Bringing
Convenience
to Good Food
2013
Annual Report and Accounts
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Greencore Group plc is a leading
convenience food business with
an annual turnover of approximately
£1.2 billion.
Our two markets are the United Kingdom
and the United States where we provide
a wide range of food to go products
supplemented by other chilled, frozen
and ambient foods to major retail and
food service customers.
We have 16 convenience foods facilities
in the UK and six in the US and we employ
over 10,000 people across the UK, the US
and Ireland.
Greencore Group plc Annual Report and Accounts 2013 Highlights of the Year
Focused on
performing for
our shareholders
Financial Highlights*
/ Group operating profit up 8.1% to £76.5 million
/ Group operating margin of 6.4%, a 30bps increase
/ Strong growth in adjusted EPS, up 13.3% to 14.5p
/ Proposed final dividend of 2.9 pence per share,
giving a total dividend of 4.8 pence per share,
up 12.9%
/ Strong cash flow generation reducing net debt
by £25.2 million. Net debt: EBITDA leverage
(reported basis) down from 2.75 times to 2.3 times
Operational Highlights
/ Integration of Uniq completed with restructuring
of the desserts business and disposal of Minsterley
facility. Integration of International Cuisine completed
/ US integrations completed and successful roll out
of food to go range to Starbucks USA from four of
our six facilities
Revenue (£m)
+3.0%
2013
2012
Operating Profit (£m)
+8.1%
2013
2012
1,197.1
1,161.9
Adjusted EPS (pence)
+13.3%
76.5
2013
70.7
2012
14.5
12.8
*
Definitions of Key Financial Performance Indicators are provided on page 9.
1
Business Review
and Strategic Report
1-33
1
2
4
8
9
10
14
18
20
22
26
Highlights of the Year
At a Glance
Chairman’s Statement
Strategy and Business Model
Key Performance Indicators
Risks and Risk Management
Chief Executive’s Review
Operating Review
Financial Review
Group Executive Board
Corporate Social Responsibility Report
Corporate Governance
34-62
34
36
39
44
56
60
62
Board of Directors
Directors’ Report
Corporate Governance Report
Report on Directors’ Remuneration
Report of the Audit Committee
Report of the Nomination Committee
Statement of Directors’ Responsibilities
Financial Statements
63-128
76
77
63
66
Independent Auditor’s Report
Group Statement of
Accounting Policies
Group Income Statement
Group Statement of Recognised
Income and Expense
Group Balance Sheet
Group Cash Flow Statement
Group Statement of Changes in Equity
Notes to the Group Financial
Statements
Company Statement of
Accounting Policies
122 Company Balance Sheet
123 Notes to the Company Balance Sheet
IBC
Shareholder and Other Information
78
79
80
82
120
Greencore Group plc Annual Report and Accounts 2013
2
Business Review and Strategic Report
At a Glance
Food to Go UK
Greencore’s Food to Go business in
the UK is one of the world’s leading
manufacturers of pre-packed sandwiches,
producing in excess of 370 million food
to go products each year. In addition to
sandwiches, baguettes and wraps its
range of products also includes broader
food to go items such as salads and sushi.
We have six Food to Go facilities in the UK
situated in Bow, Crosby, Manton Wood,
Northampton, Park Royal and Spalding.
The business also operates a unique radial
distribution network which covers the
length and breadth of mainland UK.
Fast Fact:
450m
Greencore produces
450 million food to go
products each year in
the UK and the US
Food to Go US
Greencore entered the US market with our
first acquisition in 2008 and our second
acquisition in 2010. Two more acquisitions were
completed in FY12 and the business now has six
manufacturing facilities based across the five
states of Massachusetts, Virginia, Illinois, Florida
and Utah. Its primary business in the US is the
manufacture and distribution of sandwiches
and other food to go products to convenience
store and food service outlets across the East
Coast of the US and beyond.
Greencore Group plc Annual Report and Accounts 2013 3
Prepared Meals
Greencore’s Prepared Meals business produces chilled
ready meals, pasta sauces, soup and quiche for the
major retailers in the UK. The business, like most of the
categories in which it operates, is largely private label
although Greencore also produces under license for the
Weight Watchers brand, the leading non-private label
brand in the ready meal category. The business operates
out of five facilities, based at Bristol, Consett, Kiveton,
Warrington and Wisbech. It holds strong market
positions across all the categories in which it operates.
Fast Fact:
200m
Greencore produces in
excess of 200 million
jars of cooking sauces,
pickles and condiments
each year
Fast Fact:
185m
Greencore produces
185 million prepared
meals and quiche
each year
Ambient Grocery
& Frozