clearly more that

needs to be done and the Remuneration Committee will keep

monitoring this important data point. More information on

our broader diversity and inclusion priorities can be found

on pages 65 and 145. An additional share award was also

granted to senior employees below Executive Committee level

in September 2022 (more information on this award can be

found on page 125).

I am pleased to report that the Directors’ remuneration policy

that was contained in the 2021 Remuneration Committee

report received strong support with 90.7% of shareholders

approving its adoption. The policy was updated following

consultation with our largest shareholders. A summary of the

new policy is included in this report starting on page 117. There

were no significant changes to the existing remuneration

framework or policy but some changes were made to provide

the Committee with greater flexibility going into the next

three-year cycle. As reported later on, the Committee has

already used this flexibility to incentivise and retain our strong

performing Executive team over the economic cycle.

The Committee also changed its advisor during the year. PwC

had advised the Howdens Remuneration Committee since

2007 and following the approval of the Directors’ remuneration

policy at the Annual General Meeting (AGM), it was felt an

appropriate time to refresh the advisors to the Committee.

Following a rigorous tender process, which is considered in

more detail on page 135, the Committee agreed to appoint

Korn Ferry as its advisor. I’d like to take this opportunity to

thank PwC for their support over the years and to welcome

Korn Ferry to Howdens.

As reported on page 96, the Remuneration Committee did not

consult with the wider workforce on Executive Director pay

arrangements in 2022. The Committee has safeguards in place

(as considered in this report), which ensure good alignment on

remuneration across the organisation as a whole.

Annual Remuneration

Committee Chair’s statement

It is worth remembering that all eligible employees with shares

in the Share Incentive Plan, which is the significant majority

of UK employees given that Free Shares are granted to all

UK employees each year, have a de facto say on Executive

Director pay when such matters are considered at

general meetings.

In line with the 2022 AGM, I will be presenting a summary

of the work of the Committee in 2022 at the 2023 AGM on

4 May 2023.

2022 reward outcomes

Annual bonus

For the 2022 annual bonus, performance was based on

the delivery of both profit and cash flow targets. For the full

year we have reported an increase in sales of 10.8% and

an increase in profit of 4.0%. These results are particularly

impressive given the strong performance of the business

in 2021.

This strong financial performance meant that full year profit

before tax (PBT) and cash flow were above our maximum

outperformance targets resulting in a bonus of 150% of salary

for our Executive Directors.

Performance Share Plan (PSP)

The 2020 PSP introduced a relative total shareholder returns

(TSR) measure for the first time in addition to the existing

three-year PBT growth measure.

As reported in the 2020 Remuneration Committee report,

the original weighting of the award was to be 67% for PBT

growth and 33% for the TSR measure. However, given the

uncertainty caused by the COVID-19 pandemic in H1 2020,

the Remuneration Committee initially delayed the grant of

the 2020 PSP and later that year agreed that the weightings

of the two performance measures would be reversed for

2020 only, with PBT growth carrying a 33% weighting and

relative TSR carrying a 67% weighting. The rationale for this

was that relative TSR provided a more robust measure of

management’s performance over the three-year period given

the extreme levels of uncertainty around lockdowns and

absolute trading performance.

To determine TSR performance, Howdens is ranked against

a comparator group of similar sized companies, those being

50 above and 50 below Howdens by market capitalisation in

the FTSE All Share index at or shortly before the start of the

performance period (excluding Investment Trusts). There is

zero pay out for below median performance and threshold

vesting at 15% of the maximum opportunity at median. 100%

of the opportunity is paid out when performance is equal

to or more than upper quartile performance and there is

straight-line vesting between the threshold and maximum

opportunities.

Howdens TSR performance during the three-year period

equated to vesting at 15% of the total opportunity for

this measure.

Remuneration

Committee report

Key activities in the year ahead

• Governance updates from advisors.

• Shareholder update by the Remuneration

Committee Chair at the AGM.

• Planning for 2024 incentives (taking into account

risk and other matters).

• Review of the Remuneration Committee Terms of

Reference.

• Approval of the 2024 Remuneration Committee

calendar.

2022 meeting attendance

Karen Caddick (6/6)

Andrew Cripps (6/6)

Geoff Drabble (6/6)

Louise Fowler (6/6)

Debbie White (6/6)

Karen Caddick

Remuneration Committee Chair

Howden Joinery Group Plc / Annual Report & Accounts 2022

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Governance

112 113

Remuneration Committee report

Governance / Remuneration Committee report112

Remuneration Committee report continued

PBT performance targets for the period required 5% per

annum PBT growth to achieve threshold vesting and 15% per

annum PBT growth to achieve maximum vesting. The 2020

PSP performance was measured to FY 2022 and, over the

three-year period, PBT increased by 15.9% per annum,

which equated to vesting at 100% of the total opportunity

for this measure.

In aggregate, the 2020 PSP will vest at 43% of the

maximum opportunity.

2023 reward and incentives

In December 2022, I wrote to our largest shareholders to

seek their feedback on our proposals for the operation of

the Directors' remuneration policy in 2023. Whilst all of

our proposals were in keeping with our approved policy,

we acknowledged the need to balance the views of our

shareholders with our ambitions to retain and incentivise

a strong performing Executive team over the economic

cycle and to live into our remuneration philosophy to pay

above-market levels of reward for above-market levels

of performance. We have listened to our shareholders

throughout this feedback process and have set out our

proposals for 2023 below.

Salary

Salary increases for the Executive Directors will be in line with

the wider workforce. These will be effective from 1 January

2023, the timing of which is also aligned to increases for the

wider workforce.

Whilst the Committee is mindful of the external guidance

to consider salary increases for executive directors below

the rate of increases given to all employees, the salaries of

our CEO and CFO are currently c.10% below the mid-market

level for companies of a broadly similar average market

capitalisation and therefore we believe that it remains

appropriate to increase their salaries in line with the wider

workforce. As mentioned earlier in this statement, the

Committee has been monitoring the Company’s approach

to the impact of the cost of living crisis on employees and

is satisfied that both the annual salary review and one-off

payments are proportionate.

Annual bonus

Under the updated policy approved in 2022, we increased

the normal maximum policy limit under the annual bonus to

200% of salary for Executive Directors, although there was

no change to the operation of policy of 150% of salary for

both Executive Directors for the 2022 financial year. Having

reviewed the position, taking into account market data for

companies that operate in the same or similar industries

and UK listed companies of a similar size and complexity, the

Committee is increasing the annual bonus opportunity for

both our Executive Directors to 200% of salary.

The Committee is fully aware of investor concerns regarding

benchmarking-led increases; however, we believe this

increase is necessary to correct the significant gap to market

in total remuneration opportunity and to reflect the continued

growth of the business. In the 2021 Directors’ Remuneration

report we committed to consulting with shareholders if we

were considering increasing the level of bonus opportunity

above 150% of salary and we did this prior to reaching our

final conclusion. Without this change, we believe that a

significant increase in base salary would be required to meet

our remuneration philosophy of paying above market levels of

reward for above market levels of performance.

For the 2023 annual bonus, we replicated the methodology

of PBT and cash flow measures used in the 2022 annual

bonus. The measures retain their previous weighting of

85% of maximum opportunity for PBT and 15% of maximum

opportunity for cash flow. This maintains the focus on profit in

incentives and alignment with the depots, whilst maintaining a

healthy stretch between target and maximum bonus levels to

ensure strong shareholder alignment. The Committee has set

sufficiently stretching targets for the annual bonus in 2023.

PSP

Since 2020, the PSP has operated with two performance

measures: PBT and relative total shareholder returns (TSR). In

the two most recent grants, the award was based 67% on PBT

and 33% on TSR relative to a peer group of the 50 companies

above and below Howdens ranked by market capitalisation.

Having reviewed these two metrics considering the Group’s

strategic plan and key priorities, the Committee is proposing

the addition of the following metrics:

• Return on Capital Employed (ROCE) (10% weighting) – to

incentivise management to generate a high level of returns

and balance this with capital allocation effectively as they

invest to deliver future growth plans. The range we set will

reflect a combination of analyst consensus estimates and

internal forecasts; and

• Environmental measure(s) (10% weighting) – as part

of the policy review, the Committee introduced greater

flexibility under the PSP to allow the use of non-financial

measures, such as ESG related measures, for up to 25%

of the maximum opportunity. The Committee believes

that it is the right time to introduce such a measure at

10%, which will have a range of quantitative, externally

assessed targets aligned to our stated goals of carbon/

waste reduction.

The introduction of these new measures will reduce the

PBT weighting to 60%, but it will remain the largest part of

the performance measures. PBT is the core performance

metric used throughout the business, from our depot teams

through to Executive Directors. We will retain the same TSR

performance condition with a 20% weighting. The new ROCE

metric and the new Environmental metric will make up the

remainder of the award.

Annual Remuneration Committee Chair’s statement continued

Whether the Committee exercised

discretion for the incentive period

ending 24 December 2022

The Committee considered the financial performance

for the incentive period ending 24 December 2022. PBT

for the year was £405.8m and cash flow was £498.0m.

Three-year PBT increased by 15.9% per annum and

relative TSR for the period was 'median'. The Committee

considered whether the incentive outturns projected for

the 2022 annual bonus and 2020 PSP were proportionate

to financial and relative TSR performance. It also

considered whether there were any other external

factors it was aware of that would make decreasing the

payments under these awards appropriate.

In reaching its conclusion, the Committee considered

the remuneration experience structures and policies for

the workforce as a whole in 2022, the relative ratios of

Executive and employee reward, continued alignment

to shareholder value, as well as the predictability and

proportionality of the incentives, and their ongoing

alignment to culture. The Committee took all of these

matters into consideration and agreed that the vesting

in full of these awards without adjustment or withholding

was the right overall outcome.

The Committee has also concluded that the PBT target range

should reflect a combination of analyst consensus estimates,

internal forecasts and our long-term strategic goals. This

means we will be moving away from the automatic use of

the prior year PBT figure as the base for targets for the 2023

and future grants. This latter approach does not produce

meaningful targets in periods of volatility as they can end up

being too low or too high as we have seen in respect of the

2021 and 2022 grants. The new approach seeks to ensure

that there is clear alignment between vesting outcomes

and performance and reduces the risk of a 'boom and bust'

cyclical payment cycle.

The Committee considers this mix of measures to be

appropriate as the Group’s focus on profitability is maintained,

which is consistent with Howdens’ culture, whilst adding

ROCE to focus on maintaining strong returns on capital and

an environmental measure to reflect a very important part

of our strategy. The TSR element continues to provide an

important alignment with the shareholder experience over

theperformance period.

To ensure that our remuneration philosophy is upheld, the

Committee will continue to ensure that all performance targets

are suitably stretching for the level of remuneration available

within the context of our internal expectations and external

forecasts. Further details of the measures, targets and

weightings are set out on pages 130 and 131 of this report.

No changes are proposed to long-term incentive opportunity

for 2023, and therefore the CEO will receive an award

equivalent to 270% of salary and the CFO will receive an

award of 220% of salary.

Pensions

Since May 2022, both Executive Directors' pension benefits

have been aligned with the wider workforce. This was in

line with the Committee’s commitment that there would be

alignment by the time of the Company’s next policy cycle.

The Directors' remuneration policy provides that new

Executive Directors will only participate in the Company’s

pension arrangements with contributions in line with those

ofthe wider workforce.

Senior management and the wider workforce

In addition to the Executive Directors, the Howdens

Remuneration Committee also sets remuneration for senior

management. We classify ‘senior management’ as members

of the Executive Committee (excluding Executive Directors), the

Company Secretary and the Head of Internal Audit and Risk.

During the year, the Committee agreed in principle to review

the long-term incentive awards granted to senior management

grades below Executive Committee level. More information

on the new incentive structure for this group can be found on

pages 119 and 125.

The Committee also received updates on all-employee

remuneration related policies in order to provide the context

for, and to ensure alignment with, the policy on Executive

Director remuneration. In 2019, the Committee adopted

a dashboard in line with Provision 33 of the UK Corporate

Governance Code, which shows some of the key internal and

external measures that the Committee members are aware of

when determining Executive Director and senior management

remuneration (further detail on the dashboard may be found

on page 126).

I hope the information presented within this report provides a

clear explanation as to how we have operated our Directors'

remuneration policy over 2022 and how we intend to implement

it for 2023. We continue to be committed to an open and

transparent dialogue with our stakeholders, and the Committee

would welcome any feedback or comments you have on this

report, our policy or how we implement the policy in 2023.

Karen Caddick

Remuneration Committee Chair

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114 115Governance / Remuneration Committee report

Summary of the Directors’ remuneration policy

Fixed Variable

Howdens’ Directors' remuneration policy, as set out in our 2021 Annual Report and Accounts, was approved by shareholders at our

2022 AGM. Set out below is a summary of that policy, how that policy links to strategy, and consideration of some of the factors the

Committee addressed when formulating the policy. How the policy has been applied during 2022 and will be applied during 2023

can be found on subsequent pages in the report.

The full Directors' remuneration policy can be viewed at www.howdenjoinerygroupplc.com/governance/remuneration-policy.

Executive Directors

The table below sets out the key components of Executive Directors’ pay packages, including why they are used and how they

are operated in practice.

Remuneration is benchmarked against rewards available for equivalent roles in a suitable comparator group. In addition to

benchmarking, the Committee considers general pay and employment conditions of all employees within the Group and is

sensitive to these, to prevailing market conditions, and to governance requirements.

Element and how

it supports our

strategy Operation Opportunity

Performance

measures

Base salary

Recognises the

market value of

the Executive

Director’s

role, skill,

responsibilities,

performance and

experience.

Salaries are reviewed

annually, and are effective

from 1 January each

year. Salaries will not be

changed outside of the

annual review, except for in

exceptional circumstances,

such as a mid-year change

in role.

Increases will normally be only for inflation and/or in line with the

wider employee population.

Salaries are set with consideration of each Executive Director's

performance in role and responsibilities, and within a range defined

by a market benchmark derived from companies of a comparable

size operating in a similar sector. The peer group used is reviewed

whenever benchmarking is performed, and the Committee applies

judgement in identifying appropriate peer group constituent

companies. The individual’s level of total remuneration against the

market is considered at the same time.

Reviews will also take into account the performance of the

individuals, any changes in their responsibilities, pay increases for

the wider workforce and internal relativities.

2022 and 2023 salary levels are detailed on page 130.

None.

Benefits

Provides a

competitive level

of benefits.

Howdens pays the cost

of providing the benefits

on a monthly basis or as

required for one-off events.

Benefits are based upon market rates and include receipt of a

car allowance, health insurance and death-in-service insurance

payable by the Company.

None.

Share award grants

• SIP Free Shares grant to all eligible UK employees approved

• PSP grant to Executive Directors and senior management

Committee meeting

• Workforce earnings analysis

• LTIP leaver treatment

Committee meeting

• Shareholder feedback on proposed Directors’ remuneration

policy

• 2022 incentive considerations (including workforce reward,

shareholder alignment, CEO pay ratio and gender pay gap)

• Governance update

• Draft 2021 Directors’ remuneration report

• 2022 share awards planning

• Committee advisor review

• Chair fee

AGM

• Directors' remuneration policy approved by shareholders

• 2021 Directors' remuneration report approved by shareholders

Committee meeting

• Workforce pensions communications

• Gender pay gap reporting

• Governance update

• Committee advisor review

Shareholder communication

• Remuneration Committee Chair communication with

shareholders regarding proposed operation of policy in 2023

Committee meeting

• 2023 incentives

• Executive compensation review

• Update on outstanding awards

• Risk and rewards consideration

• 2023 Remuneration Committee calendar

• Review of Committee’s terms of reference

Committee meeting

• Investor feedback on proposed Directors’ remuneration policy

• Executive Director and senior management salary review

Shareholder Communication

• Remuneration Committee Chair communication with

shareholders confirming proposed changes to new Directors'

remuneration policy following shareholder feedback

January

February

May

July

December

November

April

Remuneration Committee report continued

Annual Remuneration Committee Chair’s statement continued

Share award grants

• Additional conditional share award grant for senior

management approved (excluding Executive Committee

and Executive Directors)

September

2022 Remuneration Committee activity

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116 117Governance / Remuneration Committee report

Element and how

it supports our

strategy Operation Opportunity

Performance

measures

Annual bonus

Incentivises

annual

performance over

the financial year.

Deferral links

bonus payout

to share price

performance over

the medium-term.

Performance is assessed annually against targets made up of

at least 75% financial metrics.

At least 30% of any bonus earned is deferred into shares.

Shares are paid out on the second anniversary of deferral date.

The Committee has the discretion to adjust the bonus outcome

in light of overall underlying performance. Any adjustment

made using this discretion will be explained in the following

Annual Report on Remuneration.

Payment is subject to continued employment.

Malus provisions apply for the duration of the performance

period and to shares held under deferral.

Clawback provisions apply to cash amounts paid for two years

following payment. Therefore clawback and/or malus will

operate on the award for a total period of up to two years after

the performance period.

Clawback may be applied in the following scenarios:

• material misstatement of accounts;

• erroneous assessment of a performance target;

• where the number of plan shares under an award was

incorrectly determined; or

• gross misconduct by a Director.

The threshold for the

annual bonus will be

dependent on the

individual measures used

each year. For 2023, the

annual bonus will be based

on PBT and cash flow, with

threshold payout being

20% of salary.

The maximum opportunity

under the annual bonus is

200% of salary.

For FY 2023, the annual

bonus level will be

increased to 200% of

salary, with the position

reviewed each year.

For 2023 the

annual bonus will

be based on PBT

and cash flow

measures.

The Committee

retains the

flexibility to

use alternative

measures during

the life of this

policy, subject to

at least 75% of

the bonus being

based on financial

metrics.

Performance Share Plan (PSP)

Focuses

management

on longer-term

financial growth

than addressed

by the annual

bonus. Long-

term financial

growth is key to

the generation of

shareholder value.

Executives have the opportunity to participate in the PSP on an

annual basis. The PSP operates over a three-year vesting cycle.

Under the PSP, awards will generally be granted towards

the beginning of the performance period and vest based on

performance over the following three-year performance period.

Malus provisions apply for the duration of the vesting period.

The Committee has the discretion to adjust the PSP outcome in

light of overall underlying performance. Any adjustment made

using this discretion will be explained in the following Annual

Report on Remuneration.

Vested awards are subject to a two-year holding

period following vesting, during which no performance

measuresapply.

Clawback provisions apply for the duration of the holding

period, through which vested awards maybe reclaimed in the

event of:

• material misstatement of accounts;

• erroneous assessment of a performance target;

• where the number of plan shares under an award was

incorrectly determined; or

• gross misconduct by a Director.

No dividends accrue on unvested shares.

The threshold for the PSP

will be 15% of maximum.

This may be amended

by the Committee

dependent on the

maximum opportunity

in a givenyear.

The maximum opportunity

under the PSP is 270%

of salary.

For 2023, the

PSP will be based

on PBT growth,

relative TSR,

return on capital

employed, and

an environmental

measure.

The Committee

retains the

flexibility to

use alternative

measures during

the life of this

policy, subject

to at least 75%

of the PSP being

based on financial

metrics.

Summary of the Directors’ remuneration policy continued

Remuneration Committee report continued

Element and how

it supports our

strategy Operation Opportunity

Performance

measures

Performance Share Plan (PSP) continued

Shareholding

requirement

strengthens

alignment of

interests between

participants and

shareholders.

Executive Directors are expected to retain vested shares from

deferred bonus and long-term incentive awards (net of income

tax and national insurance contributions) until they reach the

minimum requirements.

Unvested deferred bonus and long-term incentive shares are

not taken into account. PSP shares within a holding period are

counted towards the requirement.

Executive Directors will be

required to retain 100%

of their shareholding

requirement (i.e. 200% of

base salary or full actual

holding if lower) for two

years post-cessation

from the Board of Howden

Joinery Group Plc.

Pension

Provides

competitive long-

term savings

opportunities.

Executive Directors will be entitled to participate in the Howdens Retirement Savings Plan

with contribution rates in line with the wider workforce. The level of salary supplement is

aligned to the maximum pension benefit available to the Executive Director.

None.

All-employee share incentive plan

To encourage

employee share

ownership.

Executive Directors are able to participate in the tax-

advantaged Share Incentive Plan available to

all eligible UK employees.

The maximum

participation levels

will be set based on

the applicable limits

set by HMRC.

None.

Remuneration policy for other employees

The remuneration policy described above applies specifically to Executive Directors of the Group. However, the Remuneration

Committee believes it is appropriate that all reward received by senior management is directly linked to the performance

of the Company and aligned with shareholder value. Accordingly, Executive Committee members participate in the same

incentive schemes as the Executive Directors, at a reduced level, to ensure alignment between the leadership team and with

ourshareholders.

Below Executive Committee level, certain senior management grade participate in a similar annual bonus plan that is linked to

PBT and cash flow. The promotion of employee share ownership is also cascaded through all tiers of management. From 2023,

a deferred bonus share arrangement will replace the PSP for these employees. Given the variable pay-outs of the LTIP in recent

years and the increasing complex measures being introduced for the Executive award, it was felt that an alternative structure

would be more effective, providing a greater level of understanding and engagement, and therefore retention, among this cohort

of employees (further information about incentives below the Executive Committee level may be found on page 125). Free shares

grants are made at a reduced level to a wider population within Howdens that do not use performance conditions to encourage

share ownership throughout the Company. Employees can also purchase additional shares in the Company in a tax efficient way

through our Buy As You Earn scheme, which operates under the Share Incentive Plan.

Fixed Variable

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Non-Executive Directors' remuneration policy

The Group’s policy on Non-Executive Director (NED) and Chairman fees and benefits is set out below.

Element and how

it supports our strategy Operation Opportunity Performance Measures

Fees

To attract NEDs who

have a broad range

of experience and

skills to oversee the

implementation of

ourstrategy.

The fees for the Non-Executive

Directors are determined

by the Chairman and Chief

Executive and approved by

the Board.

The fee for the Chairman

is determined by the

Remuneration Committee

while the Chairman is absent.

No other services are

provided to the Group by

Non-Executive Directors.

Fees for Non-Executive Directors are set out

in the statement of implementation of policy

on page 130.

The fees reflect the time commitment and

responsibilities of the roles. Accordingly,

committee chairmanship, Senior Independent

Director (SID) and the Non-Executive Director

responsible for employee engagement fees are

paid in addition to the NEDs’ basic fee. Committee

chairmanship fees apply only to the Audit and

Remuneration Committees. The Chairman

receives no fees in addition to the Chairman’s fee.

Fees may be reviewed every year, and are set

within a range defined by a market benchmark of

comparably sized companies and having regard

to the base salary increase payable to the wider

workforce. Benchmarking is typically undertaken

every three years.

NEDs are not eligible

to participate in any

performance related

arrangements.

Benefits

To attract NEDs who

have a broad range

of experience and

skills to oversee the

implementation of

ourstrategy.

Non-Executive Directors are entitled to receive expenses in respect of reasonable

travel and accommodation costs.

None.

Underlying principles

When determining the Directors' remuneration policy, the Committee was mindful of its obligations under Provision 40 of the

UK Corporate Governance Code to ensure that the policy and other remuneration practices were clear, simple, predictable,

proportionate, safeguarded the reputation of the Company and were aligned to Company culture and strategy. Set out on the

following page are examples of how the Committee addressed the factors.

Summary of the Directors’ remuneration policy continued

Remuneration Committee report continued

Fixed Variable

Clarity

Remuneration arrangements

should be transparent and

promote effective engagement

with shareholders and

the workforce.

In 2021, the Company invited its principal shareholders and shareholder representative groups

to consulton the updated Directors' remuneration policy and received supportive feedback.

Thedraft policy was updated following feedback from shareholders. In 2022, the Company

contacted its principal shareholders to consider various changes to remuneration practice

thatwere permitted under the policy.

All UK employees are awarded Free Shares in the Company through the Share Incentive Plan

(SIP). UK employees are also able to participate in a partnership and matching shares programme

which also operates through the SIP. All employees with shares held in the SIP trust are able to

exercise voting rights on those shares and vote on the Directors' remuneration report and the

Directors' remuneration policy (when applicable) at general meetings of the Company. Further

information on workforce engagement can be found on pages 90 and 91.

Simplicity

Remuneration structures

should avoid complexity and

their rationale and operation

should be easy to understand.

The Directors' remuneration policy has received positive feedback from stakeholders in relation

to its simplicity.

The Committee’s approach to performance measures had always been that they must be

understandable for participants in the schemes in order to ensure they are effective.

Risk

Remuneration arrangements

should ensure reputational

and other risks from excessive

rewards, and behavioural risks

that can arise from target-

based incentive plans, are

identified and mitigated.

Whilst the Committee has consciously not set an absolute annual quantum on Executive

remuneration, this is something that the Committee will keep under review. The total pay of

the Executive Directors is considered by the Committee as well as pay ratios with the wider

workforce and shareholder returns.

Predictability

The range of possible values

of rewards to individual

directors and any other limits or

discretions should be identified

and explained at the time of

approving the policy.

The range of possible values of rewards for the Executive Directors is considered on page 129.

The range of possible values of rewards for the Executive Directors was also communicated in

the 2021 Remuneration Committee report when a revised Directors' remuneration policy was

communicated to shareholders.

The Committee has a wide range of discretion in relation to variable pay awards, new joiners,

and leavers, which were identified and explained when the policy was approved.

Proportionality

The link between individual

awards, the delivery of strategy

and the long-term performance

of the company should be clear.

Outcomes should not reward

poor performance.

The Committee remains confident that the awards used to ensure continued delivery of strategy

and long-term performance are working as intended and that they are delivering outcomes in

line with our wider stakeholder experience.

In 2022, the annual bonus paid out in full following delivery of exceptional PBT results in

challenging market conditions, exceeding market expectations. However, despite the strong

profit performance, the vesting percentage for the long-term incentive award was 43% due to

challenging share price performance in the final year of the award. This impacted the outturn of

the relative TSR measure resulting in a lower vesting percentage.

Alignment to culture

Incentive schemes should drive

behaviours consistent with

company purpose, values and

strategy.

The Committee remains confident that the incentive schemes operated under the Directors'

remuneration policy are aligned with purpose, values and strategy.

Howdens’ staff are paid on the performance of their local depot or on the profitability of the

Group as a whole. This has created an autonomous, entrepreneurial, profit-focused culture

and is reflected in the heavy weighting given to profit measures in our incentive schemes for

Executive Directors and senior management.

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In this opening section of the Directors’ remuneration report, we detail some of the considerations the Committee has

regard to when implementing the Directors' remuneration policy. Contained in this section are specific disclosures on

Group performance, as well as comparative disclosures on the relative importance of spend on pay, historic CEO single

figure, CEO ratio and all-Director remuneration relative to average employees.

Profit before tax (PBT)

The graph below illustrates the Company’s historic

PBT performance.

Howdens historic PBT (£m)Howdens historic TSR

Total shareholder return (TSR)

The graph below illustrates the Company’s TSR

performance relative to the constituents of the FTSE 250

(excluding investment trusts) of which the Company is a

constituent. It shows that over the past 10 years Howdens

has generated significantly higher returns than the FTSE

250 (excluding Investment Trusts).

Group performance

Directors’ remuneration report

Part 1: Company performance and stakeholder experience

Remuneration Committee report continued

* See consolidated income statement on page 164.

** Net cash flow from operating activities is the definition used for the annual bonus scheme (see page 130).

Relative importance of spend on pay

The graph below sets out the change in the Group’s total remuneration spend from 2021 to 2022 compared to

the total returns to shareholders of the Group and the two incentive performance measures PBT and cash flow.

Director pay

Our corporate performance and remuneration

Historic single figure

The table and graph below show the historic CEO single figure and incentive payout levels. They show that, with the

exception of2020, the annual bonus has performed strongly and that long-term incentives have reflected the challenging

marketconditions.

The maximum bonus opportunity reduced from 200% of basic salary to 150% following the approval of the Directors’

remuneration policy by shareholders in May 2016.

Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

CEO single figure (£'000) 5,168 6,221 5,225 3,098 1,268 2,569 1,391 816 3,951 2,373

Annual bonus (% of maximum) 63% 64% 56% 48% 35% 75% 76% 0% 100% 100%

LTIP vest (% of maximum) 89% 100% 100% 100% 0% 0% 0%

0% 100% 43%

Andrew Livingston was appointed as CEO in April 2018 and therefore he was not granted an award under the LTIP in 2017.

250

400

450

350

300

150

200

100

Howdens

FTSE 250 (excluding Investment Trusts)

2012 2013 201620152014 20 17 2018 2019 2020 2021 2022

100

700

600

500

200

300

400

450

500

550

650

600

300

350

150

100

250

200

Total spend on pay

£624.1m

PBT*

+4.0%

Cash flow**

-5.9%

£m

Total returns to shareholders

+98.8%

£365.0m

22 2221

£405.8m

£390.3m

CEO single figure

Annual bonus (% of maximum) LTIP vest (% of maximum)

Single Figure (£’000s)

% of maximum

1,000

2,000

3,000

6,000

7,000

5,000

4,000

100

2016 2017 20192018201520142013 2020 2021 2022

£133.9m

£188.8m

£219.6m

£237.0m

£232.2m

£238.5m

£260.7m

£185.3m

£390.3m

£405.8m

2013 201620152014 20 17 2018 2019 2020 2021 2022

£529.0m

£498.0m

£553.3m

£183.6m

+12.8%

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Directors’ remuneration report

Part 1: Company performance and stakeholder experience continued

CEO pay ratio table

Howdens has calculated the CEO pay ratio for 2022 in line with the updates to the Directors’ Remuneration Reporting

Regulations. The data used to calculate the CEO pay ratio was accurate as at 31 December 2022. In accordance with section 17

of The Companies (Miscellaneous Reporting) Regulations 2018, method A was used in the calculation of the pay ratios; ranking

the pay and benefits of all our UK employees for the relevant financial year to identify the 25th, 50th, and 75th percentile-ranked

employees and using the pay and benefits figures for these three UK employees to determine the pay ratios at each quartile.

Method A has been used as it has been identified by the Department for Business, Energy and Industrial Strategy in its guidance

as the most statistically accurate method for identifying the pay ratios.

Year Method 25th percentile pay ratio 50th percentile pay ratio 75th percentile pay ratio

2022 A 74:1 64:1 53:1

2021 A 135:1 113:1 93:1

2020 A 31:1 25:1 21:1

2019 A 71:1 58:1 48:1

2018 A 122:1 100:1 81:1

It should be noted that the CEO did not receive any remuneration relating to long-term incentive share awards in 2019 or 2020 as

he was appointed to the Board in 2018. He also did not receive any annual bonus in 2020 during which time all other employees

received variable performance bonus pay. The combination of these factors resulted in a lower than anticipated CEO pay ratio

in 2019 and 2020. In 2021, the CEO pay ratio increased due to the vesting in full of the 2019 long-term incentive share award. In

2022, the ratio has reduced as the 2020 long-term incentive share award will vest at 43% of maximum and the share price upon

which the award is valued is lower than in 2021.

The total pay, benefits, and salary of each employee who is the best equivalent of the 25th, 50th, and 75th ranked employee is

asfollows:

25th percentile 50th percentile 75th percentile

Total pay and benefits (FTE) £32,066 £37,105 £45,006

Salary (including overtime) (FTE) £22,450 £26,260 £32,026

The pay and benefits of employees was calculated in line with the Single Total Figure of Remuneration methodology. In our

calculations we used actual pay from 1 January 2022 to 31 December 2022. Joiners, leavers and part time employees’ earnings

have been annualised on an FTE basis (excluding any payments of a one-off nature).

Where bonus payments are made on a weekly, monthly or quarterly basis, we included payments made in the 2022

compensation year; however, for annual bonus payments, we estimated the bonus due to employees for the 2022 compensation

year (payment is due in March 2023). P11D values are based on the 2021/22 reportable values, however, they have been

annualised accordingly.

Howdens’ vertically integrated business means that our workforce is made up of a wide range of roles from kitchen designers

to skilled engineers, from warehouse staff to senior management. We work on the premise that Howdens must be worthwhile

for all concerned and our reward structures across the business are designed to reflect the levels of personal autonomy and

outperformance we expect from every individual. Our pay structures vary between roles to deliver an appropriate balance

between fixed and variable pay. Emphasis on profit in our reward structures, from the depots to the Executive Directors, helps

to provide some alignment of reward across the business.

It is a feature of our pay structure that senior management often receive a larger proportion of their total pay through incentives

and the outcome of incentives is likely to be the main cause of variability in the ratio in future years.

The Remuneration Committee is regularly updated on the benefits provided across the business and are mindful that

consistency of approach and fairness are two key principles and important drivers for change.

Case study

Review of incentives below Executive Committee level

Having a talent pipeline that is highly motivated and highly

incentivised is key to Howdens long-term success. It is this

group that provides front-line support for the Executive

Committee in delivering the strategic priorities of the

Board and it is this leadership group who will become

future Executive Committee members.

In previous years the performance measures for

incentives for our Grade 1s and 2s have been aligned to

those for members of the Executive Committee, albeit at a

lower quantum. This has generally worked well, particularly

in relation to the annual bonus where an annual stretch

target was introduced for this cohort in 2020. However,

it became apparent that the long-term incentive awards

granted to Grade 1s and 2s had not been as effective in

recent years and were not highly valued by management.

Share price movement and volatility of long-term incentive

outcomes had resulted in this group having less shares in

the Company than they would have done previously. As a

Remuneration Committee, we want to promote employee

share ownership at all levels but it is particularly important

that our most senior employees share our shareholder

experience and have skin in the game.

In September 2022, the Remuneration Committee took

steps to address this by granting an additional share

award under the existing LTIP rules. This share award to

Grade 1s and 2s was made without financial performance

conditions but was conditional upon three years

continued employment from the date of grant. At that

time, the Committee also agreed to review the long-term

incentive plan arrangements for this group for 2023.

Following the review, the Committee agreed to replace

the long-term incentive plan for Grade 1s and 2s with a

deferred bonus share award. This award replaces the PSP

and looks to provide a more consistent vesting pattern

through the trading cycle whilst providing sufficient

incentive to maximise performance.

The sole measure for the deferred bonus share award

is PBT, our most important KPI. Like the PSP, there is a

performance range with 20% of the award vesting at

the bottom of the range and a 100% vesting at stretch

target. The performance period for the award will be one

year, reduced from three years under the PSP. However,

shares under the award will be deferred for two years (in

line with the Executive Committee deferral period) during

which time dividends will be payable but employees will

not be able to sell or transfer their awards. Normal 'Good'

and 'Bad' leaver provisions will apply with shares being

retained from 'Bad leavers'.

The Committee believes that by introducing the new

award structure, it will remove some of the complexity in

measures being included in the Executive awards and will

result in more consistent outcomes and greater retention

for this group of key employees.

Whilst the work of the Committee is necessarily focused

on members of the Executive Committee, it is also

important to demonstrate that the Remuneration

Committee is actively involved in the total reward

structures of all our employees.

Remuneration Committee report continued

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Directors’ Remuneration Report

Part 2: Application of policy in 2022

In this section of the Directors’ remuneration report we set out how the Committee has executed policy for 2022.

Disclosures in this section are retrospective and where applicable are shown against prior year comparator.

All-Director remuneration relative to average employees

Listed companies are required to disclose the annual change in each director’s pay in comparison to the average change in

employee pay. This comparison is made on salary, bonus and taxable benefits and as such does not include some of the elements

disclosed under the single figure of remuneration table such as pension contribution or long-term incentives. While the SRD

II requires a listed entity to provide employee pay information for that entity only (i.e. not on a group-wide basis), a ‘Group’

comparator has therefore also been included in the table below as this provides a more representative comparison.

% change in Basic Salary % change in Benefits % change in Bonus

2021

to 2022

2020

to 2021

2019

to 2020

2021

to 2022

2020

to 2021

2019

to 2020

2021

to 2022

2020

to 2021

2019

to 2020

Average Howden Joinery Group

Plc employee remuneration

– – – – – – – – –

Average Howdens Group

employee remuneration 5% 1% 4% (9)% (15)% 9% (4)% 38% 12%

1 In the financial year ended 24 December 2022, Howden Joinery Group Plc did not employ any individuals.

% change in Basic Salary / Fees % change in Benefits % change in Bonus

2021

to 2022

2020

to 2021

2019

to 2020

2021

to 2022

2020

to 2021

2019

to 2020

2021

to 2022

2020

to 2021

2019

to 2020

Executive Directors

Andrew Livingston

3% 12% 3% 5% (85)% 84% 3% 100% (100)%

Paul Hayes

3% – – 80% – – 3% – –

Non-Executive Directors

Karen Caddick

6% 3% 18% 100% 0% (89)% – – –

Andrew Cripps 6% 3% 5% 0% 0% 0% – – –

Geoff Drabble

4% 3% 22% 0% 0% 0% – – –

Louise Fowler

3% 4% 515% 300% 0% 100% – – –

Peter Ventress

– – – – – – – – –

Debbie White 3% 4% 3% (100)% (50)% 390% – – –

Former Directors

Richard Pennycook

(26)% 2% 3% 100% 0% (100)% – – –

1 In 2021, following shareholder consultation, Andrew Livingston's salary was increased by 12%. The rationale for this increase may be found on page 105 of the

2020 Annual Report and Accounts. In 2020, Andrew also received a relocation allowance as permitted under the Director’s remuneration policy.

2 Paul Hayes was appointed to the Board on 27 December 2020 and therefore did not receive a salary, benefits, or bonus as a Director in respect of the 2020

financial year. Comparative figures cannot therefore be calculated for the periods '2019 to 2020' and '2020 to 2021'.

3 In September 2019, Karen Caddick was appointed Remuneration Committee Chair and Geoff Drabble was appointed Senior Independent Director. Geoff also

assumed additional responsibilities as the Non-Executive Director responsible for employee engagement at the beginning of 2019. The increases shown in their

Non-Executive Director fees for 2019 to 2020 are predominantly due to these changes.

4 Louise Fowler was appointed to the Board in November 2019 and did not receive a full year of fees in respect of that year. The percentage change between 2019

and 2020 was therefore substantial as the figures are not pro-rated for the purposes of the above calculations.

5 Peter Ventress was appointed to the Board in July 2022. Comparative figures cannot therefore be calculated for the periods reported above.

6 Richard Pennycook, former Non-Executive Chairman, retired from the Board in September 2022 and therefore did not receive a full year of fees in respect of

2022. The percentage decrease between 2021 and 2022 was therefore substantial as the figures are not pro-rated for the purposes of the above calculations.

Wider workforce considerations

The Remuneration Committee received updates from the Group HR Director in respect of average salary of an employee in

2022 compared to previous years for depot, manufacturing, and logistics roles. When determining the base salary, benefits

and variable pay awards for the Executive Directors and senior management, the Committee had regard to the information

contained in a Provision 33 Dashboard, which includes information such as the CEO pay ratio, gender pay gap statistics, and

thesalary, bonus, pensions, benefits and share plan arrangements available to the wider workforce.

Remuneration Committee report continued

Fixed Variable

Directors’ remuneration report

Part 1: Company performance and stakeholder experience continued

Single figure of remuneration (audited)

£000s

Fixed Variable

Total

RemunerationSalary/Fees Taxable Benefits Pension Total Fixed Bonus LTIP Total Variable

2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021

Executive

Directors:

Andrew Livingston 670 650 20 19 84 91 774 760 1,004 975 595 2,216 1,599 3,191 2,373 3,951

Paul Hayes 438 425 36 20 48 31 522 476 657 638 – – 657 638 1,179 1,114

Total 1,108 1,075 56 39 132 122 1,296 1,236 1,661 1,613 595 2,216 2,256 3,829 3,552 5,065

Non–Executive

Directors:

Karen Caddick 74 70 2 0 – – 76 70 – – – – – – 76 70

Andrew Cripps 74 70 0 0 – – 74 70 – – – – – – 74 70

Geoff Drabble 76 73 0 0 – – 76 73 – – – – – – 76 73

Louise Fowler 60 58 4 1 – – 64 59 – – – – – – 64 59

Richard

Pennycook

Retired Sept 2022

194 261 27 0 – – 221 261 – – – – – – 221 261

Peter Ventress

Appointed July 2022

162 – 0 – – – 162 – – – – – – – 162 –

Debbie White 60 58 0 1 – – 61 59 – – – – – – 61 59

Total 701 590 33 2 – – 734 592 – – – – – – 734 592

Total current Executive Director fixed vs variable pay

Notes to the single figure table

Executive Directors

Salary

Salaries will not be changed outside of the annual review,

unless there are exceptional circumstances, such as a mid-

year change in role. Increases will normally be only for inflation

and/or in line with the wider employee population. Salaries

are set within a range defined by market benchmark derived

from companies in a similar sector. Salaries for 2023 can be

found on page 130. The peer group used is reviewed whenever

benchmarking is performed, and the Committee applies

judgement in identifying appropriate peer group constituent

companies. The individual’s level of total remuneration against

the market is considered at the same time.

Taxable benefits

Benefits are based upon market rates and include receipt

of a car allowance, non-exclusive use of a driver, health

insurance and death-in-service insurance payable by

theCompany.

Pension

Both Executive Directors received a cash benefit in lieu

of pension during the year. More information about

Executive Director pension benefits can be found on

pages 115 and119.

24%36%

76%64%

Fixed

Variable

202120212022

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Remuneration Committee report continued

Fixed elements of remuneration consist of the annual salary that the Executive Director will receive for 2023, alongside their 2023 pension entitlement, and actual

benefits received in 2021/22 (as a proxy for 2023).

Annual bonus is based on a maximum opportunity of 200% of salary and an on-target opportunity of 100% of salary.

LTIP is based on a maximum opportunity of 270% of salary for Andrew Livingston and 220% of salary for Paul Hayes. The overall policy maximum is 270% of salary.

Target opportunity is calculated as 50% of maximum (135% of salary for Andrew Livingston and 110% of salary for Paul Hayes).

The ‘maximum +’ includes share price appreciation of 50%. This column is calculated on the same basis as the maximum column however includes an uplift of 50%

total over three years for the PSP.

Fixed Variable

Directors’ remuneration report

Part 2: Application of policy in 2022 continued

Annual bonus (audited)

Targets

Our annual bonus for 2022 was based on PBT and cash

flow measures subject to an aggregate maximum of 150%

of salary. The PBT and cash flow measures were weighted

as follows:

PBT component Cash flow component

Threshold £340m

(17% of salary)

£420m

(3% of salary)

Target £370m

(63.67% of salary)

£445m

(11.25% of salary)

Outperformance £400m

(127.5% of salary)

£469m

(22.5% of salary)

70% of the annual bonus will be paid in cash and 30%

of the annual bonus will deferred as shares, which will

vest two years following the deferral date (subject to

continued employment).

Outcomes for the year

The PBT figure for the year in relation to the annual bonus

is £405.8m. The cash flow figure for the year in relation

to the bonus was £498.0m. In aggregate, the Executive

Directors will receive an annual bonus of 150% of salary

for 2022.

Andrew

Livingston

Paul

Hayes

PBT (% of salary) 127.5% 127.5%

Cash Flow (% of salary) 22.5% 22.5%

Total Bonus (% of salary) 150.0% 150.0%

Total Bonus (£'000) 1,004 657

Opportunity (% of salary)Opportunity (% of salary) Target reachedTarget reached Target not reachedTarget not reached

Performance Share Plan (PSP) (audited)

Targets

The PSP awards granted from 2020 onwards have

been measured against PBT growth and relative total

shareholder returns (TSR) over a three-year period. The

PBT growth and TSR for the 2020 award was measured

between FY 2019 to FY 2022. Any shares that vest under

the PSP award are subject to a two-year post-vest holding

period for serving Executive Directors.

Outcomes for the year

33% of the 2020 PSP award was based on a PBT growth

threshold requirement of 5% p.a. and a maximum

requirement of 15% p.a. At the threshold requirement, 15%

of the PBT growth component of the award would vest.

The PBT for 2022 was £405.8m, and therefore growth on

FY 2019 was 15.9% p.a. This component of the award will

vest at 100% of maximum opportunity.

67% of the 2020 PSP award was based on a relative TSR

measure. The threshold vesting for the TSR component of

the award was where the Company was ranked 'median'

compared to the comparator group of companies. The

maximum vesting was where the Company ranked 'at

or above upper quartile'. At threshold, 15% of the TSR

component would vest. Based on performance to FY

2022, the Company was ranked 'median' compared

to the comparator group and therefore 15% of the TSR

component of the award will vest.

The overall final vesting of the 2020 PSP award is 43% of

the maximum opportunity. £45,174 of Andrew Livingston's

award is attributable to share price increases. The share

price at the date of grant was 510.40p and the three

month average to 24 December 2022, the price on which

the value of the award is calculated, was 552.35p.

Directors’ remuneration report

Part 3: Implementation of policy in 2023

In this section of the Directors’ remuneration report we set out how the Committee has implemented policy for 2023.

Disclosures in this section are forward looking. The outcome of any variable award for Executive Directors will be

reported in the Remuneration Committee report for the financial year 2023.

2023 remuneration scenarios

The remuneration package for the Executive Directors is designed to provide an appropriate balance between fixed and

variable performance-related components, with a significant proportion of the package weighted towards long-term variable

pay. The Committee remains satisfied that the composition and structure of the remuneration packages is appropriate, clearly

supports the Company’s strategic ambitions and does not incentivise inappropriate risk-taking. The Committee reviews this on

an annual basis.

The composition and value of the Executive Directors’ remuneration packages in a range of performance scenarios are set out

in the charts below. These show that the proportion of the package delivered through long-term performance is in line with our

Directors' remuneration policy and changes significantly across the performance scenarios. As a result, the package promotes

the achievement of superior long-term performance and aligns the interests of the Executive Directors with those of other

shareholders. A brief description of each remuneration scenario is set out beneath the charts.

Notes to the single figure table continued

Paul HayesAndrew Livingston

Value of package

£’000

2,000 2,5001,500

3,0015,108

4,150

2,305

815

2,491

1,400

542

1,000500

Fixed elements of remuneration Annual bonus LTIP LTIP (attributable to 50% share price appreciation)

Maximum

Maximum +

On-target

Minimum

£’000

4,000 6,0005,0003,0002,0001,0000

Maximum

Maximum +

On-target

Minimum

3,5003,000

Annual

bonus

outcome

PSP

outcome

16%

20%

35%

100%

28%

34%

23%

37%

46%

42%

19%

18%

39%

22%

100%

34%31% 17%

25%

37%

36%

41%

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Remuneration Committee report continued

Fixed Variable

Directors’ remuneration report

Part 3: Implementation of policy in 2023 continued

PBT growth – 60% weighting

PBT component

vesting schedule

PBT growth performance condition Payout level

£484m 100% of maximum

Straight-line vesting between these points

£400m 15% of maximum

Less than £400m 0% of maximum

Relative TSR – 20% weighting

Comparator group

and averaging period

for TSR performance

• Companies ranked up to 50 above and 50 below Howdens by market capitalisation in the FTSE All Share index at

or shortly before the start of the performance period (excluding Investment Trusts).

• One month TSR average for the month preceding the first day of the performance period and one month TSR

average for the final month of the performance period.

Performance

assessment

Performance against comparator group Payout level

Equal to or above upper quartile 100% of maximum

Straight-line vesting between these points

Equal to median 15% of maximum

Below median 0% of maximum

Return on Capital Employed (ROCE) – 10% weighting

ROCE component

measurement details

Calculated by dividing the Group operating profit by the average capital employed under management’s control,

expressed as a percentage. The capital employed will include investments in assets, working capital and related

balances but will exclude balances that relate to historic or long-term financing or are outside the control of

current management. Excluded items include: cash, pension deficit repair contributions, deferred tax and long-

term financing of the Group, such as lease liabilities and borrowings.

Performance

assessment

ROCE performance condition Payout level

30% 100% of maximum

Straight-line vesting between these points

25% 15% of maximum

Less than 25% 0% of maximum

Environmental measure – 10% weighting

Environmental component

measurement details

All carbon emission and waste targets to be achieved by 31 December 2025. Base year for all targets is 2021

(other than for those relating to manufacturing sites achieving or maintaining carbon neutral status).

Performance condition Payout level

Improving our carbon

intensity ratio

Year-on-year cumulative average

Scopes 1 and 2 carbon emissions

reduction, based on tCO

e per £m

4.2% p.a. reduction 33.3% of maximum

Straight-line vesting between these points

4.0% p.a. reduction 7.5% of maximum

Below 4.0% p.a. reduction 0% of maximum

Fleet emissions reduction

UK primary fleet only, based on

KG/km

15% reduction 33.3% of maximum

Straight-line vesting between these points

12% reduction 7.5% o f maximum

Below 12% reduction 0% of maximum

Achieving carbon neutral status

across manufacturing sites

Maintain certified carbon neutrality

or, in newly acquired sites, achieve

certified carbon neutrality

Four manufacturing sites 33.3% of maximum

Straight-line vesting between these points

Two manufacturing sites 0% of maximum

A target of a minimum average over three years of 99% waste avoiding landfill across UK operations will apply which, if not achieved, will result in a

downward modifier to the outcome under this Environmental measure.

Non-Executive Director fees

Fee increases from 2023 are set out in the table below. Non-Executive Director fees are generally aligned to the average increase

for the wider workforce. However, for 2023, the Non-Executive Directors have agreed to waive this increase. The only exception is

the increase to the Committee Chair fee, which had fallen behind benchmark.

Basic

NED fee

Chair

fee

SID

fee

NED Responsible

for Workforce

Engagement fee

Committee

Chair fee

2023

Annual Fee £60,250 £325,000 £10,600 £5,400 £17,000

Effective date 1 January 2023

2022

Annual Fee £60,250 £325,000 £10,600 £5,400 £13,300

Effective date 1 January 2022

1 The Chair of the Board of Directors does not receive the basic Non-Executive Director fee or an additional fee for chairing the Nominations and Sustainability

Committees.

Executive Director base salaries

Base salary increases from 2023 are set out in the table below. The rationale for the increases may be found in the Annual

Remuneration Committee Chair statement on page 114. For 2023, salary increases for the wider workforce were, on average

across the Group, 6.3% of salary.

Executive Directors

2023 2022

Salary (£'000) Effective date Salary (£'000) Effective date

Andrew Livingston 710 1 January 2023 670 1 January 2022

Paul Hayes 464 1 January 2023 438 1 January 2022

Annual bonus measures

The table below sets out annual bonus measures for 2023. Targets for these measures are considered commercially sensitive by

the Board and so are not disclosed here. Performance targets, together with achievement against them, will be set out in full in

the 2023 Remuneration Committee report.

Bonus measure Definition Performance level Pay out level

PBT Pre-exceptional profit before tax from continuing operations Threshold

Target

Maximum

17% of salary

85% of salary

170% of salary

Cash

Flow

Net cash flow from operating activities, taking into account

the efficiency with which working capital is used, and

adjusted for exceptional items

Threshold

Target

Maximum

3% of salary

15% of salary

30% of salary

Performance Share Plan (PSP) measures

Set out on the facing page are the performance measures and relative weightings for each of the measures. Detail about the new

measures introduced for the 2023 PSP may be found in the Annual Remuneration Committee Chair statement on page 114. The

maximum opportunity under the PSP is 270% of base salary for Andrew Livingston (CEO) and 220% of base salary for Paul Hayes

(CFO). The performance period is three years, measured over the relevant financial years. See page 134 for scheme interests

awarded in 2022.

The Committee agreed that for the 2023 PSP it would move away from using the prior year PBT outturn as the basis for target in

the coming year. Going forwards, the Committee will determine threshold and vesting targets by having regard to a combination

of analyst consensus estimates, internal forecasts, and our long-term strategic goals.

Under the terms of the Directors' remuneration policy approved by shareholders at the 2022 AGM, the 2023 PSP awards will be

subject to a two-year post-vesting holding period.

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130 131Governance / Remuneration Committee report

Remuneration Committee report continued

Fixed Variable

In this section of the Directors' remuneration report, more detail is provided in respect of a number of key disclosures.

These disclosures include Executive Director pension entitlements, shareholdings, external appointments and

contractual arrangements. More detail is also provided on the operation of the Remuneration Committee and AGM voting

performance.

Service contracts and letters of appointment

All Executive Directors' employment contracts are not fixed term, but have twelve months’ notice of termination on both sides.

In the event of termination by the Company, there will be no compensation for loss of office due to misconduct or normal

resignation. In other circumstances, Executive Directors may be entitled to receive compensation for loss of office which will

be paid monthly for a maximum of twelve months. Such payments will be equivalent to the monthly salary that the Executive

Director would have received if still in employment with the Company. Executive Directors will be expected to mitigate their loss

within a twelve month period of their departure from the Company.

In their service contracts, Executive Directors have the following remuneration-related contractual provisions:

• Receipt of a salary, which is subject to annual review

• Receipt of a car allowance

• Health insurance and death-in-service insurance payable by the Group

• Eligibility to participate in any bonus scheme or arrangement which the Company may operate from time to time, subject to

the plan’s rules

• Participation in the Company’s pension plan

Non-Executive Director appointments are for an initial period of three years. They are subject to re-appointment annually at

the Annual General Meeting in accordance with the UK Corporate Governance Code. Non-Executive Directors are not entitled to

any form of compensation in the event of early termination for whatever reason. Copies of the Directors’ service contracts and

letters of appointment are available at the Company’s registered office during usual business hours.

Loss of office payments or payments to past Directors (audited)

No loss of office payments or payments to past Directors were made in the year under review.

External appointments

It is recognised that Executive Directors may be invited to become non-executive directors of other companies and that exposure

to such duties can broaden their experience and skills, which will benefit the Company. Howdens allows Executive Directors and

other appropriate senior employees to accept a maximum of one external non-executive appointment outside the Company,

subject to permission from the Committee, provided this is not with a competing company nor likely to lead to conflicts of interest.

Andrew Livingston is currently Non-Executive Director of LondonMetric Property Plc, a FTSE 250 REIT. Andrew received £56,714.16

in fees in respect of his role as Non-Executive Director. Andrew held this position upon appointment. Paul Hayes does not have any

external appointments. Executive Directors may retain the fees paid to them in respect of their non-executive duties.

Total pension entitlements (audited)

Executive Directors are invited to participate in the Howdens Retirement Savings Plan (the 'Plan') or receive an amount in lieu of

membership of the Plan. More information on pension entitlements for Executive Directors can be found on pages 115 and 119

and in the Directors' remuneration policy at www.howdenjoinerygroupplc.com/governance/remuneration-policy

The table below sets out the payments made in lieu of membership of the Plan for the Executive Directors who served during the

year. No additional benefits become receivable if Executive Directors retire early.

Executive Directors

Andrew Livingston Paul Hayes

Accrued pension at 24 December 2022 (£'000) – –

Normal retirement date – –

Pension value in the year from defined benefit component (£'000) – –

Pension value in the year from defined contribution component (£'000) – –

Pension value in the year from cash allowance (£'000) 84 48

Total 84 48

Directors’ remuneration report

Part 4: Additional disclosures

Director shareholdings (audited)

In order that their interests are aligned with those of shareholders, Executive Directors are expected to build up and maintain

a personal shareholding in the Company of at least 200% of salary.

The table below sets out the total shares held together with unvested Performance Share Plan awards and those held subject

to deferral conditions. Neither of the Executive Directors held share options in the Company that were subject to performance

conditions or held share options that were vested but unexercised.

Current Executive Directors

Andrew Livingston Paul Hayes

Shareholding requirement % 200% 200%

Shareholding requirement (number of shares)

242,600 158,595

Shares owned outright (including by connected persons)

2,5

318,772 22,816

Current shareholding (% of salary)¹ 263% 29%

Guideline met Y N

Unvested deferred bonus shares 19,432 12,705

Share awards subject only to continued employment

165 118

Share awards subject to performance conditions and continued employment

676,790 250,377

1 Based on a share price of £5.5235, being the three-month average price to 24 December 2022, and basic salary as at 24 December 2022. This is calculated by

using only those shares owned outright by the Executive Directors and their connected persons at 24 December 2022 and the Executive Director’s salary at

thatdate.

2 Includes Share Incentive Plan (SIP) partnership and dividend shares.

3 Includes only SIP free and matching shares.

4 Performance Share Plan awards under the Long-Term Incentive Plan.

5 Between 24 December 2022 (the end of the period) and 6 March 2023, Andrew Livingston has acquired 42 SIP Partnership Shares. No other changes to the

Executive Directors' total shareholdings (including any holdings of their connected persons) have occurred between the end of the period and 6 March 2023.

Non-Executive Director shareholdings (audited)

There is no shareholding requirement for Non-Executive Directors.

Non-Executive Director

Karen

Caddick

Andrew

Cripps

Geoff

Drabble

Louise

Fowler

Peter

Ventress

Debbie

White

Shareholding

1,2

: 6,000 3,000 3,000 470 – 4,562

1 Including shares held by connected persons.

2 No changes to the Non-Executive Directors’ total shareholdings (including any holdings of their connected persons) have occurred between the end of the period

and 6 March 2023.

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Remuneration Committee report continued

Scheme interests awarded during the financial year (audited)

During 2022, the Executive Directors were invited to participate in the Performance Share Plan (PSP) and Share Incentive Plan

(SIP), asset out in the table below. Further information on conditional shares and SIP free and matching shares may be found in

note 23 on page 199:

Nature of award: Award of Conditional Shares under the PSP

CEO CFO

Number of shares under award 234,516 124,941

Face value of award

£1,808,000 £963,000

Performance condition

Proportion of PSP award subject to the performance condition

TSR performance condition: 33%

PBT performance condition: 67%

TSR component vesting schedule Position at which Howdens ranks

compared to comparators

Proportion of TSR portion

of Award that may vest

At or above upper quartile 100%

Straight line vesting between these two points

At median 15%

Below median 0%

PBT component vesting schedule Annualised PBT growth over

Performance Period

Proportion of PBT portion

of Award that may vest

15% p.a. 100%

Straight line vesting between these two points

5% p.a. 15%

Less than 5% p.a. 0%

Performance period Performance measured from FY2021 to FY2024

Grant date 6 Apr 2022

Vesting date 6 Apr 2025

Additional holding period 2 years

1 Based on a share price of £7.708, being the closing price on 5 April 2022.

Nature of award: Free and Matching Shares under the SIP

Award type Award date Vest date

Number of shares

under award Award price

Face value of

award

CEO

Free Shares 6 Apr 2022 6 Apr 2025 32 £7.708 £246.65

Matching Shares 19 May 2022 19 May 2025 7 £6.564 £45.95

Matching Shares 17 Jun 2022 17 Jun 2025 8 £5.994 £47.95

Matching Shares 19 Jul 2022 19 Jul 2025 8 £6.266 £50.13

Matching Shares 19 Aug 2022 19 Aug 2025 7 £6.588 £46.12

CFO

Matching Shares 19 Jan 2022 19 Jan 2025 6 £8.216 £49.30

Free Shares 6 Apr 2022 6 Apr 2025 32 £7.708 £246.65

Matching Shares 19 May 2022 19 May 2025 31 £6.564 £203.48

1 Free and Matching Share awards under the SIP do not have performance conditions; however, there is a service condition of three years from the Award date

during which time the participant must remain employed by a UK Howdens Group company to avoid forfeiting the award.

2 The face value of the award is calculated using the share price at grant (the 'Award price').

Directors’ remuneration report

Part 4: Additional disclosures continued

Fixed Variable

Consideration by the Directors of matters relating to Directors’ remuneration

The Committee met six times during 2022 and discussed a number of items for which it is responsible. Under its terms of reference,

which are reviewed on an annual basis, the Committee is responsible for determining the broad policy and specific remuneration

packages for Executive Directors and senior management (that being the members of the Executive Committee, the Company

Secretary and the Head of Internal Audit and Risk), including pension rights and, where applicable, any compensation payments.

The Committee is also regularly updated on pay and conditions applying to other employees in the Company.

Advisors to the Committee

The Committee regularly consults with the CEO, CFO and the Group HR Director on matters concerning remuneration, although

they are never present when their own reward is under discussion. The Company Chair attends the Remuneration Committee by

invitation except when his own remuneration is determined. The Company Secretary acts as secretary to the Committee but is

never present when his own reward is determined.

The Committee also has access to detailed external information and research on market data and trends from independent

consultants. A representative from the Committee's independent advisor usually attends each meeting of the Remuneration

Committee. PricewaterhouseCoopers LLP (PwC) was the Committee’s retained independent advisor until September 2022.

PwC had been independent advisor to the Committee since 2007. During 2022, the Committee reviewed the independence and

tenure of PwC as adviser to the Committee and agreed that a new advisor would provide a fresh perspective to the Committee.

Following a tender process, Korn Ferry was appointed by the Committee in September 2022 to be its independent advisor.

Korn Ferry is a member of the Remuneration Consultants’ Group, which operates a code of conduct in relation to executive

remuneration consulting, and it does not provide any other services to the Group. PwC provided consultancy advice and support

to the internal audit function to the Company during 2022.

The Committee is satisfied that its advisors provided robust and professional advice during the year. Work undertaken during

the year for the Committee included updating the Committee on trends in compensation and governance matters and advising

the Committee in connection with benchmarking of the total reward packages for the Executive Directors and other senior

members of staff.

Total fees paid to the Committee’s advisors in relation to remuneration services provided to the Committee totalled £153,000

with fee levels based on the quantity and complexity of work undertaken.

Voting at the 2022 AGM

The results of the advisory vote in respect of the Directors’ remuneration report ('Report') and the binding vote on the Directors’

remuneration policy ('Policy') at the 2022 AGM may be found in the chart below, along with the 2021 and 2020 AGM results.

By order of the Board

Karen Caddick

Remuneration Committee Chair

6 March 2023

2022

Report

Policy

For 90.72%

For 90.67%

Against 9.28%

Against 9.33%

Withheld

55,715

Withheld

3,928,507

AGM voting outcomes

For¹ Against

1. A vote 'for' includes those votes giving the Chair discretion.

2. A vote 'withheld' is not a vote in law.

2020

2021

For 98.28%

For 95.36%

Against 1.72%

Against 4.64%

Withheld

4,495,906

Withheld

147,941

Report

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134 135Governance / Remuneration Committee report

Introduction from the Committee Chair

I am pleased to present this report covering the work of the

Audit Committee.

In 2022, global events and business developments have

required us to review a variety of financial and control risks at

each meeting. In addition to our normal business overseeing

the external and internal processes, we have also received

updates from management on cyber and information security

strategy, depot compliance and we met with the Commercial

Finance Director to consider that function's risks and priorities.

Volatility in financial markets in the autumn also resulted in

the Committee calling an additional meeting in January 2023

with the Company’s pension advisors to review valuations of

pension fund assets and liabilities because the carrying value

of the pension fund is a significant item in the consolidated

balance sheet.

During 2022, the new lead external audit partner and I were in

regular contact and, at each meeting, the Committee received

updates on KPMG's progress in their first year as our external

auditor. More information on the onboarding process can

be found in the case study on page 140. I’d also like to take

this opportunity to thank Deloitte for their tenure as external

auditor to Howdens.

I reported last year on our project to review the Group’s

internal controls to reappraise and document key controls

and strengthen evidencing of the control environment. This

work has continued throughout 2022 with the Audit Committee

receiving updates on the project at each of its meetings during

the year. This is considered in more detail on page 142 but I am

pleased to note that the Group has made significant progress

in documenting and 'attesting' controls and is automating

controls wherever possible. This will improve our ability to

evidence our control environment and enable the Committee

to provide greater assurance to the Board.

The Committee undertook its regular governance reviews,

reviewing external audit policies, monitoring the effectiveness

of the external audit process and reviewing conflicts of

interest. We await the outcome of the Government’s White

paper on 'Restoring trust in audit and corporate governance'

and believe that we remain well positioned to respond to any

proposed changes.

Audit Committee

report

Key activities in the year ahead

• Review of the Annual Report and Accounts

andpreliminary results announcement.

• Review of Audit Committee effectiveness.

• KPMG’s reappointment as auditor to be

recommended to shareholders at the Annual

General Meeting (AGM).

• Shareholder update by the Audit Committee

Chair at the AGM.

• Review of the 2023 interim results.

• Consideration of internal audit’s annual plan,

findings, independence, and resources.

• Review of key controls.

• Approval of the 2024 Audit Committee calendar.

2022 meeting attendance

Andrew Cripps (5/5)

Karen Caddick (5/5)

Geoff Drabble (5/5)

Louise Fowler (5/5)

Debbie White (5/5)

2022 Audit Committee activity

AGM

• The appointment of KPMG LLP as the external auditor

and authority for the Directors to determine the auditor’s

remuneration were approved by shareholders

Committee meeting

• Information security and

cyber security reviews

• Key controls project update

• Internal audit report

• 2022 external audit plan

• Effectiveness of the

external auditor and audit

processes

• Discussion with Head of

Internal Audit (without

presence of management)

Committee meeting

• 2022 half-year results,

including going concern

considerations

• External auditor half-year

review

• Cyber security update

• Internal audit report

• Key controls project update

• Conflicts of interest review

• Discussion with external

auditor (without

management present)

Committee meeting

• Cyber security strategy

• Internal audit report

• Key controls project update

• Fraud control framework

• Commercial Finance

Director update

• Depot compliance review

• Annual Report timetable

• Discussion with Head of

Internal Audit (without

management present)

Committee meeting

• External audit update

• 2023 internal audit plan

and budget

• Audit and assurance

policy update

• Key controls project update

• Terms of reference review

• 2023 Audit Committee

calendar

Committee meeting

• 2021 draft Annual Report

and Accounts and Full Year

Announcement

• External audit report

• External audit policies

• Internal audit report

• Key controls project

• Audit Committee

effectiveness

• Discussion with external

auditor (without

management present)

February

April

July

September

November

May

Finally, I was pleased no questions were raised by the FRC

following their review of our 2021 Annual Report and Accounts

in accordance with Part 2 of the FRC Corporate Reporting

Review Operating Procedures

. It was also pleasing to receive

a number of accolades during the year in respect of the quality

of our external reporting. Howdens was the recipient of the

Annual Report of the Year – FTSE 250 award by the Chartered

Governance Institute (formerly the ICSA) which recognised

that our 2021 Annual Report had a consistently high standard

of commentary throughout the report and offered real

insights into the business. Later in the year, the FRC used

our schematic on purpose, culture, sustainability and

governance as a best practice example in their publication

‘What makes a good… Annual Report and Accounts’.

1 The FRC’s review was based on the Annual Report and Accounts and did not benefit from detailed knowledge of the business or an understanding of the

underlying transactions entered into. It was, however, conducted by FRC staff with an understanding of the relevant legal and accounting framework.

The review carried out by the FRC provides no assurance that the Annual Report and Accounts were correct in all material respects; the FRC’s role is not

to verify the information provided but to consider compliance with reporting requirements.

Whilst it is reassuring to receive external recognition, we

recognise the ongoing importance of maintaining rigorous

reporting standards and will continue to strive for high

standards in both our financial and non-financial reporting.

I look forward to reporting directly to shareholders at our

AGM in May.

Andrew Cripps

Audit Committee Chair

Andrew Cripps

Audit Committee Chair

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Audit Committee report

Governance / Audit Committee report136

Financial reporting

Results review

The Audit Committee reviewed the Group’s 2022 Annual

Report and Accounts and the half-yearly financial report

published in July 2022.

As part of these reviews, the Committee received papers

from management on accounting policy, areas of significant

judgement, the Group's key risks, going concern considerations

and longer-term viability. The Committee also discussed

reports from KPMG on their audit of the Annual Report and

Accounts and review of the half-yearly financial report.

The Committee considered whether the Annual Report and

Accounts were fair, balanced and understandable and

contained the information necessary for shareholders to

assess the Company’s position, performance, business model,

and strategy.

Controls over financial reporting

The Committee received a report from the Head of Internal

Audit and Risk on the results of key control questionnaires

prepared by Group and Divisional management. The

effectiveness of the Group’s internal financial controls (with

specific reference to controls in place on a divisional basis)

and the disclosures made in the Annual Report and Accounts

on this matter were reviewed by the Audit Committee.

The Committee also received regular updates in respect of the

key controls project during the year. More information on the

key controls project can be found on page 142.

Areas of significant financial judgement

The Committee exercises its judgement in deciding the areas

of accounting that are significant to the Group’s accounts. The

external auditor's report details the results of their procedures

in relation to these areas to the Committee.

The matters shown below have been discussed with the Chief

Financial Officer, Group Finance Director, and the external

auditor. The Committee is satisfied that each matter has been

fully and adequately addressed by the Executive Committee,

appropriately tested, and reviewed by the external auditor,

and the disclosures made in the 2022 Annual Report and

Accounts are appropriate.

Areas of significant financial judgement:

Inventory obsolescence provisioning

Defined benefit pension scheme

Parent company accounting (new in 2022)

Inventory obsolescence provisioning

The Group’s in-stock model (further information about which

may be found on pages 14 and 15) and the scale of our product

range necessitates tight management of inventory to ensure

local availability of stock while at the same time minimising

obsolescence and wastage. In 2022, management continued

to take a strategic position on stock.

The external auditor provided reports to the Committee which

considered the appropriateness of provisions held against the

carrying value of inventory, while also having regard to the age

of discontinued lines and volumes of continuing lines relative to

the expected usage and the levels of historical write-offs.

The Committee reviewed the processes used to value each

category of inventory, including the assumptions behind

obsolescence provisions, and were satisfied with the

judgements made.

Actuarial valuation of pension fund liabilities

Whilst there were no changes in the year to the methodology

for the valuation assumptions, the significant change to the

discount rate during the year meant that there was additional

focus on this judgemental disclosure.

The Committee met with the Company's actuaries and

carefully reviewed their report, concluding that:

• the actuarial assumptions applied to pension fund liabilities,

and in particular the discount, inflation and mortality

assumptions, were consistent and appropriate; and

• they concurred with the views of the external auditors.

Valuation of pension fund assets

The Audit Committee also considered processes to value

pension fund assets. Following market volatility in September

2022, 76% of total pension fund assets at the 2022 financial

period end (2021: 35%) were assets for which there is no

observable market value (see page 196). Some of the asset

valuations required judgement because manager valuations

at the balance sheet date were not expected to be available

until after the finalisation of this report. To minimise the risk

that the valuations were not in line with assumptions, the

asset managers were contacted to check for indicators of

impairment or expected impairments, any significant market

events that may have impacted the assets since the latest

valuation, or any significant changes in fund composition

which would lead them to think that there had been any

impairment since the most recent valuation date. The

Committee concurred with the approach taken.

Parent company accounting

During the year, management reassessed accounting in the

parent company, Howden Joinery Group Plc. This has led

to clarification of the disclosure of the parent company‘s

investment in its principal subsidiary and an impairment of

an inter-company receivable in the parent company balance

sheet. In addition, a review of the Group’s leases under IFRS16

identified that certain leases needed to be included in the

parent company accounts rather than being accounted for

in the operating companies utilising the relevant properties

because the parent company is the signatory of these leases.

Audit Committee report continued

These changes resulted in prior year adjustments to the

parent company’s accounts, including to distributable

reserves. However, these do not affect the consolidated

results of the Group previously reported.

The Audit Committee reviewed management’s proposals

relating to the parent company and concluded that all

recommendations were appropriate. Further details of the

changes to the parent company balance sheet may be found

on page 209.

Other areas of Audit Committee consideration

Patent Box tax relief

The Board approved the submission of a claim for tax relief

under the UK Patent Box Tax Relief Scheme in July 2022, as

set out in detail on page 31. Following the approval, the claim

was included in the 2021 tax computation. The claim relates

to a patented cabinet leg and the submission to HMRC covers

the total period claimable since the patent was filed in 2017.

The Committee reviewed the recommendations of EY tax

specialists who have been advising the Company on the claim.

The Company has to recognise the full likely amount of the

claim in the financial statements in accordance with IFRIC

23 given the success of the claim is deemed to be more

likely than not. However, the amounts will only be confirmed

when the relevant tax returns are agreed by HMRC. The Audit

Committee considered the Company’s accounting treatment,

assumptions surrounding the valuation of the claim, and the

views of the tax advisors and external auditors, and concurred

with the approach taken.

Governance

Governance updates

Updates on the latest governance practices for audit

committees and changes in reporting requirements

were provided by the external auditor. In addition to other

resources, members of the Audit Committee are members of

the KPMG Board Leadership Centre, which provides updates

on financial and reporting matters.

The Committee received regular updates on the proposed

corporate governance reforms as set out in the

Government's White paper ‘Restoring trust in audit and

corporate governance’.

Committee effectiveness

An effectiveness review was carried out on the Committee and

its members as part of the wider external Board evaluation

process. The review concluded that the current mix of

financial, commercial and relevant sector experience of the

Audit Committee, and that of its advisors, was such that the

Committee could effectively exercise its responsibilities

to the Group in relation to risk and controls.

Policies and conflicts

The Committee reviewed its policies in relation to allocation

of non-audit work (further detail on this policy may be found

on pages 141 and 142) and employment of ex-audit firm

personnel. It also reviewed the Directors’ conflicts of interest

conflicts of interest may be found on page143.

Competition and Markets Authority (CMA) Order

compliance

The Audit Committee confirms that the Company has complied

with the provisions of the Order throughout its financial period

ended 24December 2022 and up to the date of this report.

Committee membership

The Committee is composed entirely of independent

Non-Executive Directors. Independence is critical for fair

assessment of the management team and the external and

internal audit functions.

Committee Chair

Andrew Cripps was appointed Audit Committee Chair in May

2016. He is responsible for determining the Committee’s

agenda and for maintaining the key relationships between

the Group’s senior management, Head of Internal Audit and

Risk, the Company Secretary and senior representatives of

the external auditor. He is also responsible for ensuring that

key audit issuesare reported to the Board in an effective and

timely manner and that they are reported to shareholders in

the Annual Report.

Andrew will present a summary of the work of the Audit

Committee to shareholders at the 2023 AGM.

Recent and relevant financial experience

Andrew Cripps is a qualified Chartered Accountant and

has held executive director roles in the UK and Europe with

Rothmans International, where he was Corporate Finance

Director. More recently, Andrew has been Audit Committee

Chair of a number of FTSE 250 and other public companies.

Competence relevant to the sector

The unique business model of Howdens means it does not

naturally fit into one sector and therefore when the Committee

undertook an assessment of its skills and experience it

assessed them against a number of sectors relevant to the

Company. These included building and construction, multi-

site wholesale, manufacturing and logistics, and service

tocustomers.

The Committee concluded that competence relevant to these

sectors was well represented within the current membership.

Thorough inductions are provided to the Committee members

and opportunities to meet with senior management and

Executives further enhance their working knowledge of the

way the Company operates.

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138 139Governance / Audit Committee report

Case study

External auditor transition

Transitioning to a new external auditor creates a

number of risks and benefits for companies. Ensuring

that the new auditor is prepared and ‘hits the ground

running’ on their first audit can help to mitigate some

of these risks. Selecting the right audit team that will

work collaboratively with the Company’s finance teams

and minimise management disruption is essential.

However, an updated audit approach and fresh

perspective also benefits audit quality, so it is important

to ensure a seamless transition between ingoing and

outgoingauditors.

During the external auditor tender process, the Audit

Committee considered proposals on the approach to

transition from the incumbent auditor (Deloitte). In their

proposal, KPMG set out their transition methodology and

timetable, which is considered in this case study.

Following confirmation of the Company’s intention to

appoint KPMG as auditor, KPMG set out to execute their

transition plans to the agreed timetable. Five factors for

a successful transition were identified:

1. Early clearance of accounting judgements

2. Clear understanding of how the Howdens

businessoperates

3. Focus on all aspects of reporting, including

statutoryaccounts

4. Early and proactive communication and

identificationof issues all year round

5. Focused approach without compromising quality

From June 2021, KPMG shadowed Deloitte and this

continued throughout the 2021 year-end process. The

KPMG team were able to observe ways of working with the

Howdens finance teams and familiarise themselves with

the key accounting judgements and risk assessments.

Senior members of the KPMG team also attended Audit

Committee meetings from July 2021 to observe the

Committee at work. Concurrently, the KPMG team met with

the Howdens finance and internal audit teams to discuss

plans for the 2022 half-year review and audit.

Following the conclusion of the 2021 audit by Deloitte,

KPMG undertook a thorough review of the outgoing

auditor’s audit files, launched the KPMG Clara

collaboration tool and provisionally confirmed key

accounting policies and approach to judgements. There

were initial walkthroughs of the end-to-end processes for

the key transaction flows (such as revenue recognition

and inventory management). The approach towards

technology was set out in a detailed plan, as well as data

extraction to assess the general IT control environment.

The Audit Committee received an update on how transition

plans were progressing at the April 2022 Committee

meeting. The lead audit partner also met with all members

of the Board ahead of the half-year review to discuss their

expectations and areas of focus for the audit process.

The successful transition process has resulted in a high-

quality audit from the KPMG team and a corresponding

level of assurance for the Audit Committee. We will

continue to refine the audit process further in future years.

Audit Committee report continued

At the year end, the external auditor formally confirmed

that they had complied with the requirements of the FRC

Ethical Standard as well as internal requirements and their

independence and objectivity had been maintained. The Audit

Committee also has a policy in relation to the employment of

former members of the external audit team.

External auditor effectiveness

To assess the effectiveness of the external auditor, the

Committee reviewed:

• The proposed plan of work presented by the external

auditor, including audit risks, materiality, terms of

engagement and fees prior to commencement of the

2022 audit.

• The external auditor’s fulfilment of the agreed audit plan

and any variations from the plan.

• Evaluation from key management personnel and members

of the Committee of the external auditor’s exercise of

professional scepticism and challenge.

• Robustness and perceptiveness of the auditor in their

handling of the key accounting and audit judgements.

• Internal control and risk content of the external

auditor’sreport.

• Independence of thought and potential for conflict.

External auditor fees

All relevant fees proposed by the external auditor must be

reported to and approved by the Audit Committee.

Details of external audit fees may be found in the table on

the facing page and in note 4 to the consolidatedfinancial

statements (page 172).

Policy for non-audit services provided by

the external auditor

The main aims of this policy are to:

• Ensure the independence of the auditor in performing

the statutory audit; and

• Avoid any conflict of interest by clearly detailing the types

of work that the auditor can and cannot undertake.

The Audit Committee has reviewed the policy for non-audit

services to ensure that it is in line with the FRC’s Revised

Ethical Standards 2019 (which took effect from 15 March

2020) and the FRC’s Audit Quality Practice Aid 2019.

The policy, in line with regulation, substantially limits the non-

audit services which can be provided by the external auditor.

The policy provides:

• A 70% cap of the value of the audit fee for all non-audit

services calculated on a rolling three-year basis.

• Categories of service that are prohibited from being

carried out by the auditor.

Performance expectations

for the external auditor

Specific auditor responsibilities

• Discuss the audit plan, materiality, and areas of

focus in advance.

• Report issues at all levels within the Company in a

timely fashion.

• Ensure clarity of roles and responsibilities between

local KPMG and Howdens’ Finance teams.

• Respond to any issues raised by management on a

timely basis.

• Meet agreed deadlines.

• Provide continuity and succession planning of key

staff members of KPMG.

• Provide sufficient time for management to consider

draft auditor's reports and respond to requests

andqueries.

• Ensure consistent communication between local

and central audit teams.

Wider responsibilities

• Provide timely up-to-date knowledge of technical

and governance issues.

• Serve as an industry resource, communicating

best practice trends in reporting.

• Adhere to all independence policies.

• Deliver a focused and consistent audit approach

for the Group that reflects local risks and

materiality.

• Liaise with the Howdens Internal Audit and Risk

team to avoid duplication of work.

• Provide consistency in advice at all levels.

• Ultimately, provide a high-quality service to the

Board, be scrupulous in their scrutiny of the Group

and act with utmost integrity.

Independence

The Committee reviews the independence of

the external auditor bi-annually. This includes

consideration of the potential for conflicts of interest

as well as the auditor's internal procedures to ensure

independence of its staff.

External auditor*

External auditor KPMG LLP ('KPMG')

External auditor appointed 12 May 2022

Lead audit partner Robert Brent

Lead audit partner tenure Year 1 (of a 5-year cycle)

Total fees paid to

auditor in the year

£1.2m (non-audit fees accounted

for £0.1m of the total fee)

* The information above is correct as at 24 December 2022.

External audit tender

Following a comprehensive external audit tender process,

the Audit Committee made a recommendation to the Board

in 2021 to appoint KPMG as the Group’s external auditor from

2022. The Board recommended KPMG's appointment to its

shareholders at the 2022 AGM and shareholders approved

the appointment with 98.8% of votes in favour. A case study

on the onboarding of the new external auditor can be found

below. The Board will recommend KPMG's re-appointment to

shareholders at the 2023 AGM.

External auditor independence

Auditor independence is an essential part of the audit

framework and the assurance it provides. The Committee

therefore undertook a comprehensive review of auditor

independence prior to appointment and during 2022, which

included:

• A review of the independence of the external auditor and

the arrangements which they have in place to restrict,

identify, report and manage conflicts of interest.

• A review of the changes in key external audit staff for the

current year and the arrangements for the day-to-day

management of the audit relationship.

• Consideration of the overall extent of non-audit services

provided by the external auditor, in addition to case-by-

case approval of the provision of non-audit services

asappropriate.

• Deliberation of the likelihood of a withdrawal of the auditor

from the market and note taken of the fact that there

are no contractual obligations to restrict the choice of

externalauditor.

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140 141Governance / Audit Committee report

Audit Committee report continued

Good progress in delivery of the project continued throughout

2022 with regular updates being provided to the Audit

Committee. Internal project management and governance

frameworks were determined to be working effectively and

the Committee was satisfied with the progress made during

theyear.

The Committee remains committed to the activities to

strengthen the control environment regardless of the outcome

of the Government's White paper 'Restoring trust in audit and

corporate governance', although it is likely that this will guide

prioritisation and activity for 2023.

Internal audit

The Internal Audit team has continued to develop its

capabilities during the year. This includes further development

of data analytics and systemisation of controls. An updated

Internal Audit Charter has been approved by the Committee

and communicated to management, thereby refreshing

understanding of responsibilities for internal controls and their

verification, based on the three lines of defence model.

The Committee reviewed:

• Internal Audit’s programme of work and resources and

approved its annual plan and budget.

• The level and nature of assurance activity performed by

Internal Audit.

• Results of audits and other significant findings including

the adequacy and timeliness of management’s response.

• Staffing, reporting and effectiveness of divisional audit.

Independent assurance

The Committee assessed the coverage of independent

assurance by reviewing the annual internal audit plan against

the Group’s key controls.

Internal audit effectiveness

The Committee considered that the Internal Audit function

remained effective and provided a comprehensive level of

assurance through its programme of work.

The Audit Committee has commissioned an external

assessment of the internal audit function every five years

to assess the performance and effectiveness of the Internal

Audit department.

In 2021, the Audit Committee commissioned an external

quality assessment (EQA) readiness assessment (a standard

developed by the Chartered Institute of Internal Auditors) of the

internal audit function. An EQA evaluates conformance with the

International Professional Practices Framework (IPPF), which

includes the Code of Ethics, the Core Principles, the Definition

of Internal Audit and the International Standards for the

Professional Practice of Internal Auditing (the IIA Standards).

The policy specifies a de minimis limit as well as the type of

non-audit work that the auditor may be engaged in without

the matter first being referred to the Audit Committee, which

considers each referral on a case-by-case basis.

The policy ensures that the auditor does not audit its own work

or make management decisions for the Company or any of its

subsidiaries. The policy also clarifies responsibilities for the

agreement of fees payable for non-audit work.

No non-audit services were provided by KPMG during the year.

Controls and internal audit

Internal control framework

The Group has an established framework of internal controls,

which includes the following key elements:

• The Board approves the Group’s strategy and annual

budgets; the Executive Committee is accountable for

performance within these.

• The Group and its subsidiaries operate control procedures

designed to ensure complete and accurate accounting

of financial transactions and to limit exposure to loss of

assets or fraud.

• The Audit Committee meets regularly and its

responsibilities are set out in the Audit Committee Terms

of Reference (which may be found on the Company’s

website at www.howdenjoinerygroupplc.com/governance/

corporate-governance-report/terms-of-reference-of-the-

audit-committee). It receives reports from the Internal

Audit function on the results of work carried out under

an annually agreed audit programme. Operational and

compliance controls are considered when the Committee

reviews the annual Internal Audit programme. The Audit

Committee has full and unfettered access to the internal

and external auditors.

• Operating entities provide certified statements of

compliance with specified key financial, IT and cyber

controls. These controls are cyclically tested by Internal

Audit to ensure they remain effective and are being

consistently applied.

• The Audit Committee annually assesses the effectiveness

of the assurance provided by the internal and

externalauditors.

Key Controls

As reported in the 2021 Annual Report and Accounts,

management have challenged and reviewed key controls

across the business to focus and further strengthen our

overall control framework. Sponsored by the CEO and CFO,

and reporting regularly to the Audit Committee, this project

is improving our capability to identify operational, IT and

financial controls which mitigate our key and principal risks

and evidence their effective implementation.

The readiness assessment concluded that the function’s

processes were effective and robust and would be sufficient

to meet the requirements of a full EQA. No areas reviewed were

considered to be of concern, although a small number of best

practice improvement recommendations were made and have

been implemented in 2022.

Given the output of the EQA readiness assessment, the Audit

Committee agreed to reconsider external assessment of the

function in three years' time. As such, the next effectiveness

review will be considered in 2024.

Fraud risk

The Committee considered the controls in place to mitigate

fraud risk and received a report from Internal Audit which

confirmed the effectiveness of those controls. A further

enhancement project is underway as part of our key controls.

Cyber and information security risk

The risk of a cyber security incident is considered to be one of

the Group’s principal risks. More information on this risk can be

found on page 43.

Updates on cyber and information security were presented

to the Committee by the Head of Information Security

and the Director of Infrastructure and Service Delivery at

the Committee meetings in April and July. In September,

the Committee noted that, in addition to the development

of technical controls to mitigate the increasing risk of a

cyber security incident, a revised strategy for Security

Governance had been implemented to ensure clear direction

to the business.

There were no significant information security breaches

during the year and there have been no such breaches during

the preceding three-year period.

Divisional controls

Senior management from the business are invited to discuss

the controls in their business areas. The Director of Finance

and the Head of Compliance for the Trade division gave

presentations on the key risks and control environments in

their area. In September, the Commercial Finance Director

also presented to the Committee.

Whistleblowing

Complaints on accounting, risk issues, internal controls,

auditing issues and related matters are reported to the Audit

Committee as appropriate. Oversight of the Company’s

whistleblowing policy is a matter considered by the Board. The

Board receives biannual updates on whistleblowing statistics

and trends (see pages 82 and 83).

Conflicts of interest

The Companies Act 2006 places a duty upon Directors to

ensure that they do not, without the Company’s prior consent,

place themselves in a position where there is a conflict, or

possible conflict, between the duties they owe the Company

and either their personal interests or other duties they owe to

a third party.

If any Director becomes aware that they, or any party

connected to them, have an interest in an existing or proposed

transaction with the Company, they must notify the Board

as soon as practicable. The Board has the authority to

authorise a conflict if it is determined that to do so would be

in the best interests of the Company. The Audit Committee

reviews the output of this process annually to ensure it is

appropriatelymonitored.

By order of the Board

Andrew Cripps

Audit Committee Chair

6 March 2023

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Introduction from the Sustainability

Committee Chair

Howdens has a sustainable business ethos. Being ‘worthwhile

for all concerned’ means that having a positive impact on

our environment is a key part of our overall growth plans. But

we are also committed to making our business more diverse,

creating opportunities for all, and removing barriers to

employment. These are the matters, in line with commercial

considerations, that matter most to our employees, our

investors, and our wider stakeholder base.

Many of the items considered and approved at the

Sustainability Committee are considered in detail in the

sustainability matters report (which begins on page 46),

part of the strategic report, so this Committee report is

necessarily shorter than other Committee reports to avoid

duplication. However, it is important to detail the role, remit,

and responsibilities of the Committee, to highlight some of the

key work of the Committee during the year, and to consider the

work of the Committee in the year ahead.

Role, remit and responsibilities

The primary purpose of the Howdens Sustainability

Committee is to assist the Board in articulating and developing

its sustainability strategy and providing oversight of

sustainability initiatives across the business, in line with the

purpose, values, and strategy of Howdens as established

by the Board. This includes monitoring the content and

completeness of Howdens’ external statements, disclosures,

and other reporting on sustainability matters.

Setting the tone from the top on environmental and social

matters, ensuring that these priorities are embedded in wider

strategy, and developing robust KPIs are key functions of the

Committee and I am pleased to report that the first full year of

the Sustainability Committee has been a successful one.

The key duties the Committee carries out in relation to any

environment and climate action and Howdens’ contribution

to society were set out on page 143 of the 2021 Annual Report

and Accounts, which can be accessed on our corporate

website (www.howdenjoinerygroupplc.com). However, it will

also consider any other matters referred by the Board or its

Committees relevant to sustainability.

The remit of the Sustainability Committee does not cover

governance matters per se and these remain a matter for the

Board and its Committees. The Committee will also liaise as

necessary with all other Board Committees as required.

The work of the Committee in 2022

Reducing carbon

Having made great progress on energy and waste reduction in

2021, particularly achieving carbon neutral in manufacturing

at our Howden and Runcorn sites, the Committee was mindful

to keep the momentum into 2022. Building a credible SBTi Net

Zero plan and extending carbon neutral to Howdens Work

Surfaces were two priorities for the Committee during the year.

More information on our SBTi Net Zero plans can be found on

page 52. The Committee will monitor the development of these

plans, particularly the initiatives to reduce Scope 3 emissions

which make up 90% of the Group’s total emissions.

To support the implementation of the Net Zero plan, the

Remuneration Committee has for the first time introduced

carbon reduction measures as part of our Executive

remuneration framework (see page 114).

Sustainability

Committee report

TCFD – business resilience

The Sustainability Committee is mindful to understand key

climate risks and opportunities. We do this through our

business resilience framework, which is documented through

our TCFD disclosures.

These disclosures are contained in the strategic report on

pages 54 to 61. The Committee has encouraged a simple and

pragmatic approach to business resilience. Building on the

disclosures in 2021, the Committee considered three model

scenarios, a materiality impact assessment and associated

action plan. These are integrated with the SBTi Net Zero

plans which include comprehensive supply chain mapping, a

compelling customer sustainability offer and regular review of

Howdens sustainability strategy.

Supported by external consultancy, TT Impact Strategies,

the Group utilised the following methodology for TCFD

implementation:

1. Governance and oversight: Board and management

oversight to ensure that climate issues are embedded in

the strategic planning/ enterprise risk management.

2. Assess materiality of climate-related risks: Understand

potential climate related risks and opportunities for

Howdens’ business involving all relevant internal

stakeholders.

3. Develop and define scenarios: Construct appropriate

scenarios to develop relevant narratives according to

Howdens’ context and business model.

4. Evaluate business impacts: For each scenario (three

scenarios), identify key strategic and financial impacts –

qualitative to quantitative.

5. Identify potential responses: Use the results to identify

realistic strategic responses to manage risks and

opportunities.

6. Document and disclose: Communicate to relevant parties

– the inputs, assumptions, methods, outputs, and potential

management responses.

Equality, diversity and inclusion (EDI)

The Sustainability Committee received updates from the

Group HR Director and the senior HR team on the progress

made during the year in respect of the EDI Group. Building on

the progress made during 2021, the Committee considered

updates on Executive Sponsorship of priority areas, training,

engagement and data. In the short term, business focus is on

building foundations, increasing confidence and capability,

but in the longer term, the business believes that a mature EDI

programme will provide a competitive advantage and will be

fully integrated into our ways of working.

In September, the Committee received the Best Companies

diversity data. Data captured as part of the Best Companies

survey provided the Company with its first diversity census.

The Committee noted that the data was being used to drive

local EDI activities. Around 5,900 of the 7,300 employees

who participated in the survey completed the EDI questions,

equating to an average response rate of 80%.

The Committee also considered the work done to date on

employee wellbeing.

Key activities in the year ahead

• Receive updates on workforce skills

and development.

• Receive updates on sustainability strategy,

including Net Zero plans.

• Review of the Sustainability Comittee Terms

of Reference.

• Approval of the 2024 Sustainability Committee

calendar.

2022 meeting attendance

Peter Ventress (1/1) Appointed 1 July 2022

Richard Pennycook (1/1) Retired 17 September 2022

Andrew Cripps (2/2)

Karen Caddick (2/2)

Geoff Drabble (2/2)

Louise Fowler (2/2)

Debbie White (2/2)

2022 Sustainability

Committee activity

Committee meeting

• Sustainability progress, including Net Zero plans, TCFD

disclosures and industry leadership

• EDI and apprentices

• 2023 Committee calendar

• Terms of reference

Committee meeting

• Sustainability progress

• EDI, wellbeing and apprenticeships

• Modern Slavery Statement

April

September

Apprentices

The Committee received updates on Howdens' apprenticeship

programmes at each of its meetings during the year. Having

committed to transferring 20% of the apprenticeship levy to

fund construction apprenticeships in small businesses across

the UK, it was particularly pleasing to receive the UK Social

Mobility Award for Innovation in October.

More information on Howdens' approach to social mobility can

be found on page 65.

Sustainability in 2023

The Committee will continue to focus on the core

environmental and social matters that matter the most to our

stakeholders. This will include further development of our SBTi

Net Zero carbon reduction strategy and promoting our EDI

agenda. We will continue to communicate our progress and

priorities as part of Howdens wider strategy.

By order of the Board

Peter Ventress

Sustainability Committee Chairman

6 March 2023

Peter Ventress

Sustainability Committee Chairman

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Sustainability Committee report

Governance / Sustainability Committee report

The Directors have pleasure in submitting their report and the audited financial statements for the 52 week period ended

24 December 2022. Comparative figures relate to the 52 weeks ended 25 December 2021.

To make our Annual Report and Accounts more accessible, a number of the sections traditionally found in this report can be

found in other sections of this Annual Report and Accounts where it is deemed that the information is presented in a more

connected and accessible way. The Directors’ report comprises the sections detailed below, including the statement on political

donations and research and development (‘R&D’). Any sections that have been moved have been cross-referenced below for

ease of reference:

Political donations and R&D

The Group made no political donations during the current and

previous financial year. Nor has it made any contributions

to any non-UK political party during the current or previous

financial year. The Group also has not undertaken research

and development activities during the 2022 financial period.

By order of the Board

Forbes McNaughton

Company Secretary

6 March 2023

Located in the sustainability report:

Greenhouse gas emissions and streamlined energy and

carbon reporting (SECR): Details of the Group’s greenhouse

gas emissions, as required by Sch. 7 of the Large and

Medium-Sized Companies and Groups (Accounts and

Reports) Regulation 2008 as amended by the Companies Act

2006 (Strategic Report and Directors’ Report) Regulations

2013, are set out on page 69. Information required by

the Large and Medium-sized Companies and Groups

(Accounts and Reports) Regulations 2008 as amended

by the Companies (Directors' Report) and Limited Liability

Partnerships (Energy and Carbon Report) Regulations 2018

(SI 2018/1155), may be found on pages 68 and 69.

Located in the additional information section:

Annual General Meeting (AGM): Information about

AGM can be found on page 214. The recommendation to

reappoint KPMG LLP as the Group’s auditor, can be found on

pages 136 and 140.

Share capital, substantial shareholdings and acquisition

of the Company’s own shares: Information in this regard

can be found on pages 214 and 215.

Indemnity and Insurance: Details of Directors’ Indemnity

and Insurance is located on page 215.

Significant agreements: Details of any agreements that

take effect, alter or terminate upon a change of control may

be found page 215.

Disclosure required under Listing Rule 9.8.4R: The

locations in this Annual Report and Accounts of disclosures

in relation to LR 9.8.4R are set out below:

• Details of long-term incentive schemes: note 23

beginning on page 199.

• Dividend waivers: page 214.

• Published profit forecast made during the reporting

period to 24 December 2022: page 215.

The remaining disclosures required by LR 9.8.4R are not

applicable to the Company.

Located in the strategic report:

Principal Group activities, business review and results:

The principal activities of Howden Joinery Group Plc and its

subsidiaries can be found on pages 2 to 35.

Dividend: Dividend information can be found in the

Chairman’s statement on page 18 and the ‘Financial review’

on page 32.

Directors’ statement of disclosure of information to

the auditor: This statement may be found on page 74.

Located in the governance section:

2018 UK Corporate Governance Code (the ‘Code’):

Information on how the Company applied the Principles and

complied with the Provisions of the Code may be found on

pages 96 to 101. A copy of the Code can be accessed via

www.frc.org.uk.

Internal control and risk management arrangements:

Internal control arrangements information may be found in

the Audit Committee report on page 142. Risk management

arrangements information may be found on pages 36

to 38 and in the Principal risks and uncertainties section

beginning on page 39.

Diversity policies: The Board and Group diversity policies

are available on page 106 of the Nominations Committee

report.

Stakeholder engagement: Details regarding the

engagement with suppliers, customers, and others in

business relationships with the Company, as required by

Sch. 7 to the Large and Medium-Sized Companies and

Groups (Accounts and Reports) Regulations 2008 (as

amended by the Companies (Miscellaneous Reporting)

Regulations 2018), may be found on pages 88 to 95.

Employees: Information about the total number of

employees and gender diversity statistics are located

on page 105. The average number of employees and

their remuneration are shown in note 21 on page 192. The

methods of engaging with the workforce may be found

on pages 90 and 91. All eligible UK employees have been

invited to participate in a free share award under the

Company’s Share Incentive Plan (SIP) each year since

2015, and in 2021 and 2022 were invited to participate in

a new SIP Partnership and Matching Shares plan. Further

details of the SIP may be found in note 23 on page 199.

Directors’ report

Non-financial reporting

Non-financial measures are an important part of our business and we have recognised the importance of non-financial

information in our annual reports for many years. The Board is committed to acting responsibly and working with our

stakeholders to manage the social and ethical impact of our activities. We aim to treat all our stakeholders fairly and with

integrity, as we explain in the introduction to our sustainability matters report on page 48.

We have a number of Group policies to provide guidance to our employees. The policies are designed to be easily

understood and they generally include examples of acceptable and unacceptable behaviours.

In order to consolidate our reporting requirements under sections 414CA and 414CB of the Companies Act 2006 in

respect of non-financial reporting, the table below shows where in this Annual Report and Accounts to find each of the

disclosure requirements.

Focus area Policies and statements More information and outcomes

Environmental

matters

Sustainability and Corporate

Social Responsibility

Statement of Intent (see

Group website).

• Greenhouse gas emissions and streamlined energy and carbon reporting

(pages 68 and 69).

• Discussion of the Company’s progress on implementing the recommendations of

the Task Force on Climate-Related Financial Disclosures (pages 54 to 61).

• Discussion of the UN Sustainable Development Goals and our progress on 'zero

waste to landfill' and carbon neutral manufacturing (page 50).

• KPI on production waste reuse, recovery, and recycling and our target of 100% of

wood-based material used in manufacturing processes being made from FSC® or

PEFC certified sources (page 29).

• Discussions of our efforts to reduce waste and our responsible, energy-efficient

operations (page 50).

Social matters Sustainability and Corporate

Social Responsibility

Statement of Intent (see

Group website).

• Our impact on our stakeholders (starting on page 62) and engagement

with stakeholders (starting on page 88).

• Our work with local and national charities (page 70).

Respect for

human rights

Sustainability and Corporate

Social Responsibility

Statement of Intent, and

Modern Slavery Statement

(see Group website).

• Discussion of the UN Sustainable Development Goal 8 (Decent Work and Economic

Growth) (page 50).

• Our Modern Slavery Statement (see Group website) sets out how we actively

monitor suppliers and train our procurement staff.

• Internationally recognised labour standards form part of our contracts

of employment.

Anti-bribery

and corruption

Anti-bribery and corruption,

conflicts of interest,

corporate gifts and

hospitality, anti-money

laundering, anti-tax evasion

and competition law.

• The Board considers and approves the following Group policies: anti-bribery and

corruption, anti-money laundering, anti-tax evasion, competition law policy, market

abuse compliance and the Modern Slavery Statement and whistleblowing.

• We have a rolling programme of refresher training on modern slavery and anti-

bribery for our compliance team and buyers.

• Further information about our whistleblowing facility may be found on pages 91, 97

and 143.

Employees Health & Safety Statement of

Intent (see Group website),

market abuse compliance,

data protection and privacy,

and whistleblowing.

• KPI on Health and Safety and discussion of Health and Safety performance and

initiatives (page 29).

• Discussion of employee rewards and benefits, development opportunities and

apprentice schemes (pages 65, 119 and 121).

• Diversity policies and statistics (pages 105 and 106).

• Workforce engagement (pages 90 and 91).

• Directors’ remuneration policy (see Group website for the full policy or pages 117 to

121 for a summary of the policy).

We outline our business model on pages 14 and 15. All of our non-financial KPIs are presented together on page 29.

A discussion of our principal and emerging risks, including those related to our business relationships, products and

services, as well as a description of our risk management process, starts at page 36.

146 147

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Strategic Report

Financial Statements

Additional Information

Governance

Governance Governance Page TitleDirectors’ report

Governance / Directors’ report

Our financial

performance

Financial Statements

Dividends paid

£115m paid in 2022

Revenue

£2,319m (2021: £2,094m)

EPS

65.8p (2021: 53.2p)

Net cash

£308m (2021: £515m)

Share buybacks

£250.5m (2021: £50.0m)

Profit before tax

£406m (2021: £390m)

Operating profit

£415m (2021: £402m)

150 Independent auditor’s report

164 Consolidated income statement

164 Consolidated statement of comprehensive income

165 Consolidated balance sheet

166 Consolidated statement of changes in equity

167 Consolidated cash flow statement

168 Notes to the consolidated financial statements

205 Company balance sheet

206 Company statement of changes in equity

207 Notes to the Company financial statements

2019 2019 2019

2018 2018 2018

2020 2020

2022 2022 2022

2021 2021

£415m 65.8p £115.0m

£240m 31p £68.3m

£260m 35p £0m

2021 (inc. £54.1m special dividend) £133.6m

£196m 25p

£402m 53.2p

2020 £68.3m

£406m £308m £250.5m

£1,511m

2019 2019 20192019

2018 2018 20182018

2020 2020 20202020

2022 2022 2022 2022

2021 2021 2021

2021

£1,584m

£1,548m

£2,319m

£2,094m

£239m

£261m

£185m

£390m

£231m £62.2m

£267m £55.2m

£431m £9.8m

£515m £50.0m

Financial StatementsPage Title Page TitleFinancial Statements

Financial Statements

Additional Information

Governance

Strategic Report

149Financial Statements / Contents148

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1. Our opinion is unmodified

In our opinion:

• the financial statements of Howden Joinery Group Plc give a true and fair view of the state of the Group’s and of the

Parent Company’s affairs as at 24 December 2022, and of the Group’s profit for the 52 week period then ended;

• the Group financial statements have been properly prepared in accordance with UK-adopted international accounting

standards;

• the Parent Company financial statements have been properly prepared in accordance with UK accounting standards,

including FRS 101 Reduced Disclosure Framework; and

• the Group and Parent Company financial statements have been prepared in accordance with the requirements of the

Companies Act 2006.

What our opinion covers

We have audited the Group and Parent Company financial statements of Howden Joinery Group Plc (‘the Company’) for the

52 week period ended 24 December 2022 (FY22) included in the Annual Report and Accounts, which comprise:

Group (Howden Joinery Group Plc and its

subsidiaries) Parent Company (Howden Joinery Group Plc)

• Consolidated income statement

• Consolidated statement of comprehensive income

• Consolidated balance sheet

• Consolidated statement of changes in equity

• Consolidated cash flow statement

• Notes 1 to 26 to the Group financial statements,

including the accounting policies in note 1.

• Company balance sheet

• Company statement of changes in equity

• Notes 1 to 7 to the Parent Company financial statements,

including the accounting policies in note 1.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our

responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis

for our opinion. Our audit opinion and matters included in this report are consistent with those discussed and included in our

reporting to the Audit Committee (“AC”).

We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK ethical

requirements including the FRC Ethical Standard as applied to listed public interest entities.

2. Overview of our audit

Independent auditor’s report

To the members of Howden Joinery Group Plc

Factors driving our view of risks

We have undertaken a risk assessment to identify those

matters that, in our professional judgment, were of most

significance in the audit of the financial statements of

the current period. We have considered the sector in

which the Company operates and the external factors

that drives the key underlying risks. We have determined

that the accounting for inventory is of significance to our

audit given the retail nature of the Group. We have also

identified the defined benefit plan given the sensitives

to movements in the key assumptions. In addition, the

scheme assets include a high proportion of assets (such as

unquoted equity, property and credit funds) for which there

is no external observable market price (“Level 3 pension

assets”).

Key Audit Matters Item

Accounting for inventories (Group) 4.1

Defined benefit pension scheme (Group) 4.2

Recoverability of Parent Company’s investment

in subsidiaries and debt due from group entities

(Parent Company) 4.3

Audit committee interaction

Our independence

Materiality (item 6 below)

During the year, the AC met 5 times. KPMG are invited to attend all Audit Committee meetings and are provided with

opportunities to meet with the Audit Committee in private sessions without the Executive Directors being present. For each

Key Audit Matter, we have set out communications with the Audit Committee in section 4, including matters that required

particular judgement for each. We also have opportunities to meet with the Audit Committee Chair outside the formal Audit

Committee meetings, to discuss our ongoing audit and developments with regard to the key judgments.

The matters included in the Audit Committee report on page 138 are materially consistent with our observations of

thosemeetings.

We have fulfilled our ethical responsibilities under, and we

remain independent of the Group in accordance with, UK

ethical requirements including the FRC Ethical Standard as

applied to listed public interest entities.

We have not performed any non-audit services during FY22

or subsequently which are prohibited by the FRC Ethical

Standard.

We were first appointed as auditor by the shareholders for

the 52 week period ended 24 December 2022 on 12 May

2022. The period of total uninterrupted engagement is for

the financial year ended 24 December 2022.

The Group engagement partner is required to rotate every

5 years. As these are the first set of the Group’s financial

statements signed by Robert Brent, he will be required to

rotate off after the FY26 audit.

The scope of our work is influenced by our view of

materiality and our assessed risk of material misstatement.

We have determined overall materiality for the Group

financial statements as a whole at £19.0m and for the

Parent Company financial statements as a whole at £12.0m.

We determined that profit before tax from continuing

operations is the benchmark for the Group. As such, we

based our Group materiality on profit before tax from

continuing operations, of which it represents 4.7%.

Materiality for the Parent Company financial statements

was determined with reference to a benchmark of Parent

Company total assets of which it represents 1.0%

Total audit fee £1.1m

Audit related fees (including interim review) £0.1m

Other services £nil

Non-audit fee as a % of total audit

and audit related fee % n/a

Date first appointed 12 May 2022

Uninterrupted audit tenure 1 year

Next financial period which requires a tender 2032

Tenure of Group engagement partner 1 year

Group Group Materiality

GPM Group Performance Materiality

HCM Highest Component Materiality

PLC Parent Company Materiality

LCM Lowest Component Materiality

AMPT Audit Misstatement Posting Threshold

Materiality levels used in our audit (FY22 £m)

Group

GPM

HCM

PLC

LCM

AMPT

2.4

0.95

12.3

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Governance

Financial Statements Financial Statements Page TitleIndependent auditor’s report

Financial Statements / Independent Auditor’s Report

3. Going concern, viability and principal risks and uncertainties

The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group

or the Parent Company or to cease their operations, and as they have concluded that the Group’s and the Parent Company’s

financial position means that this is realistic. They have also concluded that there are no material uncertainties that could

have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the

financial statements (“the going concern period”).

Going concern

We used our knowledge of the Group, its industry, and the

general economic environment to identify the inherent risks

to its business model and analysed how those risks might

affect the Group’s and Company’s financial resources or

ability to continue operations over the going concern period.

The risks that we considered most likely to adversely affect

the Group’s and Company’s available financial resources

over this period were :

• Customer confidence in light of the current cost of

living challenges, and the possibility of this negatively

impacting the group’s sales;

• The impact of significant inflationary pressures on the

Group’s supply chain.

We considered whether these risks could plausibly affect the

liquidity or covenant compliance in the going concern period

by assessing the degree of downside assumption that,

individually and collectively, could result in a liquidity issue,

taking into account the Group’s and Company’s current and

projected cash and facilities (a reverse stress test).

We assessed the completeness of the going concern

disclosure in note 1 to the financial statements.

Accordingly, based on those procedures, we found the

directors’ use of the going concern basis of preparation

without any material uncertainty for the Group and Parent

Company to be appropriate. However, as we cannot

predict all future events or conditions and as subsequent

events may result in outcomes that are inconsistent with

judgements that were reasonable at the time they were

made, the above conclusions are not a guarantee that the

Group or the Parent Company will continue in operation.

Our conclusions

• We consider that the directors’ use of the going concern

basis of accounting in the preparation of the financial

statements is appropriate;

• We have not identified, and concur with the directors’

assessment that there is not, a material uncertainty

related to events or conditions that, individually or

collectively, may cast significant doubt on the Group’s or

Parent Company’s ability to continue as a going concern

for the going concern period;

• We have nothing material to add or draw attention to

in relation to the directors’ statement in note 1 to the

financial statements on the use of the going concern

basis of accounting with no material uncertainties that

may cast significant doubt over the Group and Parent

Company’s use of that basis for the going concern period,

and we found the going concern disclosure in note 1 to be

acceptable; and

• The related statement under the Listing Rules set out

on page 71 is materially consistent with the financial

statements and our audit knowledge.

Independent auditor’s report continued

To the members of Howden Joinery Group Plc

Group scope (item 7 below)

We have performed risk assessment and planning procedures to

determine which of the Group’s components are likely to include risks of

material misstatement to the Group financial statements and the type

of procedures to be performed at these components. The audit of all

components, including the audit of the parent company, was performed

by the Group team.

The Group has 14 reporting components. We determined individually

financially significant components as those contributing at least 10% of

total revenue or total assets. We selected these because these are the

most representative of the relative size of the components. We identified

5 components as individually financially significant components and

performed full scope audits on these components.

The components within the scope of our work accounted for the percentages

illustrated opposite. Our audit of the Group was undertaken to the materiality

levels specified above and was performed by a single audit team.

In addition, we have performed Group level analysis on the remaining

components to determine whether further risks of material misstatement

exist in those components.

We consider the scope of our audit, as communicated to the Audit

Committee, to be an appropriate basis for our audit opinion.

Coverage of Group financial statements

Profit

before tax

Total assets

Revenue

The impact of climate change on our audit

We have considered the potential impacts of climate change on the financial statements as part of planning our audit.

On page 36, the Group has explained that climate change is its most significant emerging risk. It identifies this both in terms

of transitional risks as the world moves towards a zero-carbon economy, and the physical risks presented as climate change.

The Group has set its own targets to reduce emissions, as described on page 52.

Climate change impacts the Group in a variety of ways, and pages 59 to 61 describe the associated risks and opportunities

identified by the directors. These include the impact of climate risk on the reputation of the Group. However, the Group has not

identified any risks which have a material impact on the preparation of the financial statements.

We performed a risk assessment, taking into account climate change risks and commitments made by the Group, of how

climate change may impact the financial statements and our audit. This included enquiries of management, consideration of

the Group’s processes for assessing the potential impact of climate change risk on the financial statements and assessing

the TCFD scenario analysis performed by the Group.

We held discussions with our own climate change professionals to challenge our risk assessment.

Based on our risk assessment we determined that the climate related risks to the Group’s business, strategy and financial

planning do not have a significant impact on balances in the financial statements or on our key audit matters.

We have read the Group’s disclosure of climate related information in the front half of the annual report as set out on pages 52

to 61, and considered consistency with the financial statements and our audit knowledge.

Full scope audits

96%

97%

95%

Reviews of financial information (including enquiry)

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Financial Statements Financial StatementsPage Title Page Title

Financial Statements / Independent Auditor’s Report

Independent auditor’s report continued

To the members of Howden Joinery Group Plc

Description of the Key Audit Matter Our response to the risk

Accounting for inventory (quantities and cost)

The Group holds a significant amount of inventory across

its large depot network and a number of warehouses. As

at 24 December 2022, net inventory, after recognising

relevant provisions is £373.3 million.

The Group’s inventory is comprised of a wide product

range, typically held in large quantities. The Group

conducts periodic inventory counts at its warehouses

and annual counts at each of its depots, which are

performed throughout the year. It updates its inventory

records to reflect the results of the counts.

Cost of inventory is based on a standard cost which

is updated annually. Variances to standard cost are

analysed and apportioned to inventory at the period end.

Whilst the quantities and cost of inventory is not

considered to represent a significant risk of material

misstatement, it is one of the matters that has the

greatest effect on our overall audit strategy; the

allocation of resources in the audit; and directing the

efforts of the engagement team in order to conclude.

Subjective estimate

The scale of the Group’s product range means there

is significant management judgement in determining

the adequacy and completeness of the inventory

obsolescence provision, in particular the provision

applied to discontinued and slow-moving product lines. In

addition, given the judgement required in determining this

provisioning which relies on forward-looking information,

we have therefore identified this as an area at higher risk of

fraud or error.

The effect of these matters is that, as part of our

risk assessment, we determined that the inventory

obsolescence provision has a high degree of estimation

uncertainty, with a potential range of reasonable

outcomes greater than our materiality for the financial

statements as a whole.

Our procedures to address the risk included:

• Tests of detail: we counted a sample of inventory lines across a sample of

the Group’s depots and warehouses and compared the results of our counts

to the Group’s inventory records. Where our counts were performed prior to

or after the period-end, we rolled forward or backward our count results to

the period-end date and tested any movements in inventory quantities by

comparing to relevant supporting documentation. We examined the results

of our count procedures using statistical routines.

• Test of detail: we evaluated the appropriateness of the variances to standard

cost which are apportioned to inventory by comparing those variances back

to relevant source data and independently recalculating the amount.

• Our sector experience: we assessed management’s methodology and key

assumptions supporting the inventory provision, including the expected level

of inventory that will not be in demand and respective sales prices, against

our knowledge of the business and industry.

• Historical comparisons: we assessed management’s assumptions made

in the inventory obsolescence provision by comparing to the historical

utilisation.

• Test of detail: we evaluated the appropriateness of each of the key

assumptions within the provision which are supported by data elements

back to relevant source data and challenged the level of provision applied

by management to discontinued items by independently recalculating the

provision percentages.

• Test of detail: we evaluated the completeness of the provision by testing a

sample of current inventory lines for slow moving items or sales prices below

cost to evaluate whether additional provisioning is required.

• Assessing transparency: we assessed the adequacy of the financial

statement disclosures about the degree of estimation uncertainty in

arriving at the net realisable value.

We performed the detailed tests above rather than seeking to rely on any of

the group’s controls because our knowledge of the design of these controls

indicated that we would not be able to obtain the required evidence to support

reliance on controls.

Communications with the Howden Joinery Group Plc’s Audit Committee

Our discussions with and reporting to the Audit Committee included:

• Our approach to the audit of inventory provisioning including details of our planned substantive procedures and the extent of our control

reliance; and

• Our conclusions on the appropriateness of the Group’s inventory provisioning methodology, accounting policies and disclosures.

Areas of particular auditor judgement

We identified the following as the areas of particular auditor judgement:

• Subjective auditor judgement was required in assessing the adequacy of the inventory obsolescence provision, in particular the provision

percentages applied to the discontinued and slow-moving inventory lines.

Our results

We found the carrying value of inventory, including the level of inventory obsolescence provisioning, to be acceptable.

Further information in the Annual Report and Accounts: See the Audit Committee report on page 138 for details on how the Audit

Committee considered inventory obsolescence provisioning as an area of significant attention, page 182 for the accounting

policy on inventory obsolescence provisioning, and note 12 for the financial disclosures.

Disclosures of emerging and principal risks and longer-term viability

Our responsibility

We are required to perform procedures to identify whether there is a material inconsistency

between the directors’ disclosures in respect of emerging and principal risks and the viability

statement, and the financial statements and our audit knowledge.

Based on those procedures, we have nothing material to add or draw attention to in

relation to:

• the directors’ confirmation within the Viability statement that they have carried out a

robust assessment of the emerging and principal risks facing the Group, including those

that would threaten its business model, future performance, solvency and liquidity;

• the Principal Risks and uncertainties disclosures describing these risks and how

emerging risks are identified and explaining how they are being managed and

mitigated; and

• the directors’ explanation in the Viability statement of how they have assessed the

prospects of the Group, over what period they have done so and why they considered

that period to be appropriate, and their statement as to whether they have a reasonable

expectation that the Group will be able to continue in operation and meet its liabilities

as they fall due over the period of their assessment, including any related disclosures

drawing attention to any necessary qualifications or assumptions.

We are also required to review the Viability statement set out on page 73 under the

ListingRules.

Our work is limited to assessing these matters in the context of only the knowledge acquired

during our financial statements audit. As we cannot predict all future events or conditions

and as subsequent events may result in outcomes that are inconsistent with judgements

that were reasonable at the time they were made, the absence of anything to report on these

statements is not a guarantee as to the Group’s and Parent Company’s longer-term viability.

Our reporting

We have nothing material

to add or draw attention

to in relation to these

disclosures.

We have concluded that

these disclosures are

materially consistent with

the financial statements

and our audit knowledge.

4. Key audit matters

What we mean

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial

statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified

by us, 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.

We include below the Key Audit Matters in decreasing order of audit significance together with our key audit procedures to

address those matters and our results from those procedures. These matters were addressed, and our results are based on

procedures undertaken, for the purpose of our audit of the financial statements as a whole. We do not provide a separate opinion

on these matters.

4.1 Accounting for inventory (Group)

Financial Statement Elements Our results

FY22

FY22: Acceptable

Inventories gross value £426.8m

Inventories provision £53.5m

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4.3 Recoverability of parent company’s investment in subsidiaries

and debt due from group entities (parent company)

Financial Statement Elements Our results

FY22

FY22: Acceptable

Investments in subsidiaries £699.0m

Amounts owed by wholly-owned

subsidiary companies £103.3m

Description of the Key Audit Matter Our response to the risk

Low risk, high value

The carrying amount of the parent Company’s investments in

subsidiaries and intra-group debtor balance represents 66% of the

Company’s total assets. Their recoverability is not at a high risk

of significant misstatement or subject to significant judgement.

However, due to their materiality in the context of the parent

Company financial statements, this is considered to be the area

that had the greatest effect on our overall parent Company audit.

Our procedures to address the risk included:

• Comparing valuations: comparing the carrying amount of the

company’s investments in subsidiaries with the expected value

of the business based on forecasted dividends to ultimately be

received from the trading entity within the Group.

• Tests of detail: Assessing 100% of group debtors to identify, with

reference to the relevant debtors’ draft balance sheet whether

they have a positive net asset value and therefore coverage

of the debt owed, as well as assessing whether those debtor

companies have historically been profit-making.

We performed the tests above rather than seeking to rely on any of

the Company’s controls because the nature of the balance is such

that we would expect to obtain audit evidence primarily through the

detailed procedures described.

Communications with the Howden Joinery Group Plc’s Audit Committee

Our discussions with and reporting to the Audit Committee included:

• Our approach to the audit of parent company investments in subsidiaries and intra-Group receivables including details of our planned

substantive procedures and the extent of our control reliance;

• The prior year restatement made to the Parent company balance sheet relating to the recoverability of the investments and debts due

from Group entities, and the associated disclosures.

• In addition we have discussed the prior year restatement made to the Parent company balance sheet relating to lease accounting, as

disclosed in note 6.

Areas of particular auditor judgement

We identified the following as the areas of particular auditor judgement:

• The valuation of investments where the carrying value exceeded the net asset value and the inclusion of dividends to be received by the

parent company from other Group entities.

Our results

We found the company’s conclusion that there is no impairment of its investments in subsidiaries or intra-group debtor balance to be

acceptable.

Further information in the Annual Report and Accounts: See the Audit Committee report on page 128 for details on how the Audit

Committee considered parent company investments and intra-group receivables as an area of significant attention, page 209

for the accounting policy on parent company investments and intra-Group receivables, and note 3 for the financial disclosures.

Independent auditor’s report continued

To the members of Howden Joinery Group Plc

4.2 Defined benefit pension scheme (Group)

Financial Statement Elements Our results

FY22

FY22: Acceptable

Gross defined benefit liability £930.5m

Carrying value of assets for which there is no

quoted market price in an active market £677.4m

Description of the Key Audit Matter Our response to the risk

Subjective valuation

A significant level of estimation is required in order to determine

the valuation of the gross defined benefit liability. Small changes

in the key assumptions (in particular, discount rates, inflation

and mortality rates) can have a material impact on the amount

recognised in the financial statements.

In addition, the pension asset portfolio includes a high proportion of

assets (such as unquoted equity, property and credit funds) with no

observable market price (“Level 3 pension assets”), the valuation of

which requires significant judgement as a result of valuations being

unavailable at the balance sheet date (‘lagged valuations’). These

holdings together represented 32% (£286.0 million) of the total

pension assets held.

There is also a risk that, for certain of these assets, more recent

valuations are not expected to be available before the accounts are

finalised that should be reflected in the final position.

The effect of these matters is that, as part of our risk assessment, we

determined that valuation of the gross defined benefit obligation and

Level 3 pension assets have a high degree of estimation uncertainty,

with a potential range of reasonable outcomes greater than our

materiality for the financial statements as a whole, and possibly

many times that amount. The financial statements (note 22) disclose

the sensitivities estimated by the Group.

Our procedures to address the risk included:

• Benchmarking assumptions: we challenged, with the support

of our own actuarial specialists, the key assumptions applied in

the estimation of the pension liability, being the discount rate,

inflation rate and mortality/life expectancy, by comparing to

externally derived data.

• Actuary’s credentials: we assessed the competence,

capabilities and objectivity of the Group’s actuarial expert.

• Assessing valuers’ credentials: we evaluated the scope,

competencies and objectivity of the Group’s external experts

who assisted in determining the key unobservable inputs and

market indices used in the valuation of Level 3 pension assets.

• Methodology choice: we assessed the process adopted by

management to tackle the challenge of ‘lagged valuations’

for the Level 3 pension assets. We assessed the information

provided by the external fund managers, and assessed the risk

of material movements to the balance sheet date by reference to

external economic benchmark data.

• Assessing transparency: we considered the adequacy of the

Group’s disclosures in respect of the sensitivity of the pension

deficit to these assumptions.

We performed the tests above rather than seeking to rely on any

of the Group’s controls because the nature of the balance is such

that we would expect to obtain audit evidence primarily through the

detailed procedures described.

Communications with the Howden Joinery Group Plc’s Audit Committee

Our discussions with and reporting to the Audit Committee included:

• Our definition of the Key Audit Matter relating to the valuation of the defined benefit pension obligation and specifically the rationale for the

inclusion of the valuation of level 3 pension assets in the definition of our Key Audit Matter;

• We discussed our audit response to the Key Audit Matter which included the use of specialists to challenge the key aspects of

management’s actuarial valuation; and

• The adequacy of the disclosures, particularly as it relates to the judgement regarding the valuation of Level 3 pension assets.

Areas of particular auditor judgement

We identified the following as the areas of particular auditor judgement:

• Subjective and complex auditor judgement was required in evaluating the key actuarial assumptions used by the Group (including the

discount rate, inflation and mortality assumptions) as well as evaluating the fair value measurement approach for the Level 3 pension

assets.

Our results

We found the valuation of the gross defined benefit pension liability estimation and valuation of level 3 assets to be acceptable.

Further information in the Annual Report and Accounts: See the Audit Committee report on page 138 for details on how the Audit

Committee considered validity of pension assumptions and carrying value of assets for which there is no quoted market price in

an active market as an area of significant attention, page 192 for the accounting policy on defined benefit pensions, and note 22

for the financial disclosures.

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Financial Statements

Additional Information

Governance

Financial Statements Financial StatementsPage Title Page Title

Financial Statements / Independent Auditor’s Report

Independent auditor’s report continued

To the members of Howden Joinery Group Plc

Laws and regulations – identifying and responding to risks of material misstatement relating to

compliance with laws and regulations

Laws and regulations risk assessment

Identifying and responding to risks of material misstatement related to compliance with laws and regulations

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial

statements from our general commercial and sector experience, and through discussion with the directors (as required

by auditing standards), and discussed with the directors the policies and procedures regarding compliance with laws and

regulations.

As the Group is regulated, our assessment of risks involved gaining an understanding of the control environment including

the entity’s procedures for complying with regulatory requirements.

Risk communications

We communicated identified laws and regulations throughout our team and remained alert to any indications of

non-compliance throughout the audit.

Direct laws context and link to audit

The potential effect of these laws and regulations on the financial statements varies considerably.

The Group is subject to laws and regulations that directly affect the financial statements including financial reporting

legislation (including related companies legislation), distributable profits legislation, pension scheme legislation and taxation

legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related

financial statement items.

Most significant indirect law/ regulation areas

The Group is subject to many other laws and regulations where the consequences of non-compliance could have a material

effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation or the

loss of the Group’s license to operate. We identified the following areas as those most likely to have such an effect: health and

safety and employment laws recognising the nature of the Group’s activities.

Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry

of the directors and other management and inspection of regulatory and legal correspondence, if any. Therefore if a breach

of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.

Context

Context of the ability of the audit to detect fraud or breaches of law or regulation

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material

misstatements in the financial statements, even though we have properly planned and performed our audit in accordance

with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events

and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing

standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these

may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit

procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud

and cannot be expected to detect non-compliance with all laws and regulations.

5. Our ability to detect irregularities, and our response

Fraud – identifying and responding to risks of material misstatement due to fraud

Fraud risk assessment

Fraud and breaches of laws and regulations – ability to detect

Identifying and responding to risks of material misstatement due to fraud

To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an

incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included :

• Enquiring of directors, the audit committee, internal audit and inspection of policy documentation as to the Group’s high-

level policies and procedures to prevent and detect fraud, including the internal audit function, and the Group’s channel

for “whistleblowing”, as well as whether they have knowledge of any actual, suspected or alleged fraud.

• Reading Board and audit committee meeting minutes.

• Considering remuneration incentive schemes and performance targets for management and directors including the

long-term incentive plan for management remuneration.

• Using analytical procedures to identify any unusual or unexpected relationships.

Risk communications

We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout

the audit.

Fraud risks

As required by auditing standards, and taking into account possible pressures to meet profit targets and market

expectations, we perform procedures to address the risk of management override of controls, in particular the risk that Group

management may be in a position to make inappropriate accounting entries and the risk of bias in accounting estimates

such as the inventory obsolescence provisions and pension assumptions. On this audit we do not believe there is a fraud risk

related to revenue recognition because there are limited opportunities to fraudulently adjust revenue recognition given the

high volume and low value nature of purchases.

We identified a fraud risk related to the inventory obsolescence provision in response to possible pressures to meet profit

targets or market expectations.

Link to KAMs

Further detail in respect of the inventory obsolescence provision is set out in the key audit matter disclosures in section 4 of

this report.

Procedures to address fraud risks

We performed procedures including:

• Identifying journal entries and other adjustments to test for all full scope components based on risk criteria and comparing

the identified entries to supporting documentation. These included those posted by users outside of their expected

business area and those posted to unusual accounts.

• Assessing whether the judgements made in making accounting estimates are indicative of a potential bias.

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Additional Information

Governance

Financial Statements Financial StatementsPage Title Page Title

Financial Statements / Independent Auditor’s Report

£0.95m

Audit misstatement posting threshold

What we mean Basis for determining materiality and judgements applied

This is the amount below which identified

misstatements are considered to be clearly

trivial from a quantitative point of view. We may

become aware of misstatements below this

threshold which could alter the nature, timing

and scope of our audit procedures, for example

if we identify smaller misstatements which are

indicators of fraud.

This is also the amount above which all

misstatements identified are communicated to

Howden Joinery Group Plc’s Audit Committee.

We set our audit misstatement posting threshold at 5% of our materiality

for the Group financial statements. We also report to the Audit Committee

any other identified misstatements that warrant reporting on qualitative

grounds.

The overall materiality for the Group financial statements of £19.0m compares as follows to the main financial statement

caption amounts:

Total Group

Revenue FY22

Group profit

before tax FY22

Total Group

Assets FY22

Financial statement Caption £2,319.0m £405.8m £2,032.7m

Group Materiality as % of caption 0.8% 4.7% 0.9%

7. The scope of our audit

Group scope

What we mean

How the Group audit team determined the procedures to be performed across the Group.

The Group has 14 reporting components. In order to determine the work performed at the reporting component level, we

identified those components which we considered to be of individual financial significance, those which were significant due

to risk and those remaining components on which we required procedures to be performed to provide us with the evidence we

required in order to conclude on the group financial statements as a whole.

We determined individually financially significant components as those contributing at least 10% of total revenue, total net

assets or total assets. We selected these because these are the most representative of the relative size of the components.

We identified 5 components as individually financially significant components and performed full scope audits on these

components.

The components within the scope of our work accounted for the following percentages of the Group’s results, with the prior

year comparatives indicated in brackets:

Scope

Number of

components

Range of

materiality

applied

Group

revenue

Total profits and

losses that made

up Group PBT

Group

total

assets

Full scope audits 5 £2.4m – £18.0m 97% 96% 95%

Reviews of financial information

(including enquiry) 9 £2.0m – £10.0m 3% 4% 5%

Total 14 100% 100% 100%

The remaining 3% of total Group revenue, 4% of total profits and losses that made up Group profit before tax and 5% of total

Group assets is represented by 9 reporting components, none of which individually represented more than 5% of any of total

Group revenue, total profits and losses that made up Group profit before tax or total Group assets. For these components,

we performed analysis at an aggregated group level to re-examine our assessment that there were no significant risks of

material misstatement within these.

The work on all of the financially significant components, including the audit of the Parent Company, was undertaken to the

materiality levels specified above and performed by the Group team.

Independent auditor’s report continued

To the members of Howden Joinery Group Plc

6. Our determination of materiality

The scope of our audit was influenced by our application of materiality. We set quantitative thresholds and overlay qualitative

considerations to help us determine the scope of our audit and the nature, timing and extent of our procedures, and in evaluating

the effect of misstatements, both individually and in the aggregate, on the financial statements as a whole.

£19.0m

Materiality for the group financial statements as a whole

What we mean Basis for determining materiality and judgements applied

A quantitative reference for the purpose of

planning and performing our audit.

Materiality for the Group financial statements as a whole was set at

£19.0m. This was determined with reference to a benchmark of Group

profit before tax from continuing operations (‘PBTCO’).

We determined that Group profit before tax from continuing operations

(‘PBTCO’) is the main benchmark for the Group as this is the primary

measure by which stakeholders and the market assess the performance of

the group.

Our Group materiality of £19.0m was determined by applying a percentage

to the Group profit before tax from continuing operations. When using a

benchmark of Group profit before tax to determine overall materiality,

KPMG’s approach for public interest entities considers a guideline range

3% – 5% of the measure. In setting overall Group materiality, we applied a

percentage of 4.7% to the benchmark.

Materiality for the Parent Company financial statements as a whole

was set at £12.0m, determined with reference to a benchmark of Parent

Company total assets, of which it represents 1.0%.

£12.3m

Performance materiality

What we mean Basis for determining materiality and judgements applied

Our procedures on individual account

balances and disclosures were performed to

a lower threshold, performance materiality,

so as to reduce to an acceptable level the risk

that individually immaterial misstatements

in individual account balances add up to

a material amount across the financial

statements as a whole.

We have considered performance materiality at a level of 65% of

materiality for Howden Joinery Group Plc Group financial statements as a

whole to be appropriate.

The Parent Company performance materiality was set at £7.8m,

which equates to 65% of materiality for the Parent Company financial

statements as a whole.

We applied this percentage in our determination of performance

materiality based on an increased aggregation risk, having considered our

risk assessment of the entity’s control environment.

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Additional Information

Governance

Financial Statements Financial StatementsPage Title Page Title

Financial Statements / Independent Auditor’s Report

Other matters on which we are required to report by exception

Our responsibility Our reporting

Under the Companies Act 2006, we are required to report to you if, in our opinion:

• adequate accounting records have not been kept by the Parent Company, or returns

adequate for our audit have not been received from branches not visited by us; or

• the Parent Company financial statements and the part of the Directors’

Remuneration Report to be audited are not in agreement with the accounting

records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

We have nothing to report in these

respects.

9. Respective Responsibilities

Directors’ responsibilities

As explained more fully in their statement set out on page 146, the directors are responsible for: the preparation of the financial

statements including being satisfied that they give a true and fair view; 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;

assessing the Group and Parent 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 they either intend to liquidate the Group or the Parent

Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities

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 our opinion in an auditor’s report. Reasonable assurance is a high

level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial

statements.

A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.

The Company is required to include these financial statements in an annual financial report prepared using the single electronic

reporting format specified in the TD ESEF Regulation. This auditor’s report provides no assurance over whether the annual

financial report has been prepared in accordance with that format.

10. The purpose of our audit work and to whom we owe our responsibilities

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act

2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to

state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume

responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or

for the opinions we have formed.

Robert Brent

(Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

15 Canada Square

London

E14 5GL

8 March 2023

Independent auditor’s report continued

To the members of Howden Joinery Group Plc

8. Other information in the annual report

The directors are responsible for the other information presented in the Annual Report together with the financial statements.

Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit

opinion or, except as explicitly stated below, any form of assurance conclusion thereon.

All other information

Our responsibility Our reporting

Our responsibility is to read the other information and, in doing so, consider whether,

based on our financial statements audit work, the information therein is materially

misstated or inconsistent with the financial statements or our audit knowledge.

Based solely on that work we

have not identified material

misstatements or inconsistencies

in the other information.

Strategic Report and Directors Report

Our responsibility and reporting

Based solely on our work on the other information described above we report to you as follows:

• we have not identified material misstatements in the strategic report and the directors’ report;

• in our opinion the information given in those reports for the financial year is consistent with the financial statements; and

• in our opinion those reports have been prepared in accordance with the Companies Act 2006.

Directors’ Remuneration Report

Our responsibility Our reporting

We are required to form an opinion as to whether the part of the Directors’

Remuneration Report to be audited has been properly prepared in accordance with

the Companies Act 2006.

In our opinion the part of the

Directors’ Remuneration Report

to be audited has been properly

prepared in accordance with the

Companies Act 2006.

Corporate governance disclosures

Our responsibility Our reporting

We are required to perform procedures to identify whether there is a material

inconsistency between the financial statements and our audit knowledge, and:

• the directors’ statement that they consider that the annual report and financial

statements taken as a whole is fair, balanced and understandable, and provides

the information necessary for shareholders to assess the Group’s position and

performance, business model and strategy;

• the section of the annual report describing the work of the Audit Committee,

including the significant issues that the Audit Committee considered in relation to

the financial statements, and how these issues were addressed; and

• the section of the annual report that describes the review of the effectiveness of the

Group’s risk management and internal control systems.

Based on those procedures, we

have concluded that each of these

disclosures is materially consistent

with the financial statements and

our audit knowledge.

We are also required to review the part of the Corporate Governance Statement relating

to the Group’s compliance with the provisions of the UK Corporate Governance Code

specified by the Listing Rules for our review.

We have nothing to report in this

respect.

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Strategic Report

Financial Statements

Additional Information

Governance

Financial Statements Financial StatementsPage Title Page Title

Financial Statements / Independent Auditor’s Report

Consolidated balance sheet

Notes

24 December 2022

£m

25 December 2021

£m

Non-current assets

Intangible assets 9 3 5.9 22 .6

Property, plant and equipment 10 3 9 8 .7 295. 8

Lease right-of-use assets 11 6 14. 3 555.8

Pension asset 22 – 14 0. 8

Deferred tax asset 7 35. 9 13. 4

Prepaid credit facility fees 1 .0 0.3

1 ,08 5. 8 1 , 0 2 8 .7

Current assets

Inventories 12 373 . 3 301 .6

Corporation tax 7 32 .3 –

Trade and other receivables 13 23 3 .3 205. 8

Cash and cash equivalents 18 308 .0 515.3

946.9 1 , 0 2 2 .7

Total assets 2 ,0 3 2 .7 2,051 .4

Current liabilities

Lease liabilities 11 (95. 3) (5 7. 5)

Trade and other payables 14 (4 3 3 . 9) (3 8 4.7)

Current tax liability 7 – (25.9)

Provisions 15 (1 2 .0) –

(54 1.2) (4 6 8 . 1)

Non-current liabilities

Pension liability 22 (41 . 5) –

Lease liabilities 11 (570.0) (533.7)

Deferred tax liability 7 (3.8) (3 7. 7)

Provisions 15 (4 . 5) (2 0 . 4)

(61 9. 8) (591 . 8)

Total liabilities (1 , 16 1 .0) (1 ,0 59. 9)

Net assets 87 1 .7 991 . 5

Equity

Share capital 16 56.1 59. 8

Capital redemption reserve 16 9.1 5.4

Share premium 16 8 7. 5 8 7. 5

ESOP and share-based payments 16 1 1 .7 5.9

Treasury shares 16 (25.5) (2 7.1)

Retained earnings 16 7 32 .8 860.0

Total equity 87 1 .7 991 . 5

The financial statements were approved by the Board and authorised for issue on 6 March 2023 and were signed on its behalf by

Paul Hayes

Chief Financial Officer

Consolidated income statement

Consolidated statement of comprehensive income

Notes

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Continuing operation:

Revenue 2, 3 2,319. 0 2, 0 9 3 .7

Cost of sales (9 0 7. 8) (80 4.7)

Gross profit 1 , 41 1 . 2 1, 28 9.0

Operating expenses (996.0) (887 .3)

Operating profit 4 415.2 4 0 1 .7

Finance income 5 3.8 –

Finance costs 6 (13. 2) (1 1 . 4)

Profit before tax 40 5. 8 390.3

Tax on profit 7 (3 1 .6) (75.8)

Profit for the period attributable to the equity holders of the parent 3 74 . 2 314.5

Earnings per share:

Basic earnings per 10p share 8 65.8p 5 3. 2p

Diluted earnings per 10p share 8 65 .6p 53 .0p

Notes

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Profit for the period 3 74 . 2 314. 5

Items of other comprehensive income:

Items that will not be reclassified subsequently to profit or loss:

Actuarial (losses)/gains on defined benefit pension scheme 22 (1 8 3 .0) 170. 4

Deferred tax on actuarial gains and losses on defined benefit pension scheme 7 3 4. 8 (3 3 .5)

Change of tax rate on deferred tax 7 1 1 .0 (8 .5)

Items that may be reclassified subsequently to profit or loss:

Currency translation differences 2. 1 (2. 3)

Other comprehensive income for the period (135.1) 1 26 .1

Total comprehensive income for the period attributable

to equity holders of the parent 23 9.1 4 4 0.6

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Strategic Report

Financial Statements

Additional Information

Governance

Financial Statements Financial Statements Consolidated balance sheetConsolidated income statement Consolidated statement of

comprehensive income

Financial Statements / Consolidated balance sheet

Notes

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Operating profit 415.2 4 0 1 .7

Adjustments for:

Depreciation and amortisation of owned assets 9, 10 44.0 40.6

Depreciation, impairment and loss on termination of leased assets 11 80. 8 74 . 8

Share-based payments charge 7. 3 10.1

(Increase)/decrease in prepaid credit facility fees (0 .7) 0.3

(Profit)/loss on disposal of property, plant and equipment and intangible assets (0.1) 3. 2

Operating cash flows before movements in working capital 54 6. 5 5 3 0 .7

Movements in working capital

Increase in inventories (69. 8) (4 6 . 6)

(Increase) in trade and other receivables (23. 7) (39. 2)

Increase in trade and other payables and provisions 41 . 8 84. 1

Difference between pensions operating charge and cash paid 2.0 (18.5)

(4 9 . 7) (20. 2)

Cash generated from operations 49 6.8 5 10.5

Tax paid (101 . 5) (73 . 1)

Net cash flow from operating activities 395.3 4 37. 4

Cash flows used in investing activities

Payments to acquire property, plant and equipment and intangible assets (14 0. 8) (8 5. 9)

Receipts from sale of property, plant and equipment and intangible assets 0.7 0.1

Acquisition of subsidiary – net of cash acquired 26 (14.6) –

Interest received 1. 1 –

Net cash used in investing activities (15 3 .6) (85.8)

Cash flows used in financing activities

Payments to acquire own shares (25 0.5) (5 0.0)

Receipts from release of shares from share trust 0. 1 0.4

Inflow from receipt of forfeited dividends – 0.2

Inflow from sale of forfeited shares – 1.8

Dividends paid to Group shareholders (115.0) (1 3 3 .6)

Interest paid – including on lease liabilities (1 3 . 1) (1 1 .0)

Repayment of principal on lease liabilities (66.1) (74 . 8)

Net cash used in financing activities (444. 6) (267 .0)

Net (decrease)/increase in cash and cash equivalents (2 02 . 9) 8 4 .6

Cash and cash equivalents at beginning of period 515.3 4 3 0 .7

Effect of movements in exchange rates on cash held (4 . 4) –

Cash and cash equivalents at end of period 18 30 8 .0 515.3

We present an analysis of cash and non-cash changes in liabilities due to financing activities in note 18.

Consolidated cash flow statement

capital

£m

Capital

redemption

reserve

£m

premium

account

£m

ESOP and

share-based

payments

£m

Treasury

£m

Retained

earnings

£m

Total

£m

At 26 December 2020 60. 3 4. 9 8 7. 5 (3. 5) (28. 2) 599.8 7 20. 8

Accumulated profit for the period – – – – – 3 14. 5 314 .5

Other comprehensive income for the period – – – – – 126.1 1 26.1

Total comprehensive income for the period – – – – – 4 4 0.6 4 4 0.6

Current tax on share schemes – – – – – (0.1) (0.1)

Deferred tax on share schemes – – – – – 1.3 1.3

Movement in ESOP – – – 10.5 – – 10. 5

Reclaim of forfeited dividends – – – – – 0.2 0.2

Proceeds from sale of forfeited shares – – – – – 1.8 1.8

Buyback and cancellation of shares (0.5) 0. 5 – – – (5 0.0) (50.0)

Transfer of shares from treasury into share trust – – – (1 .1) 1.1 – –

Dividends – – – – – (1 3 3.6) (1 3 3 .6)

At 25 December 2021 59. 8 5.4 8 7. 5 5.9 (2 7. 1) 860.0 991.5

Accumulated profit for the period – – – – 3 74 . 2 374 . 2

Other comprehensive income for the period – – – – – (135.1) (135.1)

Total comprehensive income for the period – – – – – 23 9.1 2 39. 1

Current tax on share schemes – – – – – 0.4 0.4

Deferred tax on share schemes – – – – – (1 .3) (1 . 3)

Movement in ESOP – – – 7. 4 – – 7. 4

Buyback and cancellation of shares (3. 7) 3 .7 – – – (250. 5) (25 0.5)

Transfer of shares from treasury into share trust – – – (1 .6) 1.6 – –

Dividends – – – – – (115.0) (115.0)

At 24 December 2022 56.1 9.1 8 7. 5 11 .7 (25.5) 732.8 87 1 .7

The item ‘Movement in ESOP’ consists of the share-based payment charge in the year, together with any receipts of cash from

employees on exercise of share options.

At the current period end there were 5,237,907 ordinary shares held in treasury, each with a nominal value of 10p (2021:

5,567,555 shares of 10p each).

We present a description of the nature and purpose of each reserve at note 16.

Consolidated statement of changes in equity

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Financial Statements

Additional Information

Governance

Financial Statements Financial Statements Consolidated cash flow statementConsolidated statement of changes in equity

Financial Statements / Consolidated cash flow statement

General information

Company and currency details

Howden Joinery Group Plc (‘the Company’) is a company

incorporated in the United Kingdom under the Companies

Act 2006. Its registered office address is 40 Portman Square,

London W1H 6LT. The nature of the Group’s operations and

principal activities are set out in the Strategic Report.

These financial statements are presented in pounds sterling,

the currency of the primary economic environment in which

the Group operates. Foreign operations are included on the

basis set out below.

Foreign currency transactions

Transactions in foreign currency are translated at the

exchange rate on the date of the transaction. Monetary

assets and liabilities denominated in foreign currencies at the

balance sheet date are translated at the exchange rate at the

balance sheet date. Foreign exchange gains and losses are

recognised in the income statement.

Foreign operations

The assets and liabilities of foreign operations are translated

into sterling at foreign exchange rate at the balance sheet

date. The results and cash flows of overseas subsidiaries are

translated into sterling on an average exchange rate basis,

weighted by the actual results of each month.

Exchange differences arising from the translation of the

results and net assets of overseas subsidiaries are taken

toequity via the statement of comprehensive income.

Accounting period

The Group’s accounting period covers the 52 weeks to

24December 2022. The comparative period covered the

52weeks to 25 December 2021.

Impairment of assets

The carrying amount of the Group’s assets is reviewed at

least annually to determine whether there is any indication

of impairment. If such an indication exists, the asset’s

recoverable amount is estimated.

Apart from in the case of trade and other receivables,

and inventories, an impairment loss is recognised for the

amount by which the asset’s carrying amount exceeds its

recoverable amount. Impairment losses are recognised in

the income statement.

For trade and other receivables and inventories which are

considered to be impaired, the carrying amount is reduced

through the use of an allowance for estimated irrecoverable

amounts. Changes in the carrying value of this allowance are

recognised in the income statement.

Statement of compliance and basis of preparation

The Group financial statements have been prepared in

accordance with UK-adopted international accounting standards.

The financial statements have been prepared on the historical

cost basis, modified for certain items carried at fair value, as

stated in the accounting policies.

These consolidated financial statements include the accounts

of the Company and all entities controlled by the Company (its

subsidiaries, together referred to as ‘the Group’) from the date

control commences until the date that control ceases.

‘Control’ is defined as the Group having power over the

subsidiary, exposure or rights to variable returns from the

subsidiary, and the ability to use its power to affect the amount

of returns from the subsidiary. Further details of all subsidiaries

are given in the ‘Additional Information’ section at the back of

this Annual Report. All subsidiaries are 100% owned and the

Group considers that it has control over them all.

Going concern

The Directors have undertaken a robust assessment and

concluded that it is appropriate to prepare the financial

statements on the going concern basis. They have not

identified any material uncertainties. Full details are set out in

the strategic review, starting on page 71.

The going concern review period covers the period of

12 months after the date of approval of these financial

statements. The Board has considered the trading results and

financial performance in 2022, and the Group balance sheet

at 24 December 2022, noting that the Group is debt-free, has

cash and cash equivalents of £308m, and appropriate levels

of working capital. The Group also has a five-year, committed,

multi-currency revolving credit facility of up to £150m which

expires in September 2027 and which was not drawn at the

year end.

Management have modelled various scenarios including:

• A ‘base case’ scenario. This is based on the final 2022

Group forecast, prepared in November 2022 and including

the actual results of the 2022 peak sales period.

• A ‘severe but plausible’ downside scenario based on the

worst 12-month year-on-year actual fall ever experienced

in the Group’s history. This is more significant than the

combined effect of COVID and Brexit on 2020 actual

performance.

• A ‘reverse stress-test’ scenario.

Notes to the consolidated financial statements

General information

1 General information

Company and currency details

Foreign currency transactions

Foreign operations

Accounting period

Impairment of assets

Statement of compliance and basis of preparation

Going concern

Standards in issue but not yet effective

Earnings

2 Revenue

3 Segmental reporting

4 Operating profit

5 Finance income

6 Finance costs

7 Current and deferred tax

8 Earnings per share

Operating assets and liabilities

9 Intangible assets

10 Property, plant and equipment

11 Lease right-of-use assets and lease liabilities

12 Inventories

13 Other financial assets

14 Other financial liabilities

15 Provisions

Capital structure and risk

16 Share capital and reserves

17 Dividends

18 Notes to the cash flow statement

19 Borrowing facility

20 Financial risk management

Employees

21 Staff costs and number of employees

22 Retirement benefit obligations

23 Share-based payments

Other supporting notes

24 Financial commitments

25 Related party transactions

26 Acquisition of subsidiary

The order of the notes is set out below. Significant accounting policies and, where applicable, information relating to

significant judgements and sources of estimation uncertainty are presented as part of the related note.

Financial Statements / Notes to the consolidated financial statements

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Financial Statements

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Governance

Governance Page Title

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168

Financial Statements Notes to the consolidated financial statements

Notes to the consolidated financial statements continued

3 Segmental reporting

(a) Basis of segmentation, and other general information

Information reported to the Group’s Executive Committee, which is regarded as the chief operating decision maker, is focused on

one operating segment, Howden Joinery. Thus, the information required in respect of profit or loss, assets and liabilities, can all

be found in the relevant primary statements and notes of these consolidated financial statements.

The Howden Joinery business derives its revenue from the sale of kitchens and joinery products, and related services.

(b) Geographical information

The Group’s operations are mainly located in the UK, with a small presence in France, Belgium and the Republic of Ireland. The

Group has depots in each of these locations, with the first depot in the Republic of Ireland opening in 2022. The number of depots

in each location at the current and prior period ends is shown in the five year record which is located towards the back of this

Annual Report. The Group’s manufacturing and sourcing operations are located in the UK.

The following table analyses the Group’s revenues from external customers by geographical market, irrespective of the origin of

the goods:

Revenues from external customers

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

UK 2,256.1 2,043.3

France, Belgium and Ireland 62.9 50.4

2,319.0 2,093.7

The following is an analysis of the carrying amount of assets, and additions to property, plant and equipment and intangible

assets, analysed by the geographical area in which the assets are located.

Carrying amount of assets

24 December 2022

£m

25 December 2021

£m

UK 1,903.1 1,991.9

France, Belgium and Ireland 129.6 59.5

2,032.7 2,051.4

Non-current assets

24 December 2022

£m

25 December 2021

£m

UK 975.4 982.8

France, Belgium and Ireland 74.5 32.5

1,049.9 1,015.3

Additions to property plant and equipment and intangible assets

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

UK 122.7 82.8

France, Belgium and Ireland 24.5 7.0

147.2 89.8

General information continued

In the base case and the severe but plausible downside scenarios, the Group has significant headroom throughout the going

concern period after meeting its commitments. In the reverse stress-test scenario, the results show that sales would have to fall

by a significant amount over and above the fall modelled in the severe but plausible downside scenario before the Group would

have to take further mitigating actions. The likelihood of this level of fall in sales is considered to be remote.

Taking all the factors above into account, the directors believe that the Group is well placed to manage its financing and other

business risks satisfactorily and have a reasonable expectation that the Group will have adequate resources to remain in

operational existence for the going concern review period set out above.

Standards in issue but not yet effective

At the date of authorisation of these financial statements, the following standards, amendments to standards, and

interpretations, were in issue but not yet effective for the Group in these financial statements:

Annual Improvements 2018–2020 cycle

Amendments to IAS 37: Costs of fulfilling an onerous contract

Amendments to IAS 16: Property, plant and equipment

Amendment to IFRS 3: Business Combinations

Amendments to IAS 1: Presentation of financial statements and IFRS Practice Statement 2: Disclosure of accounting policies

Amendments to IAS 12: Deferred tax related to assets and liabilities arising from a single transaction

IFRS 17: Insurance Contracts

Amendments to IAS 1 – Classification of liabilities as Current or Non-Current

Amendments to IFRS 16: Lease Liability in a Sale and Leaseback

The Directors anticipate that the adoption of the standards and interpretations mentioned above will have no significant impact

on the Group’s financial statements when the relevant standards come into effect.

Significant accounting judgements and major sources of estimation uncertainty

The Group recognises significant judgement and estimation uncertainty in connection with its defined benefit pension scheme. It

also recognises estimation uncertainty over making allowances against the carrying value of inventory. More details are given in

the relevant notes.

Other significant accounting policies

These are presented as part of the related note to the financial statements.

Earnings

2 Revenue

Accounting policy

The Group recognises revenue when it has satisfied its performance obligations to the customer and the customer has

obtained control of the goods or services being transferred. Revenue from sales of goods is recognised on collection or

delivery of the goods. Revenue from services is recognised when the customer accepts that the services are complete.

We measure revenue at the fair value of the consideration received or receivable, excluding sales taxes and discounts.

We recognise interest income as it accrues and measure it using the effective interest rate method.

Financial Statements / Notes to the consolidated financial statements

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Notes to the consolidated financial statements continued

5 Finance income

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Bank interest receivable 1.1 –

Other finance income – pensions 2.7 –

3.8 –

6 Finance costs

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Interest expense on lease liabilities (13.1) (11.0)

Other finance expense – pensions – (0.4)

Other interest (0.1) (0.0)

Total finance costs (13.2) (11.4)

7 Current and deferred tax

Accounting policy

Income tax

The tax expense represents the sum of current tax and deferred tax. It is recognised in profit or loss except to the extent that it

relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax

Current tax is based on taxable profit for the financial period and any adjustments to tax payable or receivable for prior years.

Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that

are taxable or deductible in other financial years as well as items that are never taxable or deductible.

It is calculated as the best estimate of the tax expected to be paid or received. It reflects any uncertainty related to income

taxes and is measured using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on the temporary difference between the carrying amounts of

assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. It is accounted for using

the balance sheet liability method. It is calculated at the tax rates that are expected to apply in the period when the liability

is settled, or the asset realised, based on tax laws and rates that have been enacted or substantially enacted at the balance

sheet date.

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised

to the extent that it is probable that taxable profits will be available against which deductible temporary differences can

be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial

recognition of other assets and liabilities in a transaction (other than in a business combination) that affects neither the

taxable profit nor the accounting profit.

The carrying amounts of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no

longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.

Earnings continued

4 Operating profit

Operating profit has been arrived at after (charging)/crediting:

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Net foreign exchange (loss)/gain (0.7) 5.2

Depreciation of property plant and equipment (36.5) (31.5)

Amortisation of intangible assets (7.5) (9.1)

Depreciation and impairment of lease right-of-use assets (80.8) (74.8)

Cost of inventories recognised as an expense (893.1) (789.9)

Write down of inventories (14.0) (20.0)

Profit/(loss) on disposal of fixed assets – (3.2)

Increase in allowance for expected credit losses on trade debts (1.6) (2.9)

Staff costs (624.1) (553.3)

Auditor’s remuneration for audit services (1.1) (0.7)

All of the items above relate to continuing operations.

A more detailed analysis of auditor’s total remuneration is given below:

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Audit services:

Fees paid to the Company’s auditor for the audit of the Company’s

annual financial statements (0.2) (0.2)

Fees paid to the Company’s auditor and their associates for other services to the Group:

– the audit of the subsidiary companies pursuant to legislation (0.9) (0.5)

Total audit fees (1.1) (0.7)

Other services:

Audit related assurance services (review of the half-year results) (0.1) (0.1)

Tax compliance services – –

Tax advisory services – –

Total non-audit fees (0.1) (0.1)

Details of the Group’s policy on the use of auditors for non-audit services, the reasons why the auditor was used rather than

another supplier and how the auditor’s independence and objectivity were safeguarded are set out in the Corporate Governance

Report. No services were provided pursuant to contingent fee arrangements.

Financial Statements / Notes to the consolidated financial statements

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Governance GovernancePage Title Page Title

Notes to the consolidated financial statements continued

The total tax charge for the period can be reconciled to the result per the income statement as follows:

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Profit before tax 405.8 390.3

Tax at the UK corporation tax rate of 19% (2021: 19%) 77.1 74.1

IFRS2 share scheme charge 0.3 (0.3)

Expenses not deductible for tax purposes 1.0 1.7

Overseas losses not utilised 2.7 2.2

Non-qualifying depreciation 1.6 0.6

Super deduction – capital allowances (2.4) (0.6)

Rate change 0.6 (1.7)

Patent box claim (9.0) –

Other tax adjustments in respect of previous years (40.3) (0.2)

Total tax charged in the income statement 31.6 75.8

The Group’s effective rate of tax is 7.8% (2021: 19.4%). The lower effective tax rate is largely driven by the effect of the Patent Box

deduction which was realised during the period as discussed in note 9(a) above.

Deferred tax:

Analysis of deferred tax assets and liabilities, and the movements on them during the period.

Retirement

benefit

obligations

£m

Accelerated

capital

allowances

£m

Company

schemes

£m

Leasing

£m

Other

temporary

differences

£m

Total

£m

At 26 December 2020 9.1 1.3 0.3 3.1 1.5 15.3

(Charge)/credit to income statement (2.3) (1.1) 1.9 (0.5) 1.4 (0.6)

Credit to the income statement – change of rate – – – 0.7 1.0 1.7

Credit outside the income statement- change of rate (8.5) – 0.3 – – (8.2)

(Charge)/credit outside the income statement (33.5) – 1.0 – – (32.5)

At 25 December 2021 (35.2) 0.2 3.5 3.3 3.9 (24.3)

(Charge)/credit to income statement – 12.9 – 0.2 (0.6) 12.5

(Charge) to the income statement – change of rate – (0.4) – – (0.2) (0.6)

Credit outside the income statement – change of rate 11.0 – 0.2 – – 11.2

(Charge)/credit outside the income statement 34.8 – (1.5) – – 33.3

At 24 December 2022 10.6 12.7 2.2 3.5 3.1 32.1

Deferred tax arising from accelerated capital allowances can be further analysed as a £16.5m asset and a £3.8m liability (2021:

£2.7m asset and £2.5m liability).

Earnings continued

Current tax:

(a) Tax in the income statement

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Current tax:

Current year 77.2 77.3

Adjustments in respect of previous periods* (33.6) (0.5)

Total current tax 43.6 76.8

Deferred tax:

Current year 2.1 0.4

Adjustments in respect of previous periods* (14.7) (1.7)

Effect of changes in tax rate 0.6 0.3

Total deferred tax (12.0) (1.0)

Total tax charged in the income statement 31.6 75.8

UK Corporation tax is calculated at 19% (2021: 19%) of the estimated assessable profit for the period. Tax for other countries is

calculated at the rates prevailing in the respective jurisdictions.

* The adjustments in respect of previous periods are primarily driven by two items:

As a result of a patent granted in 2021, a tax deduction was taken in relation to the Patent Box legislation for the periods

from 2017 to 2021 by resubmitting the relevant tax computations accordingly. This legislation allows the income directly

attributable to patented items to be taxed at 10% instead of 19% and the resubmission resulted in a prior year current tax

credit of £36.1m.

As a result of the change of the tax rate from 19% to 25%, it was decided that the group would not claim capital allowances

other than the deductions available under the capital allowance super deduction regime. This was to preserve the tax benefit

available to be realised at a higher tax rate. This adjustment gave rise to a £10.4m debit to current tax and a corresponding

£10.4m credit to deferred tax.

(b) Tax relating to items of other comprehensive income or changes in equity

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Deferred tax (credit)/charge to other comprehensive

income on actuarial difference on pension scheme (34.8) 33.5

Change of rate effect on deferred tax (11.0) 8.5

Deferred tax charge/(credit) to equity on share schemes 1.3 (1.3)

Current tax (credit)/charge to equity on share schemes (0.4) 0.1

Total(credit)/charge to other comprehensive income or changes in equity (44.9) 40.8

Financial Statements / Notes to the consolidated financial statements

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Notes to the consolidated financial statements continued

Operating assets and liabilities

9 Intangible assets

(a) Total amounts recognised in the balance sheet

24 December 2022

£m

25 December 2021

£m

Goodwill 12.4 –

Software 23.5 22.6

35.9 22.6

(b) Goodwill

The goodwill all arose on the acquisition in the current year of Sheridan Fabrications Ltd. Further details, together with the

accounting policy for goodwill, are given in note 26.

Accounting policy

Directly attributable costs incurred for the development of computer software controlled by and for use within the business

are capitalised and written off over their estimated useful lives, which are reviewed annually and which range between three

and seven years. No amortisation is charged on assets under construction.

Amounts paid to third parties for development of assets not controlled by the Group are expensed over the period where the

Group receives the benefit of the use of these assets. Licence fees for using third-party software are expensed over the period

the software is in use.

Intangible assets

in use

£m

Assets under

construction

£m

TOTAL

£m

Cost

At 26 December 2020 50.6 2.9 53.5

Exchange adjustments (0.1) – (0.1)

Additions 5.6 4.4 10.0

Disposals (13.1) (0.1) (13.2)

Reclassifications 3.3 (3.3) –

At 25 December 2021 46.3 3.9 50.2

Exchange adjustments 0.1 – 0.1

Additions 1.8 6.5 8.3

Acquisition of subsidiary (note 26) 0.3 – 0.3

Disposals (5.2) (0.1) (5.3)

Reclassifications 2.5 (2.5) –

At 24 December 2022 45.8 7.8 53.6

Accumulated depreciation

At 26 December 2020 (29.2) – (29.2)

Exchange adjustments 0.1 – 0.1

Charge for the period (9.1) – (9.1)

Disposals 10.6 – 10.6

At 25 December 2021 (27.6) – (27.6)

Exchange adjustments (0.1) – (0.1)

Charge for the period (7.5) – (7.5)

Disposals 5.1 – 5.1

At 24 December 2022 (30.1) – (30.1)

Net book value at 24 December 2022 15.7 7.8 23.5

Net book value at 25 December 2021 18.7 3.9 22.6

Earnings continued

The presentation in the balance sheet is as follows:

24 December 2022

£m

25 December 2021

£m

Deferred tax assets 35.9 13.4

Deferred tax liabilities (3.8) (37.7)

32.1 (24.3)

At the balance sheet date the group had unused tax losses as disclosed below. These losses are carried forward by particular

group companies and may only be offset against profits of that particular company. Deferred tax assets are not recognised

in relation to these losses as it is not considered probable that suitable future taxable profits will be available in the relevant

company against which the unused losses can be utilised. Specifically, in the case of the trading and non-trading losses this is

due to the unpredictability of future profit streams in the relevant entities, while for the capital losses it is due to the future capital

gains not currently being forecast to arise. All unrecognised losses may be carried forward indefinitely and have been valued in

GBP at the year end closing exchange rate.

The analysis below does not include any tax losses attributable to our former subsidiaries in the Netherlands and Germany,

which have now ceased to trade.

24 December 2022

£m

25 December 2021

£m

Trading losses 77 63

Non-trading losses 20 20

Capital losses 86 86

Total losses 183 169

The losses disclosed above relate to activities both in the UK and in overseas jurisdictions. Of the trading losses, £31m relate to

UK activities with the remainder being attributable to Belgium (£1m), Ireland (£2m) and France (£43m). All of the non-trading

losses and capital losses are attributable to UK activities.

8 Earnings per share

From continuing operations

52 weeks to 24 December 2022 52 weeks to 25 December 2021

Earnings

£m

Weighted average

number of shares

Earnings per

Earnings

£m

Weighted average

number of shares

Earnings per

Basic earnings per share 374.2 568.6 65.8 314.5 591.2 53.2

Effect of dilutive share options – 2.1 (0.2) – 2.1 (0.2)

Diluted earnings per share 374.2 570.7 65.6 314.5 593.3 53.0

The difference between the weighted average number of shares used in the calculation of basic earnings per share and the total

number of shares in issue at the period end is due to the net effect of time-apportioned adjustments for shares held in treasury,

shares held in trust which are not unconditionally vested, and shares bought back and cancelled in the period.

Financial Statements / Notes to the consolidated financial statements

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Notes to the consolidated financial statements continued

11 Lease right-of-use assets and lease liabilities

Accounting policy

We assess whether a lease exists at the inception of the related contract. If a lease exists, we recognise a right-of-use asset

and a corresponding lease liability with effect from the date the lease commences.

The lease liability

The lease liability is initially measured at the present value of the lease payments due. As the discount rate inherent in our

leases is not readily determinable, we use the Group’s incremental borrowing rate to discount the payments and arrive at net

present value.

The Group does not have a history of borrowing, and therefore it does not have a credit agency credit rating. Therefore, we

derive the incremental borrowing rate by a process of:

• discussion with our bankers to estimate a reasonable proxy credit rating for the Group;

• using an independent third-party borrowing rate curve, giving indicative costs of borrowing for companies with a

comparable credit rating over various durations, and

• selecting borrowing rates from the appropriate points on that curve to best match the duration of our lease portfolios.

Our leases are on relatively simple terms. Lease payments included in the measurement of the lease liability comprise fixed

lease payments, less any lease incentives. We do not have variable lease payments which depend on an index, residual value

guarantees, purchase options or termination penalties.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using

the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

We remeasure the lease liability (and make a corresponding adjustment to the related right-of-use asset) whenever:

• the lease term has changed, in which case the lease liability is remeasured by discounting the revised lease payments

using a revised discount rate; or

• the lease payments have changed as a result of a change in an index, or, as is common with property leases, to reflect

changes in market rental rates. In these cases, the lease liability is remeasured by discounting the revised lease payments

using the initial discount rate.

In any cases other than those described immediately above, where a lease contract is modified and the lease modification is

not accounted for as a separate lease, the lease liability is remeasured by discounting the revised remaining lease payments

using a revised discount rate.

The lease liability is presented as a separate item in the balance sheet and is split between current and non-current portions.

The lease right-of-use asset

‘The right-of-use asset comprises the initial measurement of the corresponding lease liability and any initial direct costs of

obtaining the lease. It is subsequently measured at cost less accumulated depreciation and any impairment losses.

Whenever we incur an obligation for costs to restore a leased asset to the condition required by the terms and conditions of

the lease, a provision is recognised and measured under IAS 37.

Right-of-use assets are depreciated over the lease term as this is always shorter than the useful life of the underlying asset.

Depreciation starts at the commencement date of the lease. We do not have any leases that include purchase options or

transfer ownership of the underlying asset.

The right-of-use assets are presented as a separate line item in the balance sheet.

Lease term

It is uncommon for any of our leases to have extension options, although in the case of property leases it is common for us to

enter into a new lease of the same property when the current lease expires. It is also uncommon for us to exit any leases before

the end of their specified maximum term. Therefore we assume on inception that our leases will run to the maximum term in

the lease agreement.

Operating assets and liabilities continued

10 Property, plant and equipment

Accounting policy

On adopting IFRS, the Group adopted the transitional provisions of IFRS 1 to use previous revaluations of freehold properties as

the new deemed cost at the date of transition to IFRSs.

All property, plant and equipment is stated at cost (or deemed cost, as applicable) less accumulated depreciation and any

accumulated impairment losses.

Depreciation of property, plant and equipment is provided to write off the difference between their cost and their residual

value over their estimated lives on a straight-line basis. The current range of useful lives is as follows:

Freehold property 50 years

Leasehold property improvements and fittings the period of the lease, or the individual asset’s life, if shorter

Plant, machinery & vehicles 3–20 years

Fixtures & fittings 2–15 years

Capital work-in-progress and freehold land are not depreciated.

Residual values, remaining useful economic lives and depreciation periods and methods are reviewed regularly

and adjusted if appropriate.

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are recognised in

the income statement.

Freehold

property

£m

Leasehold

property

improvements

£m

Plant,

machinery

& vehicles

£m

Fixtures

& fittings

£m

Capital

WIP

£m

TOTAL

£m

Cost £m £m £m £m £m

At 26 December 2020 42.9 91.9 184.7 182.1 21.5 523.1

Exchange adjustments – – (0.2) (0.6) – (0.8)

Additions 12.2 6.6 8.7 29.6 22.7 79.8

Disposals – (7.3) (12.0) (4.4) – (23.7)

Reclassifications – 0.9 9.8 0.4 (11.1) –

At 25 December 2021 55.1 92.1 191.0 207.1 33.1 578.4

Exchange adjustments – – 0.1 0.5 – 0.6

Additions 16.2 16.5 12.2 49.6 44.4 138.9

Acquisition of subsidiary (note 26) 0.1 – 0.3 0.1 – 0.5

Disposals – (0.3) (5.3) (1.3) – (6.9)

Reclassifications 1.7 (0.2) 8.1 8.2 (17.8) –

At 24 December 2022 73.1 108.1 206.4 264.2 59.7 711.5

Accumulated depreciation

At 26 December 2020 (7.8) (32.2) (125.0) (109.3) – (274.3)

Exchange adjustments – – 0.1 0.2 – 0.3

Charge for the period (1.3) (4.7) (11.9) (13.6) – (31.5)

Disposals – 7.3 11.3 4.3 – 22.9

At 25 December 2021 (9.1) (29.6) (125.5) (118.4) – (282.6)

Exchange adjustments – – (0.1) (0.1) – (0.2)

Charge for the period (1.7) (5.1) (12.3) (17.4) – (36.5)

Disposals – 0.3 4.9 1.3 – 6.5

At 24 December 2022 (10.8) (34.4) (133.0) (134.6) – (312.8)

Net book value at 24 December 2022 62.3 73.7 73.4 129.6 59.7 398.7

Net book value at 25 December 2021 46.0 62.5 65.5 88.7 33.1 295.8

Financial Statements / Notes to the consolidated financial statements

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Notes to the consolidated financial statements continued

Amounts recognised in the income statement

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Included in net operating expenses

Depreciation of right-of-use assets:

– property 65.4 58.0

– vehicles, plant & machinery 16.3 15.2

Impairment and net (gain)/loss on lease termination (0.9) 1.6

Total – recognised in net operating costs 80.8 74.8

Expense relating to short-term leases 5.4 3.7

Variable lease payments, not included in the measurement of lease liabilities 2.9 1.6

Included in finance costs

Interest expense on lease liabilities 13.1 11.0

Cash flows and maturity analysis of lease liabilities

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Total cash outflow for leases 79.2 85.8

24 December 2022

£m

25 December 2021

£m

Maturity analysis of lease liabilities

Contractual undiscounted cashflows due

– within 1 year 109.9 68.0

– 1 to 5 years 285.4 263.5

– more than 5 years 371.6 352.5

766.9 684.0

Operating assets and liabilities continued

Property leases treated as short-term leases when in the process of being renewed

From time to time when renewing a property lease, the new lease may not be formally signed before the end date of the

previous lease. In these circumstances, although both we and the landlord will have agreed our willingness to renew the

lease in principle, and we may also have protection under property law which grants us the right to renew the lease, our

interpretation of IFRS 16 is that there is no enforceable right to renew the lease until the new lease is formally signed.

Therefore, we treat any lease payments made in this period between expiry and renewal as short-term lease payments under

IFRS 16 and we expense them, taking advantage of the IFRS16 short-term lease exemption.

Amounts treated as variable lease payments – rent reviews

It is common for property leases to contain a clause whereby the rent is reviewed every five years and adjusted in line with

prevailing market rates. The process of agreeing rent reviews can sometimes be a lengthy one, and some reviews are not

agreed until after their effective date.

In these cases we will continue to pay rent at the old rate until the rent review is agreed and neither the lease asset nor the

lease liability is remeasured. If the new rent is agreed at a higher rate than the old rent, there will be a one-off payment to the

lessor, covering the increase in rent for the period between the date from which the rent review was effective and the date on

which the rent review was agreed.

This payment is treated as a variable lease payment and is not included in the remeasurement of the lease liability.

The lease asset and liability are remeasured from the rent review agreement date, based on the future agreed cashflows at

the new agreed rent.

Nature of the Group’s leasing activities

Around 90% of our leases by value are for depot, warehouse, and office properties. A typical depot lease would be for a period

of 10 to 15 years, with warehouse and factory leases being for significantly longer and typical office lease periods being shorter.

We also lease other smaller assets such as fork lift trucks, lorries, vans and cars, with typical lease periods ranging up to around

5years.

Amounts recognised in the balance sheet

24 December 2022

£m

25 December 2021

£m

Right-of-use assets

Property 565.6 510.9

Vehicles, plant & machinery 48.7 44.9

614.3 555.8

Additions to right-of-use assets in the period 141.6 70.0

The additions to right-of-use assets in 2022 includes £1.3m acquired as part of a business combination (see note 26).

24 December 2022

£m

25 December 2021

£m

Lease liabilities

Current (95.3) (57.5)

Non-current (570.0) (533.7)

(665.3) (591.2)

Financial Statements / Notes to the consolidated financial statements

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Governance GovernancePage Title Page Title

Notes to the consolidated financial statements continued

13 Other financial assets

Accounting policy

Trade receivables do not contain a significant financing component and are stated at their nominal value, reduced by an

allowance for expected credit losses. This approximates to their fair value.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses. This 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.

To determine expected credit losses, the Group uses historical observed default rates for these different groups of

receivables, adjusted for forward-looking estimates. The default rates and forward-looking estimates are revised at each

reporting date.

Trade and other receivables

24 December 2022

£m

25 December 2021

£m

Trade receivables (net of allowance) 173.5 166.5

Prepayments 55.2 34.3

Other receivables 4.6 5.0

233.3 205.8

An analysis of the Group’s allowance for expected credit losses on debtors is as follows:

24 December 2022

£m

25 December 2021

£m

Balance at start of period 15.8 12.9

Acquired with subsidiary (note 26) 0.2 –

Increase in allowance recognised in the income statement 1.6 2.9

Balance at end of period 17.6 15.8

Trade receivables – exposure to credit risk and allowance for expected credit losses

We have no significant concentration of credit risk, as our exposure is spread over a large number of customer accounts.

We charge interest at appropriate market rates on balances which are in litigation.

Before accepting any new credit customer, we obtain a credit check from an external agency to assess the potential customer’s

credit quality, and then we set credit limits on a customer-by-customer basis. We review credit limits regularly, and adjust them if

circumstances change. In the case of one-off customers, our policy is to require immediate payment at the point of sale, and not

to offer credit terms.

The historical level of customer default is low as a percentage of sales, and we consider the credit quality of period end trade

receivables to be high. We regularly review trade receivables which are past due but not impaired, and we make an allowance

against them based on any expected credit losses. We base our assessment both on past experience and also on whether there

are any other likely significant future factors which might affect recoverability and influence our assessment of expected credit

losses. We maintain regular contact with customers with overdue debts and, where necessary, we take legal action to recover

the receivable.

We wrote off £7.9m of debts in the period (2021: £5.6m). Included within our aggregate trade receivables balance are specific

debtor balances with customers totalling £44.7m before allowance for expected credit losses (2021: £42.6m before allowance)

which are past due as at the reporting date. We have assessed these balances for recoverability and we believe that their credit

quality remains intact.

Operating assets and liabilities continued

12 Inventories

Estimation uncertainty – allowances against the carrying values of inventories

In order to achieve the accounting objective that inventories are stated at the lower of cost and net realisable value, the Group

carries an allowance against products which it estimates may not sell at a price above cost, or where we may be holding

levels of product in excess of estimated future demand. The Group bases these estimates on regular reviews of stock levels,

as well as of product lifecycles, selling prices achieved in the market and historical sales profiles of products after they have

been discontinued. These estimates are regularly reviewed against actual experience, and revised to reflect any differences,

but the accuracy of the estimates at any point in time can be affected by the extent to which current products may not follow

historical patterns.

Both the gross inventory balance and the amount of the allowance against carrying value are material items and we

would expect this to remain the case as the Group grows in size, and as consumer demand for regular introductions of

new product continues.

We derive our allowance against carrying value based on specific kitchen ranges and stock items where a decision has been

made to discontinue future sales or where our monitoring of current sales indicates that the rate of sales is in decline and

the product may be coming to the end of its life cycle. The level of judgement and estimation involved requires assessing the

obsolescence risk across a high volume of SKUs, which can have different risk profiles. As such, the allowance is specific in

nature and does not lend itself to meaningful sensitivity analysis in the same way as a figure which is derived by a general

formula. The potential range of reasonable outcomes could be material. In the analysis of the allowance below, we have

separately identified the aggregate gross value of stock against which an allowance has been made.

Once a decision is made to discontinue future sales of a product, it will still be available for sale in depots for a standard period

of time, after which any remaining units of that product will be removed from sale. Our stock allowance is calculated so that

the carrying value of any unsold units is progressively written down to nil over the period during which they are available for

sale. The rate at which the units are written down to nil is based on actual historical experience of realised selling prices for

previous similar products, and recognises that higher selling prices are typically achievable at the beginning of the period

than at the end of the period. Rates are reviewed regularly against historical experience and are adjusted if necessary.

Accounting policy

Inventories are stated at the lower of cost and net realisable value. In the case of manufactured inventories, cost includes

an appropriate share of production overheads based on normal operating capacity, calculated using a standard cost

which is regularly updated to reflect average actual costs. An allowance is made for obsolete, slow-moving, or defective

items where appropriate.

24 December 2022

£m

25 December 2021

£m

Raw materials 24.3 16.0

Work in progress 6.2 5.6

Finished goods and goods for resale 396.3 322.9

Allowance against carrying value of inventories (53.5) (42.9)

373.3 301.6

The aggregate carrying amount of specific inventories against which allowances have been made is given below:

2022 2021

Gross value of stock

£m

Allowance against

carrying value

£m

Gross value of stock

£m

Allowance against

carrying value

£m

Stock with no allowance against it 323.3 – 269.7 –

Stock with an allowance 103.5 (53.5) 74.8 (42.9)

426.8 (53.5) 344.5 (42.9)

Financial Statements / Notes to the consolidated financial statements

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Financial Statements

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Governance

Governance GovernancePage Title Page Title

Notes to the consolidated financial statements continued

15 Provisions

Accounting policy

Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable that the Group will

be required to settle that obligation, and a reliable estimate can be made of the amount required to settle the obligation.

Provisions are measured at the best estimate of the expenditure required to settle the obligation at the balance sheet date,

taking into account the risks and uncertainties surrounding the obligation, and are discounted to present value where the

effect is material.

Property

£m

Warranty

£m

Closure costs

£m

French post-

employment

benefits

£m

Total

£m

At 26 December 2020 5.6 8.0 – 0.3 13.9

Additional provision in the period 3.2 7.7 2.2 – 13.1

Provision released in the period (0.2) – – – (0.2)

Utilisation of provision in the period (1.6) (4.8) – – (6.4)

At 25 December 2021 7.0 10.9 2.2 0.3 20.4

Additional provision in the period 1.3 7.0 – – 8.3

Provision released in the period (1.6) – (1.4) – (3.0)

Utilisation of provision in the period (1.7) (6.7) (0.8) – (9.2)

At 24 December 2022 5.0 11.2 0.0 0.3 16.5

Presented as current liabilities 4.4 7.6 – – 12.0

Presented as non-current liabilities 0.6 3.6 – 0.3 4.5

5.0 11.2 – 0.3 16.5

In the current reporting period, provisions have been presented as either current or non-current liabilities for the first time. The

basis of the allocation is outlined for each type of provision, below. In prior periods, all provisions were presented as non-current.

Property provision

The property provision covers obligations to make dilapidation payments to landlords of leased properties. Following the

guidance in the IFRSs governing leases and provisions, our assessment is that, in general, the likelihood of a cash outflow for

dilapidations at the time of signing a lease is remote, and therefore it would be unusual for us to recognise any costs relating to

dilapidations at that time.

In these cases, the event which changes our assessment of the likelihood of a cash outflow for dilapidations from being remote

to being probable, and which therefore triggers our recognition of a provision for that probable outflow, typically occurs as

we come towards the end of a lease and we can assess the condition of the leased property and the likelihood of dilapidations

being payable.

The timing of any outflows from the provision is variable, and is dependent on the timing of dilapidations assessments and works.

Although circumstances will differ from property to property, a typical pattern would be that the outflow would occur within 1–3

years of the provision being made. The amounts provided are specific to each property and are based on our best estimate of

the cost of performing any required works or, in cases where we will not be directly contracting for the works to be done, our best

estimate of the outflow required to settle any claim from the landlord. Where the amounts involved are significant, we would

typically take advice on the likely costs from third-party property maintenance specialists.

For the purposes of allocating this provision between current liabilities and non-current liabilities we have used our best estimate

of when we would reasonably expect outflows to occur, based on circumstances at each relevant property.

Operating assets and liabilities continued

An ageing analysis of these past due trade receivables is as follows:

24 December 2022

£m

25 December 2021

£m

1–30 days past due 22.6 24.8

31–60 days past due 6.1 5.6

61–90 days past due 3.8 2.6

90+ days past due 12.2 9.6

Total overdue amounts, excluding allowance for doubtful receivables 44.7 42.6

There were no trade receivables which would have been impaired at either period end were it not for the fact that their credit

terms were renegotiated. The Group does not renegotiate credit terms.

Cash and cash equivalents

Cash and cash equivalents comprises cash at bank and on hand together with demand deposits, and other short-term

investments (see below). Cash at bank is either in current accounts, or is placed on short-term deposit, and is available

on demand. Interest on short-term deposits is paid at prevailing money market rates. The carrying value of these assets

approximates to their fair value.

Short-term investments

From time to time, the Group uses short-term investments in UK Gilts as part of its cash management activities. The Group

reviews these investments before entering into them, and, after establishing that the Group intends to hold these investments in

order to collect contractual cashflows which are solely payments of principal and interest, they are initially recognised at cost,

including any transaction fees.

Subsequent to initial recognition, these investments are carried at amortised cost using the effective interest method. Income

from these investments is recognised in the income statement on an effective yield basis. They form part of our cash and cash

equivalents for cash flow purposes.

There were no investments at the current balance sheet date. The investments held at the previous balance sheet date had

maturity dates ranging between 1 and 3 months. They returned a fixed rate of interest and their weighted average effective

interest rate was 0.02% pa.

The carrying value of these investments at the previous period end approximated to their fair value.

14 Other financial liabilities

Accounting policy

Trade payables are not interest-bearing and are stated at their nominal value, which approximates to their fair value.

Trade and other payables

Current liabilities

24 December 2022

£m

25 December 2021

£m

Trade payables 189.5 178.8

Other tax and social security 91.9 86.6

Other payables 37.2 26.3

Accruals and deferred income 115.3 93.0

433.9 384.7

Trade payables, other payables, and accruals principally comprise amounts due in respect of trade purchases and ongoing costs.

The average credit taken for trade purchases during the period, based on total operations, was 55 days (2021: 59 days).

The Group’s policy on payment of creditors is to agree terms of payment prior to commencing trade with a supplier, and to abide

by those terms on the timely submission of satisfactory invoices.

Financial Statements / Notes to the consolidated financial statements

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Notes to the consolidated financial statements continued

17 Dividends

Amounts recognised as distributions to equity holders in the period:

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Interim dividend for the 52 weeks to 24 December 2022 – 4.7p/share 26.1 –

Final dividend for the 52 weeks to 25 December 2021 – 15.2p/share 88.9 –

Interim dividend for the 52 weeks to 25 December 2021 – 4.3p/share – 25.3

Final dividend for the 52 weeks to 26 December 2020 – 9.1p/share – 54.2

Special dividend for the 52 weeks to 26 December 2020 – 9.1p/share – 54.1

115.0 133.6

Dividends proposed at the end of the period (but not recognised in the period):

52 weeks to

24 December 2022

£m

Proposed final dividend for the 52 weeks to 24 December 2022 – (15.9p/share) 87.9

87.9

The Directors propose a final dividend in respect of the 52 weeks to 24 December 2022 of 15.9p per share, payable to ordinary

shareholders who are on the register of shareholders at 11 April 2023, and payable on 19 May 2023.

The proposed final dividend for the current period is subject to the approval of the shareholders at the 2023 Annual General

Meeting, and have not been included as a liability in these financial statements.

Dividends have been waived indefinitely on all shares held by the Group’s employee share trusts which have not yet been

awarded to employees.

18 Notes to the cash flow statement

Analysis of net cash

Cash at bank

and in hand

£m

Current asset

investments

£m

Cash and cash

equivalents,

and net cash

£m

At 25 December 2021 490.3 25.0 515.3

Cash flow (182.3) (25.0) (207.3)

At 24 December 2022 308.0 – 308.0

The current asset investments had a maturity of less than three months, and as such were considered to be cash equivalents for

the purposes of the cash flow statement. More details are given at Note 13.

Changes in liabilities arising from financing activities

The only liabilities which have changed due to financing activities are lease liabilities. The cash and non-cash changes in lease

liabilities are analysed below.

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Opening balance (591.2) (580.5)

Cash movement: repayment of principal on lease liabilities 66.1 74.8

Cash movement: lease interest paid 13.1 11.0

Non-cash movement: lease interest charged (13.1) (11.0)

Non cash movement: net additions to lease liabilities (140.2) (85.5)

Closing balance (665.3) (591.2)

Operating assets and liabilities continued

Warranty provision

The warranty provision relates to the estimated costs of product warranties. As products are sold, the Group makes provision

for claims under warranties, based on actual sales and on historical average warranty costs incurred. As claims are made,

the Group utilises the provision and then uses the historical data on the rate and amount of claims to periodically revise our

expectations of the amount of future warranty costs and therefore the rate at which it is appropriate to provide for warranty

costs on each sale in the future.

For the purposes of allocating this provision between current liabilities and non-current liabilities we have used the historical

data on timing and amount of claims to estimate the costs for the next 12 months and have classified this as a current liability.

Closure costs

Closure costs in 2021 relate to closing 5 depots in France, which did not align with our city-based depot expansion plans.

French post-employment benefits provision

This provision relates to a benefit which is payable to employees in our French subsidiary under French law on retirement. It is

a lump sum payable on retirement, not a recurring pension. There will only be an outflow from this provision if any of the eligible

employees are employed by our French subsidiaries immediately before their retirement.

The provision represents our best estimate of the potential liability and it is calculated based on several factors, mainly the age

profile and salary details of the current workforce in France, and the current rate of staff turnover. The calculation to arrive at the

best estimate of the required provision is revised periodically by third-party specialists and our provision is adjusted in line with

the results of this calculation if necessary.

We have estimated that the whole of this provision is non-current.

Capital structure and risk

16 Share capital and reserves

Ordinary shares of 10p each:

52 weeks to

24 December 2022

No.

52 weeks to

25 December 2021

No.

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Allotted, called up and fully paid

Balance at the beginning of the period 597,573,827 602,863,861 59.8 60.3

Bought back and cancelled during the period (36,657,778) (5,290,034) (3.7) (0.5)

Balance at the end of the period 560,916,049 597,573,827 56.1 59.8

Share capital

The Company has one class of ordinary share that carries no right to fixed income. The holders of ordinary shares are entitled

to receive dividends as declared and are entitled to one vote per share at meetings of the Company. All shares rank equally with

regard to the Company’s residual assets.

Description of the nature and purpose of the other reserves shown in the balance sheet

The share premium reserve represents the amounts above the nominal value received for shares sold. The capital redemption

reserve represents the nominal value of share capital bought back and cancelled. The ESOP reserve relates to the costs of

providing share-based payments. The treasury share reserve represents the cost of shares bought from the market and held in

treasury. The retained earnings reserve represents the Group’s cumulative results.

Financial Statements / Notes to the consolidated financial statements

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Governance

Governance GovernancePage Title Page Title

Notes to the consolidated financial statements continued

(d) Financial risk management

General

The Group is exposed in varying degrees to a variety of financial instrument related risks. The Board has approved and monitors

the risk management processes, including documented treasury policies, counterparty limits, and controlling and reporting

structures. The types of risk exposure, the way in which these exposures are managed, and the quantification of the level of

exposure in the balance sheet is shown below (subcategorised into credit risk, liquidity risk and market risk). The Group is actively

engaged in the management of all of these financial risks in order to minimise their potential adverse impact on the Group’s

financial performance.

The principles, practices and procedures governing the Group-wide financial risk management process have been approved

by the Board and are overseen by the Executive Committee. In turn, the Executive Committee delegates authority to a central

treasury function (‘Group Treasury’) for the practical implementation of the financial risk management process across the

Group and for ensuring that the Group’s entities adhere to specified financial risk management policies. Group Treasury

regularly reassesses and reports on the financial risk environment, identifying and evaluating financial risks. The Group

does not take positions on derivative contracts and only enters into contractual bank deposit or lending arrangements with

counterparties that have appropriate credit ratings, as detailed in section (e) below.

Cash and cash equivalents

Cash at bank and in hand, which is the term used in the balance sheet, comprises cash on hand together with demand deposits,

and other short-term highly liquid investments that are readily convertible to a known amount of cash, and are subject to an

insignificant risk of changes in value. Cash and cash equivalents, which is the term used in the cash flow statement, comprises

cash at bank and in hand, as defined immediately above, together with any current asset investments.

Arrangements are in place to ensure that cash is utilised most efficiently for the ongoing working capital needs of the Group’s

operating units and to ensure that the Group earns the most advantageous rates of interest available. The prime consideration in

the investment of cash balances is the security of the asset, followed by liquidity and then yield.

Current asset investments consist of UK Government Treasury Bills with an initial term to maturity of up to three months. These

investments are held to maturity and, whilst of lower liquidity than cash, will ensure that the primary Group policy objective of

asset security is met.

Management of trade receivables is discussed in note 13.

(e) Credit risk

The Group’s principal financial assets are cash, investments, and trade and other receivables. Our main credit risk is the risk of

trade customers defaulting their debts. We have a policy of only dealing with creditworthy counterparties in order to mitigate the

risk of defaults.

We describe our policy on dealing with trade customers in note 13. Trade receivables are spread over a large number of

customers, and we do not have a significant exposure to any single counterparty.

We limit our exposure to credit risk on liquid funds and investments through adherence to a policy of minimum short-term

counterparty credit ratings assigned by international credit-rating agencies (Standard & Poor’s A-1 and Moody’s P-1). However,

when accounts are opened in new territories there may be instances where there is no appropriate partner which meets the

Group’s credit rating conditions. In such circumstances, arrangements with a counterparty which does not meet the Group’s

credit rating criteria can be made only at the specific approval of the Board and is subject to a maximum cash holding limit.

In addition, the Group Treasury function monitors counterparty risk through credit agency ratings.

Our maximum exposure to credit risk is presented in the following table:

24 December 2022

£m

25 December 2021

£m

Trade receivables (net of allowance) 173.5 166.5

Cash 308.0 490.3

Current asset investments – 25.0

Total credit risk exposure 481.5 681.8

Capital structure and risk continued

19 Borrowing facility

Accounting policy

Fees relating to borrowing facilities are recorded as prepayments and released over the life of the facility.

At the period end date, the Group had a £150m committed multi-currency revolving credit facility, due to expire in September

2027. The Group did not use the facility in the year.

As at 24 December 2022, the full £150m of the facility was available in addition to the Group’s cash and short-term investments

as shown on the Balance Sheet.

If the Group were to use the facility, it would carry interest at a rate of SONIA plus a margin of between 100 and 175 basis points,

with the margin being dependent on the ratio of total net debt to EBITDA.

The facility has two covenants, both of which are calculated on a 12 month rolling basis twice each year, at year end and then

again at half year end. Under one covenant the ratio of EBITDA to net debt has to be less than 3:1, and under the other covenant

the ratio of EBITDA to net finance charges has to be greater than 4:1.

20 Financial risk management

(a) Capital risk management

The Group manages its capital structure to maximise shareholder returns through its debt and equity balance, trading-off the

benefits of financial leverage with the expected future costs of financial distress.

The capital structure of the Group consists of cash and short-term investments, the committed borrowing facility discussed

further in note 19 – if needed – and equity attributable to equity holders of the parent (including issued share capital and reserves

as disclosed in the Consolidated Statement of Changes in Equity, and in note 16).

The Board of Directors reviews the capital structure regularly, including at the time of preparing annual budgets, preparing

three-year corporate plans, and considering corporate transactions. As part of this review, the Board reviews the costs and the

risks associated with each class of capital. The Group will balance its overall capital structure through the payment of dividends,

new share issues and share buybacks, taking on or issuing new debt or repaying any existing debt.

(b) Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of

measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial

liability and equity instrument are included in the relevant notes to the financial statements. An index to the notes is located

between the cash flow statement and note 1

24 December 2022

£m

25 December 2021

£m

Financial assets (current and non-current)

Trade receivables 173.5 166.5

Cash and cash equivalents 308.0 515.3

Financial liabilities (current and non-current)

Trade payables 189.5 178.8

Financial Statements / Notes to the consolidated financial statements

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Notes to the consolidated financial statements continued

(h) Financial instrument sensitivities

Financial instruments affected by market risk include deposits, trade receivables and trade payables. The following analysis,

required by IFRS 7, is intended to illustrate the sensitivity of the Group’s financial instruments as at its year end to changes in

market variables, being exchange rates and interest rates. The sensitivity analysis has been prepared on the basis that the

components of net cash and the proportion of financial instruments in foreign currencies are all constant. For floating rate

liabilities, the analysis is prepared assuming that the amount of liability outstanding at the year end date was outstanding for

the whole year. As a consequence, this sensitivity analysis relates to the position as at the balance sheet date. The following

assumptions were made in calculating the sensitivity analysis:

• Deposits are carried at amortised cost and therefore carrying value does not change as interest rates move.

• No sensitivity is provided for accrued interest as accruals are based on pre-agreed interest rates and therefore are not

susceptible to further rate movements.

• Finance lease interest payments are fixed at the inception of the contract and are not subject to repricing. They have

therefore been excluded from this analysis.

• Translation of foreign subsidiaries and operations into the Group’s presentation currency have been excluded from the

sensitivity.

Using the above assumptions, the following analyses show the illustrative effect on the income statement and equity that would

result from reasonably possible changes in the relevant foreign currency or interest rates:

Interest rate sensitivity

The sensitivity analysis below has been determined based on the exposure to interest rates for floating rate non-derivative

instruments at the balance sheet date. The Group holds no derivative financial instruments. Fixed rate liabilities are not

susceptible to changes in interest rates, and are omitted from the analysis below. For floating rate liabilities, the analysis is

prepared assuming the amount of the liability outstanding at the balance sheet date was outstanding for the whole year. A 50

basis points increase is used as this represents management’s assessment of the possible change in interest rates.

At the reporting date, if interest rates had been 50 basis points higher and all other variables were held constant, the Group’s net

profit and profit and loss reserve would increase by £0.6m (2021: increase by £1.1m).

For a decrease of 50 basis points, the current year figures would decrease by £0.6m (2021: decrease by £1.1m).

Foreign exchange sensitivity

As noted above, the Group is mainly exposed to movements in Euro and US dollar exchange rates. The following information

details our sensitivity to a 10% weakening or strengthening in Sterling against the Euro and the US Dollar. These percentages are

the rates used by management when assessing sensitivities internally and represent management’s assessment of the possible

change in foreign currency rates. The sensitivity analysis of our exposure to foreign currency risk at the reporting date has been

determined based on the change taking place at the end of the financial period, and based on the outstanding foreign currency

balances at the period end.

24 December 2022

£m

25 December 2021

£m

10% weakening of Sterling to Euro 2.1 2.4

10% strengthening of Sterling to Euro (1.7) (2.0)

10% weakening of Sterling to US dollar 2.8 2.6

10% strengthening of Sterling to US dollar (2.3) (2.1)

Capital structure and risk continued

(f) Liquidity risk

Liquidity risk is the risk that the we could experience difficulties in meeting our commitments to creditors as financial liabilities

fall due for payment. The Group manages its liquidity risk by using reasonable and retrospectively-assessed assumptions

to forecast the future cash-generative capabilities and working capital requirements of the businesses it operates and by

maintaining sufficient cash and investment reserves, committed borrowing facilities and other credit lines as appropriate.

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has agreed an appropriate

liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity

management requirements.

The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by

continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities as

far as is possible. Included in note 19 is a description of additional undrawn facilities that the Group has at its disposal to further

reduce liquidity risk. In addition, the Strategic Review contains a section describing the interaction of liquidity risk and the going

concern review.

Maturity profile of outstanding financial liabilities

Our only outstanding financial liabilities, other than leases, are our trade creditors. These are capital liabilities, with no

associated interest, and are payable within one year. Our lease liabilities are disclosed at note 11.

(g) Market risk

This is the risk that financial instrument fair values will fluctuate owing to changes in market prices. The significant market risks

to which we are exposed are foreign exchange risk, and interest rate risk. These are discussed further below:

Foreign exchange risk

We are exposed to foreign exchange risk, principally as a result of operating costs incurred in foreign currencies, and to a lesser

extent, from non-sterling revenues. Our policy is generally not to hedge such exposures. The exposure of the our financial assets

and liabilities to currency risk is as follows:

24 December 2022

£m

25 December 2021

£m

Euro

Trade receivables 9.4 6.5

Other receivables 3.9 2.7

Cash and cash equivalents 56.7 59.7

Trade payables (43.4) (39.3)

Other payables (7.3) (7.5)

19.3 22.1

US Dollar

Other receivables 1.1 –

Cash and cash equivalents 25.3 23.3

Trade payables (1.1) –

25.3 23.3

TOTAL 44.6 45.4

Interest rate risk

The Group does not have any significant exposure to interest rate risk.

Financial Statements / Notes to the consolidated financial statements

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Strategic Report

Financial Statements

Additional Information

Governance

Governance GovernancePage Title Page Title

Notes to the consolidated financial statements continued

(a) Overview of all retirement benefit arrangements

Defined contribution: auto-enrolment plan

The Group operates an auto-enrolment defined contribution plan for employees. Under the terms of this scheme, employees

make pension contributions out of their salaries, and the Group also makes additional contributions.

The total cost charged to income in respect of this plan in the current period of £37.0m (2021: £26.5m) represents the Group’s

contributions due and payable in respect of the period. All of this amount was paid in the period as was also the case in the

previous period.

Defined contribution: other plan

The Group operates another defined contribution plan for its employees. The assets of this plan are held separately from those of

the Group, and are under the control of the scheme trustees.

The total cost charged to income in respect of this plan in the current period of £0.6m (2021: £0.7m) represents the Group’s

contributions due and paid in respect of the period.

Defined benefit plan

Characteristics and risks of the plan:

The Group operates a funded pension plan which provides benefits based on the career average pensionable pay of

participating employees. This plan was closed to new entrants from April 2013, and closed to future accrual on 31 March 2021.

The assets of the plan are held separately from those of the Group, being held in a trustee-administered pension plan and

invested with independent fund managers. The trustee directors of the plan comprise three member-elected trustees, two

independent trustees, and three Group-appointed trustees. All trustees are required to act in the best interests of the plan

beneficiaries.

The plan exposes the Group to actuarial risks, such as longevity risk, interest rate risk, inflation risk and market (investment) risk.

Longevity risk isthe risk that members live for longer than is currently expected. That results in pensions being paid for longer

than expected, thus costing schemes more money.

Examples of interest rate risk are that a decrease in corporate bond yields increases the present value of the defined benefit

obligations, or that a decrease in gilt yields results in a worsening in the Scheme’s funding position.

An example of inflation risk is that an increase in inflation results in higher benefit increases for members which in turn increases

the Scheme’s liabilities.

Investment risk comes from three main sources: risk that the fund will fall in value, risk that the pension fund’s returns will not

keep pace with inflation (real returns are negative), and risk that the pension fund does not perform well enough to keep pace

with the growth in the cost of providing pension benefits.

Accounting and actuarial valuation

Contributions are charged to the consolidated income statement so as to spread the cost of pensions over the employees’

working lives with the Group. The present value of the defined benefit obligation, the related current service cost, and past

service cost are determined by a qualified actuary using the projected unit method. The most recent completed actuarial

valuation was carried out at 5 April 2020 by the plan actuary. The actuary advising the Group has subsequently rolled forward

the results of the 5 April 2020 valuation to 24 December 2022. This roll-forward exercise involves updating all the assumptions

which are market-based (i.e. inflation, discount rate, rate of increase in pensions and rate of CARE revaluation) to values as at

24December 2022. We are using CMI 2021 mortality tables, being the most recent tables available.

Employees

21 Staff costs and number of employees

The aggregate payroll costs of employees, including executive directors, were:

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Wages and salaries (536.3) (474.6)

Social security costs (47.8) (44.7)

Pension operating costs (note 22) (40.0) (34.0)

(624.1) (553.3)

Wages and salaries includes a charge in respect of share-based payments of £7.3m (2021: £10.1m).

The average monthly number of persons (including executive directors) employed by the Group during the period was as follows:

52 weeks to

24 December 2022

No.

52 weeks to

25 December 2021

No.

12,408 10,789

22 Retirement benefit obligations

Significant judgement and source of estimation uncertainty

There is significant judgement involved in selecting appropriate measurement bases for the actuarial assumptions used to

measure the pension liability.

There is also estimation uncertainty relating to the assumptions, as reasonable alternative assumptions could have led to

measurement at a materially different amount.

The key assumptions within this calculation are discount rate, inflation rates and mortality rates. These are set out

below, together with sensitivity analysis that shows the effect that these estimates can have on the carrying value of the

pensiondeficit.

There is also significant judgement around the valuation of the subset of the unquoted pension assets for which the most

recent available valuations at the time of approving these financial statements are valuations from the relevant fund

managers as at 30 September. Detail of the approach taken, and of the amounts involved, is given below under the heading

‘Valuation of plan assets’

Accounting policies

Defined contribution pensions

Payments to defined contribution pension schemes are charged to the income statement as they fall due.

Defined benefit pensions

The calculation of the Group’s net asset or obligation is performed by a qualified actuary using the projected unit method.

When the calculation results in a potential asset, the recognised asset is limited to the present value of economic benefits

available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the

present value of economic benefits, consideration is given to any applicable minimum funding requirements. The Group

considers that there are no restrictions caused by IFRIC 14 on recognising any pension asset.

Scheme liabilities are calculated by estimating the amount of future benefit that employees have earned in return for

their service. That benefit is then discounted to determine its present value. The discount rate used is selected to closely

approximate the yield at the balance sheet date on AA-rated bonds that have maturity dates approximating to the terms of

the Group’s obligations. This discount rate is also used to calculate the net pension scheme finance charge or credit.

Scheme assets are carried at fair value. More details are given in this note as part of the analysis of plan assets.

Current and past service costs and the net pension finance charge or credit are recognised in the income statement.

Actuarial gains and losses are recognised immediately through the remeasurement of the defined benefit liability and

are taken through the statement of comprehensive income.

Financial Statements / Notes to the consolidated financial statements

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Financial Statements

Additional Information

Governance

Governance GovernancePage Title Page Title

Notes to the consolidated financial statements continued

Key assumptions used in the valuation of the plan

52 weeks to

24 December 2022

52 weeks to

25 December 2021

Rate of increase of pensions in deferment capped at lower of CPI and 5% 2.70% 2.85%

Rate of CARE revaluation capped at lower of RPI and 3% 2.45% 2.55%

Rate of increase of pensions in payment:

– pensions with increases capped at lower of CPI and 5% 2.65% 2.80%

– pensions with increases capped at lower of CPI and 5%, with a 3% minimum 3.45% 3.50%

– pensions with increases capped at the lower of LPI and 2.5% 2.15% 2.20%

Inflation assumption – RPI 3.15% 3.30%

Inflation assumption – CPI 2.70% 2.85%

Discount rate 4.70% 1.90%

Life expectancy (years): pensioner aged 65

– male 86.6 86.6

– female 88.4 88.4

Life expectancy (years): non-pensioner aged 45

– male 87.6 87.6

– female 90.2 90.3

Sensitivities

Present value of

scheme liabilities at

24 December 2022

£m

Projected 2023 pension cost

Total service

cost

£m

Net interest

(credit)/cost

£m

Net pension

(credit)/expense

£m

Assumption

Current valuation, using the assumptions above 931 2.6 1.3 3.9

0.5% decrease in discount rate 1,007 2.6 4.4 7.0

0.5% increase in inflation 968 2.6 3.1 5.7

1 year increase in longevity 963 2.6 2.8 5.4

The sensitivities above are applied to the defined benefit obligation at the end of the reporting period, and the projected total

service cost for 2023. Whilst the analysis does not take account of the full distribution of cash flows expected under the scheme,

it does provide a reasonable approximation. The same amount of movement in the opposite direction would produce a broadly

equal and opposite effect.

To address the requirements of both IAS 1 and IAS 19, we note that the effect on the discount rate and inflation sensitivities of

flexing them down to 0.25% or up to 1% in a linear manner would give materially correct results.

Employees continued

Funding and estimated contributions

The Group’s contributions in the current and prior periods are shown in the tables below. The Group bears the plan’s

administration costs. The Group also has an agreement with the pension plan trustees to make additional deficit contributions

to the plan of £30m per year until June 2023. Under the agreement, the scheme’s funding position is monitored on a monthly

basisand deficit contributions are be suspended if the scheme’s funding position is 100% or greater as at the last working day of

two consecutive months on a Technical Provisions (‘TP’) basis, and is resumed if the funding position subsequently falls back to

below 100% on the last working day of two consecutive months.

The scheme’s funding reached 100% on a TP basis part way through 2021 and additional deficit contributions stopped,

according to the mechanism described above. The scheme remained in surplus on a TP basis until the part way through October

2022, and remained in TP deficit from that point until the 2022 year end. Additional deficit contributions commenced from the

beginning of 2023.

The Group’s estimated total cash contributions to the defined benefit plan in the 52 weeks ending 30 December 2023 are £30.6m.

This figure allows for additional deficit contributions for the whole of 2023 at the current rate of £30m per year.

Differences between the defined benefit pension deficit on an IAS 19 basis and on a funding basis

As is mandatory under International Financial Reporting Standards, the Group values its pension deficit in these accounts on an

IAS19 basis. As shown below, the IAS19 deficit at the current period end is £41.5m. On a funding basis (also known as a ‘Technical

Provisions basis’, being the basis on which the triennial actuarial valuations are carried out), the funding deficit at the current

period end is estimated at £64.7m, this estimate being based on an approximate roll-forward of the 2020 triennial funding

valuation, updated for market conditions. The IAS 19 valuation requires ‘best estimate’ assumptions to be used whereas the

funding valuation uses ‘prudent’ assumptions. This would typically result in the funding valuation producing a higher deficit,

or a lower asset, than the IAS 19 valuation.

(b) Total amounts charged in respect of pensions in the period

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Charged to the income statement:

Defined benefit plan – current service cost – 4.8

Defined benefit plan – administration cost 2.4 2.0

Defined benefit plan – total service cost 2.4 6.8

Defined benefit plan – net finance (credit)/charge (2.7) 0.4

Defined contribution plans – total operating charge 37.6 27.2

Total net amount charged to profit before tax 37.3 34.4

Charged to equity:

Defined benefit plan – actuarial losses/(gains) 183.0 (170.4)

Total charge/(credit) 220.3 (136.0)

Financial Statements / Notes to the consolidated financial statements

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Strategic Report

Financial Statements

Additional Information

Governance

Governance GovernancePage Title Page Title

Notes to the consolidated financial statements continued

As can be seen from the asset analysis above, the actual mix of assets has been affected by the macroeconomic conditions of

the current year and has resulted in the sale of many of the risk-reducing assets by the year end, with the result that the asset

allocation set out in the August 2022 Statement of Investment Principles is not being met at the year end.

Analysis of plan members, scheme liability split and duration

2022

No. of members % of total liability Duration (years)

Deferred members 6,236

Total members 6,236 63% 19

Pensioners 4,233 37% 11

Total No./average duration 10,469 100% 16

1 The membership figures are as given in the plan accounts and are as at 31 March 2022, the date of the latest audited pension plan accounts. The duration and %

of liability figures are as calculated by the Group’s actuary as at the Group’s current year end.

2021

No. of members % of total liability Duration (years)

Active members 1,231

Deferred members 5,305

Subtotal 6,536 67% 24

Pensioners 4,031 33% 13

Total No./average duration 10,567 100% 20

2 The membership figures are as given in the plan accounts and are as at 31 March 2021, the date of the latest audited pension plan accounts. Since that date, the

plan has closed to further accrual and all non-pensioner members are now deferred members. The duration and % of liability figures are as calculated by the

Group’s actuary as at the Group’s current year end.

Duration depends on the discount rate. The higher the discount rate, the less valuable are payments in the long-term future –

reducing the average duration of the (discounted) liabilities. There has been a 2.8% increase in the discount rate in 2022, which

has shortened the duration.

Balance sheet

The amount included in the balance sheet arising from the Group’s obligations in respect of defined benefit retirement benefit

plan is as follows:

24 December 2022

£m

25 December 2021

£m

Present value of defined benefit obligations (930.5) (1,512.5)

Fair value of scheme assets 889.0 1,653.3

Surplus/(deficit) in the scheme, recognised in the balance sheet (41.5) 140.8

Movements in the present value of defined benefit obligations were as follows:

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Present value at start of period 1,512.5 1,641.0

Current service cost – 4.8

Administration cost 2.4 2.0

Interest on obligation 28.3 21.1

Actuarial losses/(gains):

– changes in financial assumptions (622.8) (127.7)

– changes in demographic assumptions (3.5) (5.2)

– experience 55.8 20.5

Benefits paid, including expenses (42.2) (44.0)

Present value at end of period 930.5 1,512.5

Employees continued

Analysis of plan assets

24 December 2022 25 December 2021

Quoted market price in

an active market

£m

No quoted market price

in an active market

£m

Quoted market price in

an active market

£m

No quoted market price

in an active market

£m

Liability-driven investments 174.1 – 435.7 –

Equities

– passive equities – – 172.5 –

Private equity – 0.6 – 0.6

Alternative growth assets

– fund of hedge funds – 152.4 – 148.6

– absolute return fund 1.0 – 91.4 –

Insurance-linked securities – 105.2 – 100.9

Corporate bonds 1.8 – 232.2 –

Commercial property funds 7.7 239.9 114.0 175.6

Other secure income 1.2 179.3 – 150.1

Asset-backed securities 0.5 – 10.6 –

Cash and cash equivalents 25.3 – 21.1 –

Total 211.6 677.4 1,077.5 575.8

The plan assets do not include any of the Group’s own financial instruments nor any property occupied by, or other assets used

by, the Group.

Valuation of plan assets

All of the quoted assets have a daily price, and therefore are valued using market prices on the last trading day before our year end.

Unquoted investments are stated at values provided by the fund manager in accordance with relevant guidance. Some of

the unquoted investments are valued on a weekly basis, some are valued on a monthly basis, and others are only valued on a

quarterly basis. Based on asset values at the current year end, 48% of the unquoted assets are valued based on a valuation from

fund managers as at 31 December 2022, and a further 10% are valued at 3 January 2023, in both cases they are adjusted for

cash movements and rolled backwards using a suitable index if there is one. The fund managers’ 31 December 2022 valuations

for the remaining 42% of unquoted assets, which have a carrying value of £286.0m at the current period end, are not available

until after these consolidated financial statements are approved and so the only available valuations for these funds at the

current year is the 30 September 2022 valuations from the fund managers, which are adjusted for cash movements and rolled

forward to our year end date using a suitably-correlated index where one is available.

Asset allocation

As set out in the plan’s August 2022 Statement of Investment Principles, the plan trustees’ long-term asset allocation strategy is

to target a 60% allocation of assets to ‘Return-seeking assets’ and a 40% allocation to ‘risk-reducing assets’.

The plans accounts then goes on to explain these classes of assets as follows:

‘Return-seeking assets’ target a higher expected return than that of risk reducing/matching assets and typically have a

higher associated volatility, relative to liabilities. These assets would typically involve equities and could possibly include

alternative asset classes such as different types of absolute return and hedge funds, infrastructure, property and illiquid

credit approaches. Assets used to predominantly manage liquidity and cashflows within the Secure Income portfolio are also

deemed ‘Return-seeking’.

‘Risk-reducing (or matching) assets’ have characteristics that are broadly similar in nature to the liabilities. These assets are

predominantly government or corporate bonds and could also possibly include other financial instruments such as interest

rate and inflation swaps, credit default swaps and cash.

Financial Statements / Notes to the consolidated financial statements

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Strategic Report

Financial Statements

Additional Information

Governance

Governance GovernancePage Title Page Title

Notes to the consolidated financial statements continued

Statement of comprehensive income

Amounts taken to equity via the statement of comprehensive income in respect of the Group’s defined benefit plan are

shownbelow:

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Actuarial (loss)/gain on plan assets (753.5) 58.0

Decrease in plan liabilities due to financial assumptions and experience 622.8 127.7

(Increase) in plan liabilities due to experience (55.8) (20.5)

Decrease in plan liabilities due to demographic assumptions 3.5 5.2

Net actuarial (loss)/gain, before associated deferred tax (183.0) 170.4

23 Share-based payments

Accounting policy

The Group issues equity-settled share-based payments. They are measured at fair value at the date of grant. The fair value is

expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest.

1) Details of each scheme

The Group recognised a charge of £7.3m (2021: charge of £10.1m) in respect of share-based payments during the period. The

Group has various share-based payment schemes, which are all equity-settled. The main details of all schemes which existed

during the period are given below.

Share Incentive Plan (‘SIP’)

This is a UK tax-advantaged ‘all-employee’ share plan under which the Company may grant the following types of awards to

eligible UK employees:

(i) Free Shares, the vesting and forfeiture period is three years commencing on the date of grant and subject to continued

employment. The shares are not subject to any performance conditions. Dividends are payable on the Free Shares during

the vesting period. Voting rights are attached to Free Shares during the vesting period.

(ii) Partnership Shares, which do not have a vesting period as they are purchased using deductions from the gross pay

of participating employees. The shares are not subject to any performance conditions. Dividends are payable on the

Partnership Shares from grant. Voting rights are attached to Partnership Shares from grant.

(iii) Matching Shares, the vesting and forfeiture period for which is three years commencing on the date of grant and subject to

continued employment and retention of the associated Partnership Shares in the SIP trust. Matching Shares are granted to

participants in a ratio determined by the Company up to a maximum of two free Matching Shares for each Partnership Share

purchased. Matching Shares are not subject to any performance conditions. Dividends are payable on the Matching Shares

during the vesting period. Voting rights are attached to Matching Shares during the vesting period.

(iv) Dividend Shares, which do not have a vesting period as they are purchased using dividend monies payable on existing

SIP shares held in the SIP trust. The shares are not subject to any performance conditions. Dividends are payable on the

Dividend Shares from grant. Voting rights are attached to Dividend Shares from grant.

Free Shares, Partnership Shares, and Matching Shares must be kept in the SIP trust for five years from the date of grant to be

capable of being sold or transferred out of the SIP trust free of income tax and National Insurance contributions (exceptions

apply for ‘good leaver’ scenarios). Dividend Shares must be held in the SIP trust for three years from the date of grant to be

capable of being sold or transferred out of the SIP trust free of income tax liability.

Employees continued

Movements in the fair value of the plan’s assets is as follows:

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Fair value at start of period 1,653.3 1,593.3

Interest income on plan assets 31.0 20.7

Contributions from the Group 0.4 25.3

(Loss)/return on assets excluding amounts included in net interest (753.5) 58.0

Benefits paid, including expenses (42.2) (44.0)

Fair value at end of period 889.0 1,653.3

Movements in the deficit during the period are as follows:

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Deficit at start of period 140.8 (47.7)

Current service cost – (4.8)

Administration cost (2.4) (2.0)

Employer contributions 0.4 25.3

Other finance income/(charge) 2.7 (0.4)

Total remeasurements recognised in other comprehensive income (183.0) 170.4

Deficit at end of period (41.5) 140.8

Income statement

Amounts recognised in the income statement arising from the Group’s obligations in respect of the defined benefit plan are

shown below.

Amount charged to operating profit:

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Current service cost – 4.8

Administration cost 2.4 2.0

Total service cost 2.4 6.8

The total service cost is included in the financial statement heading Staff Costs.

Amount credited to other finance charges:

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Interest income on plan assets (31.0) (20.7)

Interest cost on defined benefit obligation 28.3 21.1

Net charge (2.7) 0.4

The actual return on plan assets was a loss of £(722.5)m (52 weeks to 25 December 2021: increase of £78.7m).

Financial Statements / Notes to the consolidated financial statements

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Strategic Report

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Additional Information

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Notes to the consolidated financial statements continued

2) Movements in the period

52 weeks to 24 December 2022

SIP (i)

Number

LTIP (i)

Number

LTIP (iii)

Number

LTIP (iv)

Number

In issue at beginning of period 2,253,629 – 3,324,679 13,646

Granted in period 359,104 382,200 1,080,204 –

Lapsed in period (102,785) – (38,868) –

Exercised in period (436,287) – (1,299,808) (13,646)

In issue at end of period 2,073,661 382,200 3,066,207 –

Exercisable at end of period 1,130,011 – 67 –

Number of options in the closing balance

granted before 7 November 2002 14,028 – – –

Weighted average share price for options

exercised during the period (£) 7.10 N/A 6.92 7.79

Weighted average life remaining for options

outstanding at the period end (years) 1.3 2.7 1.4 N/A

Weighted average fair value of options

granted during the period (£) 7.71 5.27 6.24 N/A

Exercise price for all options (£) 0.00 0.00 0.00 0.00

LTIP (ii)

Number

WAEP

(£)

SIP (iii)

Number

In issue at beginning of period 307,429 3.17 18,577

Granted in period – N/A 73,576

Lapsed in period – N/A (12,324)

Exercised in period (67,083) 2.04 (558)

In issue at end of period 240,346 3.48 79,271

Exercisable at end of period 240,346 3.48 –

Number of options in the closing balance

granted before 7 November 2002 – –

Weighted average share price for options

exercised during the period (£) 7.62 6.34

Weighted average life remaining for options

outstanding at the period end (years) – 2.4

Weighted average fair value of options

granted during the period (£) N/A 6.50

Exercise price for all options (£) 2.38 to 3.79 –

Employees continued

Howden Joinery Group Long-Term Incentive Plan (‘LTIP’)

This is a discretionary employee share plan under which the Company may grant different types of award including options,

conditional awards and restricted share awards. With the exception of (iv) below, neither dividends nor dividend equivalents are

payable during the vesting period. The different types of awards are as follows:

(i) Conditional Share Awards, the vesting period for which is three years commencing on the date of grant and subject to

continued employment. The shares are not subject to any other performance conditions.

(ii) Market value options, the vesting period for which was three years commencing from the date of grant with an exercise

period of seven years (i.e. a total life of ten years). The vesting conditions for these options were as follows:

Date of award 2012 2013

Vesting based on growth in profits – from year ended December 2011 2012

– to year ended December 2014 2015

Award vests at 25% if profits over the vesting period grow by 6% 6%

Award vests at 100% if profits over the vesting period grow by 12% 12%

Date of award 2014

Vesting based on growth in profits – from year ended December 2013

– to year ended December 2016

Award vests at 15% if profits over the vesting period grow by 8%

Award vests at 100% if profits over the vesting period grow by 20%

If profits grow by a figure between the upper and lower thresholds for each year, the award vests on a sliding scale.

(iii) Performance Share Plan, the vesting period for which is three years commencing from the date of grant. The awards are

subject to the following performance conditions:

Date of award 2018 2019

Vesting based on growth in profits – from year ended December 2017 2018

– to year ended December 2020 2021

Award vests at 15% if profits over the vesting period grow by 5% 5%

Award vests at 100% if profits over the vesting period grow by 15% 15%

Date of award 2020 2021 2022

Performance Period – from year ended December 2019 2020 2021

– to year ended December 2022 2023 2024

Performance Conditions:

Total shareholder return (the ‘TSR tranche’) represents the following proportion

of the Award 67% 33% 33%

– TSR tranche vests at 15% if the Company is ranked

compared to comparators at

Median

Upper quartile

Median

Upper quartile

Median

Upper quartile

– TSR tranche vests at 100% if the Company is ranked compared to comparators

in the Growth in pre-exceptional profit before tax (the ‘PBT tranche’) represents

the following proportion of the Award 33% 67% 67%

– PBT tranche vests at 15% if profit grows over the Performance Period grow by 5% 5% 5%

– PBT tranche vests at 100% if profit grows over the Performance Period grow by 15% 15% 15%

If profits grow by a figure between the upper and lower thresholds for each year, the award vests on a sliding scale.

(iv) Restricted Share Awards, where the participant receives beneficial entitlement to shares upon grant of the award. The legal

interest however is not transferred to the participant until the forfeiture provisions and restrictions applicable to the awards

cease to apply. The shares are not subject to any performance conditions other than continued employment. Dividends are

payable during the vesting period.

Financial Statements / Notes to the consolidated financial statements

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Strategic Report

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Notes to the consolidated financial statements continued

Other supporting notes

24 Financial commitments

Capital commitments

24 December 2022

£m

25 December 2021

£m

Contracted for, but not provided for in the financial statements:

– Tangible assets 16.1 16.1

– Intangible assets – software 0.7 2.1

16.8 18.2

25 Related party transactions

Companies which are related parties

Transactions between Group companies, which are related parties, have been eliminated on consolidation and are not disclosed

in this note. All transactions between the Group and the Group’s pension schemes have been disclosed in note 22.

Remuneration of key management personnel

Key management personnel comprise the Board of Directors (including non-executive directors) and the Executive Committee.

Details of the aggregate remuneration to these personnel is set out below. The figure disclosed for share-based payments

represents the gain realised on the exercise of share options in the year, albeit that those options will have been granted in

previous periods. All figures include any related employer’s National Insurance.

24 December 2022

£m

25 December 2021

£m

Short-term employment benefits 10.5 6.6

Termination payments 0.8 0.4

Share-based payments 4.2 0.5

15.5 7.5

Other transactions with key management personnel

There were no other transactions with key management personnel.

26 Acquisition of subsidiary

Accounting policy – business combinations and goodwill

The Group accounts for business combinations using the acquisition method when the acquired set of activities and assets

meets the definition of a business and control is transferred to the Group.

The Group has an option to apply a ‘concentration test’ that permits a simplified assessment of whether an acquired set of

activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the gross

assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired.

Any excess of consideration over net assets acquired is recognised on acquisition as goodwill and tested for impairment at

least annually.

Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.

On 13 February 2022, for a total consideration of £15m from existing cash resources, the Group acquired 100% of the shares

and voting rights of Sheridan Fabrications Limited (‘Sheridans’), a leading industry specialist in the manufacture, fabrication,

laser templating and installation of premium worksurfaces. Sheridans employs around 200 people and is based in Normanton,

Yorkshire, around 30 miles from the Group’s factory at Howden.

The acquisition increases the Group’s manufacturing capacity and supports our strategy of increasing our share of this growing

market.

Employees continued

52 weeks to 25 December 2021

SIP (i)

Number

LTIP (i)

Number

LTIP (iii)

Number

LTIP (iv)

Number

In issue at beginning of period 2,685,127 10,000 4,203,998 64,942

Granted in period 329,076 – 997,693 –

Lapsed in period (118,566) (600) (1,877,012) –

Exercised in period (642,008) (9,400) – (51,296)

In issue at end of period 2,253,629 – 3,324,679 13,646

Exercisable at end of period 854,403 – 32 –

Number of options in the closing balance

granted before 7 November 2002 15,264 – – –

Weighted average share price for options

exercised during the period (£) 7.96 7.47 N/A 7.33

Weighted average life remaining for options

outstanding at the period end (years) 0.99 N/A 1.35 0.26

Weighted average fair value of options

granted during the period (£) 7.45 N/A 6.18 N/A

Exercise price for all options (£) 0.00 0.00 0.00 0.00

LTIP (ii)

Number

WAEP

(£)

SIP (iii)

Number

In issue at beginning of period 412,962 3.25 –

Granted in period – N/A 18,806

Lapsed in period (7,926) 3.79 (229)

Exercised in period (97,607) 3.46 –

In issue at end of period 307,429 3.17 18,577

Exercisable at end of period 307,429 3.17 –

Number of options in the closing balance

granted before 7 November 2002 – –

Weighted average share price for options

exercised during the period (£) 8.34 N/A

Weighted average life remaining for options

outstanding at the period end (years) 0.00 2.88

Weighted average fair value of options

granted during the period (£) N/A 8.68

Exercise price for all options (£) 1.28 to 3.79 0.00

3) Fair value of options granted

The fair value of awards granted is estimated on the date of grant using a binomial or a Monte Carlo option valuation model, as

appropriate for the type of award granted.

The key assumptions used in the model were:

52 weeks to

24 December 2022

52 weeks to

25 December 2021

Dividend yield (%) 1.8 to 3.4 2.2

Expected life of options (years) 3.0 1.6 to 3.0

Expected share price volatility (%) 32.2 to 32.3 22.0 to 31.6

Financial Statements / Notes to the consolidated financial statements

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Governance GovernancePage Title Page Title

Notes to the consolidated financial statements continued

The fair value of the major classes of assets and liabilities at acquisition date and the amount of goodwill recognised is

shown below:

Fair value recognised

£m

Intangible assets – software 0.4

Property plant & equipment 0.5

Lease right-of-use assets 1.3

Inventories 1.9

Trade and other receivables and prepayments 3.2

Trade and other payables and accruals (3.2)

Cash 0.4

Borrowings (1.2)

Total lease liabilities (1.3)

Net assets acquired 2.0

Goodwill recognised on acquisition 12.4

Consideration paid for the net assets acquired – cash 14.4

Additional consideration paid in cash – treated as settlement of

existing debt on acquisition, owed by the Group to Sheridans 0.6

Total consideration paid – cash 15.0

Total cash consideration paid – net of cash acquired 14.6

The goodwill represents the expected synergies from the acquisition in expanding the Group’s activities in its addressable

market, including the skills of the assembled Sheridans workforce. None of the goodwill is expected to be deductible for tax

purposes. It is presented on the balance sheet as part of the Group’s intangible assets.

The gross value of trade receivables on acquisition, excluding the debtor due to Sheridans from the Group, was £2.3m. Their fair

value, and the best estimate at acquisition date of the cash flows expected to be collected was £2.1m.

The Group incurred acquisition-related costs of £0.3m, which were expensed in the period and are included in Operating expenses.

Details of the effect of the acquisition on revenue and profit are as follows:

Revenue

£m

Gross profit

£m

Additional amounts recognised in respect of Sheridans in the Group consolidated statement of

comprehensive income for the period since acquisition date (13 February 2022) 14.4 0.1

Management’s estimate of results for the combined entity for the current reporting period if the

acquisition date had been at the beginning of the reporting period (26 December 2021) 2,322.2 1,411.5

The figures in the table above exclude revenue and profit from transactions between Sheridans and the Group. The revenue and

profit figures for the period since 13 February present leasing transactions on an IFRS 16 basis. The estimated figures for the

period between 26 December 2021 and 13 February 2022 are on an FRS102 basis.

The Sheridans factory and offices, together with the land which they stand on – which were not owned by Sheridans Fabrications

Limited – were bought for £10m in a separate transaction. This has been accounted for as an asset purchase, and forms part of

the reported capital expenditure for the period.

Notes

24 December 2022

£m

25 December 2021

(restated – note 6)

£m

Non-current assets

Investments in subsidiaries 3 699.0 699.0

Lease right-of-use assets 7 175.5 180.3

Amounts owed by wholly-owned subsidiary companies 103.3 1,957.3

Deferred tax assets 1.0 –

Prepaid credit facility fees 1.0 0.3

979.8 2,836.9

Current assets

Other debtors 4 9.9 9.2

Cash and cash equivalents 218.2 430.4

228.1 439.6

Total assets 1,207.9 3,276.5

Current liabilities

Lease liabilities 7 (10.2) (4.2)

Amounts owed to wholly-owned subsidiary companies (326.8) (2,324.2)

(337.0) (2,328.4)

Non-current liabilities

Lease liabilities 7 (192.1) (199.2)

(192.1) (199.2)

Total liabilities (529.1) (2,527.6)

Net assets 678.8 748.9

Equity

Called up share capital 5 56.1 59.8

Capital redemption reserve 9.1 5.4

Share premium 87.5 87.5

Treasury shares (25.5) (27.1)

Retained earnings 551.6 623.3

Total equity 678.8 748.9

The Company profit after tax for the 52 weeks to 24 December 2022 was £293.8m (52 weeks to 25 December 2021: profit after

tax of £79.4m after restatement – see note 6).

The financial statements were approved by the Board and authorised for issue on 6 March 2023 and were signed on its behalf by

Paul Hayes

Chief Financial Officer

For and on behalf of Howden Joinery Group Plc, registered number 02128710

Company balance sheet

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Governance

Governance GovernancePage Title Company balance sheet

Financial Statements / Company balance sheet

Company statement of changes in equity

Called up

share capital

£m

Capital

redemption

reserve

£m

premium

account

£m

Treasury

£m

Retained

earnings

£m

Total

£m

At 26 December 2020 60.3 4.9 87.5 (28.2) 1,032.3 1,156.8

Effect of restatement – see note 6 – – – – (306.8) (306.8)

Adjusted balances at 26 December 2020 60.3 4.9 87.5 (28.2) 725.5 850.0

Retained profit for the period, restated – see note 6 – – – – 79.4 79.4

Reclaim of forfeited dividends – – – – 0.2 0.2

Proceeds from sale of forfeited shares – 1.8 1.8

Buyback and cancellation of shares (0.5) 0.5 – – (50.0) (50.0)

Transfer of shares from treasury into share trust – – 1.1 – 1.1

Dividends declared and paid – – – – (133.6) (133.6)

At 25 December 2021, restated – see note 6 59.8 5.4 87.5 (27.1) 623.3 748.9

Retained profit for the period – – – – 293.8 293.8

Buyback and cancellation of shares (3.7) 3.7 – – (250.5) (250.5)

Transfer of shares from treasury into share trust – – – 1.6 – 1.6

Dividends declared and paid – – – – (115.0) (115.0)

At 24 December 2022 56.1 9.1 87.5 (25.5) 551.6 678.8

24 December 2022

£m

The Company’s distributable reserves at period end are:

Retained earnings 551.6

Treasury shares (25.5)

Distributable reserves 526.1

Notes to the Company financial statements

1 Significant Company Accounting policies

General information

Howden Joinery Group Plc is a company incorporated in the United Kingdom under the Companies Act 2006. The Company’s

principal activity is being the parent company of the Howden Joinery Group. More information about the Group structure is given

at page 212.

Basis of presentation

The Company’s accounting period covers the 52 weeks to 24 December 2022. The comparative period covered the 52 weeks to

25 December 2021

Basis of accounting

These financial statements have been prepared on the going concern basis and in accordance with Financial Reporting

Standard 101 Reduced Disclosure Framework (FRS 101) and the UK Companies Act.

The accounts are prepared under the historical cost convention. Under section 408 of the Companies Act 2006 the Company is

exempt from the requirement to present its own income statement or statement of comprehensive income.

In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following

disclosures:

• Statement of Cash Flows and related notes;

• a comparative period reconciliation for share capital;

• disclosures in respect of transactions with wholly owned subsidiaries;

• comparative period reconciliations for tangible fixed assets and intangible assets;

• an additional statement of financial position in respect of the restatement at note 6, as required by IAS 1;

• disclosures in respect of capital management;

• the effects of new but not yet effective IFRSs; and

• disclosures in respect of Key Management Personnel.

As the Group Financial Statements include the equivalent disclosures, the Company has also taken advantage of the

exemptions under FRS 101 available in respect of IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7

Financial Instruments.

Investments in subsidiaries

These investments are shown at cost less any provision for impairment.

Lease accounting

The Company’s accounting policies for leases are the same as those for the Group, which are disclosed at note 11 to the Group

consolidated financial statements.

2 Profit and loss account information

The Company has no employees (2021: none), did not pay directors’ emoluments (2021: £nil), the fees payable to the Company’s

auditor for the audit of the Company’s annual accounts were paid by another Group company in the current period, and were

£10,000 in the prior period.

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Governance

Financial Statements Financial StatementsCompany statement of changes in equity Notes to the Company financial statements

Financial Statements / Notes to the Company financial statements

3 Investments in subsidiaries

Total

£m

Cost and carrying value:

At 25 December 2021 and 24 December 2022 699.0

The investment represents the Company’s 100% ownership of Howden Joinery Holdings Limited, which in turn holds 100% of all

other Group companies – either directly or through one its 100%-owned subsidiaries. The combined results and financial position

of the subsidiaries and this Company is shown in the consolidated Howden Joinery Group Plc financial statements.

The investment consists of a capital contribution in addition to ownership of the subsidiary’s share capital of £2, which is held

at cost.

Other than a small amount of interest receivable on cash and cash equivalents, the Company has no income receivable

other than from transactions with its 100%-owned subsidiaries. Expenses payable by the Company to companies outside the

100%-owned Group are in excess of this interest income so it is considered that the market capitalisation of the Group, which was

significantly in excess of the carrying value of the investments in subsidiaries at both the current and prior period end, is a useful

indicator of any possible impairment in the Company’s investment in subsidiaries.

Details of all Group subsidiaries are given on page 212.

4 Other debtors

24 December 2022

£m

25 December 2021

£m

Other debtors 0.4 0.3

Other tax and social security 9.5 8.9

9.9 9.2

5 Share capital

Ordinary shares of 10p each:

52 weeks to

24 December 2022

No.

52 weeks to

25 December 2021

No.

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Allotted, called up and fully paid

Balance at the beginning of the period 597,573,827 602,863,861 59.8 60.3

Bought back and cancelled during the period (36,657,778) (5,290,034) (3.7) (0.5)

Balance at the end of the period 560,916,049 597,573,827 56.1 59.8

6 Prior year restatement

During the current period, the Directors have reassessed the Company’s accounting for leases, intercompany receivables and

investment in subsidiaries. This has resulted in prior year adjustments to the Company financial statements, as detailed below.

There is no impact on the consolidated Group financial statements.

(a) Description of restatements

Property lease accounting

On adoption of IFRS16: Leases, the Directors determined that the companies who actively manage and operate the leased

properties should record the lease liabilities and right-of-use lease assets. This approach has been revisited and the revised

conclusion was that leases should be accounted for in the financial statements of the company who is the signatory to the lease.

A review of the Group’s leases identified that there were five leases where this Company was signatory to the lease. Accordingly,

an adjustment has been made to remove these leases from the financial statements of 100%-owned subsidiary company

in which they had previously been reported, and to record them on the Company balance sheet. There is no impact on the

consolidated Group position as previously reported.

Intercompany receivables and investment in subsidiary companies

In prior years, the Directors assessed the recoverability of the intercompany receivables based on the viability of the Group as a

whole. This approach has been revisited to assess the ability and intent of the individual subsidiary entities to repay the amounts

due on demand.

As a result of this review, it has been identified that some intercompany receivables were impaired at 26 December 2020 by

£296.9, with a further impairment arising in the period ending 25 December 2021 of £12.1m, but these impairments had not

been recognised in the parent company’s financial statements. The impairments have therefore been recorded as prior year

adjustments.

An additional result of this review of intercompany debts was that there were insufficient reserves in this Company’s wholly-

owned subsidiary to satisfy part of the dividend paid to this Company in 2021. This proportion of the dividend income has

therefore been derecognised and reflected in the adjustments presented in this Company’s financial statements. There is no

impact on the consolidated Group position as previously reported.

Additionally, the investment in subsidiary entities has been re-presented to reflect the permanent substance of the financing

arrangements. This is solely a disclosure adjustment and has no effect on the Company or Group financial position.

(b) Adjustments arising from restatements

Lease

right-of-use

assets

Current

lease

liabilities

Non-current

lease

liabilities

Intercompany

receivables

Dividend

income from

subsidiary

Net effect of

restatements

on reserves

Property lease accounting – transfer leases from

fellow subsidiary 200.4 (6.8) (203.5) – – (9.9)

Intercompany receivables – impairment of

intercompany debt – – – (296.9) – (296.9)

Effect of restatements on opening balances

as at 26 December 2020 200.4 (6.8) (203.5) (296.9) – (306.8)

Property lease accounting – incremental effect in 2021 (20.1) 2.6 4.2 12.1 – (1.2)

Intercompany receivables – incremental impairment

in 2021 – – – (12.1) – (12.1)

Partial write back of dividend from subsidiary in 2021 – – – – (71.4) (71.4)

Incremental effect of restatements on year to

25 December 2021 figures (20.1) 2.6 4.2 – (71.5) (84.7)

Assets/(liabilities) recorded on restated balance

sheet at 25 December 2021 180.3 (4.2) (199.2)

£m

Retained profit for the year to 25 December 2021 – before restatement 164.1

Partial write back of dividend from subsidiary in 2021 (71.4)

Intercompany receivables – incremental effect in 2021 (12.1)

Property lease accounting – incremental effect in 2021 (1.2)

Retained profit for the year to 25 December 2021 – restated 79.4

Notes to the Company financial statements continued

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Governance

Financial Statements Financial StatementsPage Title Page Title

Financial Statements / Notes to the Company financial statements

7 Lease right-of-use assets and lease liabilities

Nature of the Company’s leasing activities

The Company is the signatory for leases on five warehouse and office properties which are used by other Group companies.

Amounts recognised in the balance sheet

Right-of-use assets

24 December 2022

£m

25 December 2021

£m

Property 175.5 180.3

Additions to right-of-use assets in the period 3.1 0.0

24 December 2022

£m

25 December 2021

£m

Lease liabilities

Current (10.2) (4.2)

Non-current (192.1) (199.2)

(202.3) (203.4)

Amounts recognised in the income statement

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Included in net operating expenses

Depreciation of property right-of-use assets 7.9 7.8

Included in finance costs

Interest expense on lease liabilities 4.5 4.5

Cash flows and maturity analysis of lease liabilities

52 weeks to

24 December 2022

£m

52 weeks to

25 December 2021

£m

Total cash outflow for leases 8.7 11.3

Maturity analysis of lease liabilities

24 December 2022

£m

25 December 2021

£m

Contractual undiscounted cashflows due

– within 1 year 14.6 8.7

– 1 to 5 years 42.7 46.7

– more than 5 years 204.6 215.1

261.9 270.5

Notes to the Company financial statements continued

Howden Joinery Group Plc / Annual Report & Accounts 2022

210

Financial Statements Page Title

Additional Info Divider

Additional Information

212 Parent company and all subsidiary undertakings

213 Five year record

214 Shareholder and share capital information

216 Shareholder Ranges

216 Corporate timetable

217 Advisors and registered office

217 Corporate timetable

Additional Information

Additional Information / Contents 211

Strategic Report

Financial Statements

Additional Information

Governance

Five year record

December 2022

52 weeks

£m

December 2021

52 weeks

£m

December 2020

52 weeks

£m

December 2019

52 weeks

£m

December 2018

52 weeks

£m

Summarised Income Statement

Revenue 2,319.0 2,093.7 1,547.5 1,583.6 1,511.3

Operating Profit 415.2 401.7 195.7 260.0 240.1

Profit before tax 405.8 390.3 185.3 260.7 238.5

Full year dividend per share (pence)

20.6 19.5 18.2 3.9 11.6

Basic EPS (pence) 65.7 53.2 24.9 35.0 31.3

Summarised Balance Sheet

Non-current assets excluding

leases and pension 471.5 332.1 290.7 251.7 221.4

Non-current lease right-of-use assets 614.3 555.8 544.2 – –

Inventories 373.3 301.6 255.0 231.8 226.3

Receivables (including tax) 265.6 205.8 166.6 193.1 186.0

Payables and provisions (454.2) (468.7) (338.2) (272.2) (261.9)

Pension (liability)/asset (41.5) 140.8 (47.7) (56.6) (36.0)

Total lease liabilities (665.3) (591.2) (580.5) – –

(542.4) (411.7) (544.8) 96.1 114.4

Net cash & short-term investments 308.0 515.3 430.7 267.4 231.3

Total net assets 871.7 991.5 720.8 615.2 567.1

Number of depots at end of year

UK 808 778 748 732 694

France 58 38 28 25 20

Belgium 2 2 2 2 2

Republic of Ireland 5 – – – –

Netherlands – – – – 1

Germany – – – – 1

TOTAL 873 818 778 759 718

Capital expenditure 141 86 70 61 44

1 Dividends. In 2019, an interim dividend of 3.9p/share and a final dividend of 9.1p/share were declared, making a total of 13.0p/share. However, following the

disruption caused by the outbreak of COVID in early 2021, the 2019 final dividend of 9.1p/share was not paid. In 2021, there was no interim dividend declared,

but (see note 11 of these financial statements), there was a 2020 final dividend of 9.1p/share and also a special dividend of 9.1p/share, making a total of

18.2p/share for 2020.

Parent company and all subsidiary undertakings

At 24 December 2022

Country of registration

orincorporation Registered office

Parent company

Howden Joinery Group Plc England and Wales 40 Portman Square, London, W1H 6LT

All subsidiary undertakings

Intermediate Holding Companies:

Howden Joinery Holdings Limited England and Wales 40 Portman Square, London, W1H 6LT

Howden Joinery International Holdings Limited England and Wales 40 Portman Square, London, W1H 6LT

Trading:

Howden Joinery Limited England and Wales 40 Portman Square, London, W1H 6LT

Howdens Cuisines SAS France 1 Rue Calmette, ZA Du Bois Rigault Nord,

62880 Vendin-Le-Vieil

Howdens Cuisines SRL Belgium Rue Des Emailleries 4, 6041 Gosselies

Howden Joinery (Ireland) Limited Republic of Ireland Suite 3, One Earlsfort Centre, Earlsfort Terrace,

Dublin 2, Ireland

Sheridan Fabrications Limited England and Wales 40 Portman Square, London, W1H 6LT

Property Management:

Howden Joinery Properties Limited England and Wales 40 Portman Square, London, W1H 6LT

Howden Kitchens Properties Limited England and Wales 40 Portman Square, London, W1H 6LT

Administration and Employee Services:

Howden Joinery Corporate Services Limited England and Wales 40 Portman Square, London, W1H 6LT

Howden Joinery People Services Limited England and Wales 40 Portman Square, London, W1H 6LT

Dormant:

Howden Kitchens Limited England and Wales 40 Portman Square, London, W1H 6LT

Galiform Limited England and Wales 40 Portman Square, London, W1H 6LT

Foreign Company Registrations:

Howden Joinery Limited Isle of Man 33–37 Athol Street, Douglas, Isle of Man, IM1 1LB

Howden Joinery Limited Jersey 40 Portman Square, London, W1H 6LT

Howden Joinery Properties Limited Isle of Man 33–37 Athol Street, Douglas, Isle of Man, IM1 1LB

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Financial Statements

Additional Information

Governance

Additional Information Additional Information

Strategic Report

Five year recordParent company and all subsidiary undertakings

Additional Information / Five year record

At the AGM on 12 May 2022, the Directors were granted

authority by shareholders to purchase up to 59,200,627 of

the Company’s ordinary shares through the market

. The

authority expires at the conclusion of the 2023 AGM or within

15 months from the date of passing the resolution (whichever

is earlier).

Rights and restrictions

Issued share classes: Ordinary only (fully paid)

Voting rights at general meetings: One vote per share

Fixed income rights: None

Individual special rights of control: None

Holding size restrictions

: None

Transfer restrictions

: None

The Directors are not aware of any agreements between

holders of the Company’s shares that may result in

restrictions on the transfer of shares or on voting rights.

Substantial shareholdings

As at 6 March 2023, the Company had been notified, in

accordance with Rule 5 of the Disclosure and Transparency

Rules, of the following voting rights as a shareholder of the

Company:

Substantial

Shareholder

% of total

voting rights

Date of last

notification

BlackRock, Inc 5.45% 23 November 2022

The percentage interest is as stated by the shareholder at the

time of notification and current interests may vary.

Significant agreements

There are a number of agreements that take effect, alter

or terminate upon a change of control such as commercial

contracts, bank loan agreements and employee share plans.

The only one of these which is considered to be significant in

terms of likely impact on the business of the Group as a whole

is the bank facility (as described on page 71 and in note 19

on page 188). If the lender were not prepared to consent to

a change of control, a mandatory repayment of the entire

facility would be triggered.

The Directors are not aware of any agreements between the

Company and its Directors or employees that provide for

compensation for loss of office or employment that occurs

because of a takeover bid.

Provision for indemnity against liability incurred

by a Director

The Company has provided indemnities to the Directors (to

the extent permitted by the Companies Act 2006) in respect

of liabilities incurred as a result of their office. Neither the

indemnity nor any insurance provides cover in the event

that the Director is proven to have acted dishonestly

orfraudulently.

Listing Rule 9.8.4R(2) disclosure

The following statement, characterised as a profit forecast,

was included in the Group’s Trading Update on 3 November

2022 for the financial year ended 24 December 2022:

“ Against a backdrop of economic uncertainty, we will remain

vigilant for any potential headwinds while managing

inflationary and supply chain pressures. We are confident

in our resilient business model and our well-established

strategy. Given the continued momentum in the period, the

Group now expects profit before tax to be marginally ahead

of the average of published analyst consensus forecasts

for FY 2022.”

A footnote to the statement above read:

“ Analysts’ consensus is available on the Howdens corporate

website. Profit Before Tax consensus for 2022 is an average

of £387m with a range of £373m to £410m. The year ended

30 December 2023 contains an additional (53rd) week of

Group operating costs.”

The actual Group profit before tax figure for the period ended

24 December 2022 is set out on page 164.

1 At prices ranging between 10p and the higher of (a) 105% of the average

middle market quotation for an ordinary share as derived from the London

Stock Exchange Daily Official List for the five business days immediately

preceding the day on which the ordinary share is purchased; and (b) an

amount equal to the higher of the price of the last independent trade of an

ordinary share and the highest current independent bid for an ordinary

share as derived from the London Stock Exchange Trading System.

2 Governed by the general provisions of the Articles of Association (which

may be amended by special resolution of the shareholders) and prevailing

legislation.

Shareholder and share capital information

Annual General Meeting

The 2023 Annual General Meeting (‘AGM’) will be held at

Freshfields Bruckhaus Deringer LLP, 100 Bishopsgate, London,

EC2P 2SR on 4 May 2023 at 11.00am.

Shareholders will have the opportunity to discuss Howdens’

progress and operations directly with the Board at the AGM.

The notice of the AGM will be sent to shareholders at least

21clear days before the meeting and will detail the resolutions

to be voted on.

Dividend

Subject to the 2022 final dividend payment being approved

by shareholders at the AGM on 4 May 2023, the following

timetable will apply:

2022 Final Dividend

Ex-Dividend date 6 April 2023

Record Date 11 April 2023

Payment Date 19 May 2023

Dividend reinvestment plan (‘DRIP’)

Howden Joinery Group Plc (‘Howdens’) offers a DRIP for our

shareholders in eligible countries who wish to elect to use their

dividend payments to purchase additional ordinary Howdens

shares, rather than receive a cash payment. The DRIP is

provided and administered by Equiniti Financial Services

Limited (‘Equiniti’). Further details regarding the DRIP can be

found on Equiniti’s website: www.shareview.co.uk/info/drip

Dividend payments directly to a bank or building society

account

If you are a shareholder with a UK bank or building society

account, you can arrange through our registrar, Equiniti, to

have dividends paid directly to your account using a bank or

building society mandate. You can arrange this by completing

the form attached to a previous dividend confirmation you

have received, through Equiniti’s Shareview Portfolio website,

portfolio.shareview.co.uk (registration is required), or by

calling Equiniti on +44 (0) 333 207 6558.

Existing dividend mandate details can be amended to have

dividends paid to a different UK bank or building society

account. Dividend mandate details can also be de-selected if

you would prefer to receive payments by cheque.

Share Capital

As at 24 December 2022, the Company had only fully paid

up ordinary 10 pence shares in issue (‘Shares’). Below sets

out the share capital position at 24 December 2022 and at

25 December 2021:

% change

Number of Shares

24 Dec 2022 25 Dec 2021

Total Shares in issue (6.13)% 560,916,049 597,573,827

Treasury Shares (5.92)% 5,237,907 5,567,555

Shares with voting rights (6.14)% 555,678,142 592,006,272

Shares held in Treasury have no voting or dividend rights and

are used solely for the satisfaction of employee share awards.

Details of employee share schemes are set out in note 23 to

the Financial Statements beginning on page 199.

Shares held by the Howden Joinery Group Plc Employee

Benefit Trust abstain from voting at the Company’s general

meetings and waive dividends. Shares held in the Share

Incentive Plan Trust, which have been allocated to employees

through UK all-employee share plans, have both voting and

dividend rights.

Shares in public hands

(‘Free float’ shares)

As at 24 December 2022, 0.89% of the Company’s issued

share capital was held in Treasury, 0.28% was held by

Directors, persons discharging managerial responsibility

(PDMRs), or connected persons of those Directors or PDMRs,

0.34% was held in employee share trusts (excluding any

allocated shares which are not forfeitable), and 5.13% was

held by major shareholders (those who have declared

holdings above 5%).

Free float shares therefore accounted for 93.36% of the

Company’s issued share capital at the 24 December 2022.

Acquisition of the Company’s own shares

During 2022, the Company repurchased and cancelled

37 million shares worth a total of £250m under its 2022

share repurchase programme. The repurchased shares

represented a nominal value of £3,700,000 and equated to

6.2% of the called up share capital of the Company at the

beginning of the period (excluding Treasury shares).

In line with our capital allocation policy (see the Chairman’s

statement on page 18 for more information) the Company

returns surplus capital to shareholders. The Board considered

that a share buy back programme was, and continues to

be, the most efficient means of deploying surplus capital to

shareholders.

1 The definition of ‘Shares in public hands’ may be found in Listing Rule

6.14.3R. The Company considers shares which meet the definition of

‘shares in public hands’, as set out in the Listing Rules, to be ‘free

float’shares.

Howden Joinery Group Plc / Annual Report & Accounts 2022 Howden Joinery Group Plc / Annual Report & Accounts 2022

214 215

Financial Statements

Additional Information

Governance

Additional Information Additional Information Page Title

Strategic Report

Shareholder and share capital information

Additional Information / Shareholder and share capital information

Number of holders Number of shares Percentage of holders Percentage of shares

Corporate holders

0 to 1,000 81 25,282 1.14 0.00

1,001 to 5,000 84 208,705 1.18 0.04

5,001 to 10,000 37 272,882 0.52 0.05

10,001 to 50,000 152 3,966,359 2.14 0.71

50,001 to 100,000 59 4,144,297 0.83 0.74

100,001 to 250,000 107 17,171,999 1.50 3.06

Over 250,000 219 527,953,053 3.08 94.12

739 553,742,577 10.39 98.72

Individual holders

0 to 1,000 5,189 1,846,330 72.94 0.33

1,001 to 5,000 1,012 2,288,323 14.23 0.41

5,001 to 10,000 108 768,340 1.52 0.14

10,001 to 50,000 59 1,140,213 0.83 0.20

50,001 to 100,000 4 311,989 0.06 0.06

100,001 to 250,000 1 126,277 0.00 0.02

Over 250,000 2 693,000 0.03 0.12

6,375 7,174,472 89.61 1.28

Total 7,114 560,917,049 100.00 100.00

2023

Trading update 27 April

Annual General Meeting 4 May

Half-Yearly Report 20 July

Trading update 2 November

End of financial year 30 December

Shareholder Ranges as at 24 December 2022

Corporate timetable

Advisors and registered office

Principal Banker

Lloyds

25 Gresham Street

London

EC2V 7HN

Joint Financial Advisers

and Stockbrokers

Numis Securities

45 Gresham Street

London

EC2V 7BF

Barclays

1 Churchill Place

Canary Wharf

London

E14 5HP

Solicitors

Freshfields Bruckhaus Deringer

100 Bishopsgate

London

EC2P 2SR

Auditor

KPMG

15 Canada Square

London

E14 5GL

Registrar

Equiniti

Aspect House

Spencer Road

Lancing

West Sussex

BN99 6DA

Registered Office

40 Portman Square

London

W1H 6LT

Howden Joinery Group Plc / Annual Report & Accounts 2022

217

Financial Statements

Additional Information

Governance

Strategic Report

Advisors and registered office

Additional Information / Advisors and registered office

Howden Joinery Group Plc / Annual Report & Accounts 2022

216

Additional Information Shareholder Ranges Corporate timetable

The UK’s number 1

trade kitchen supplier

Annual Report and Accounts 2022 Howden Joinery Group Plc

2022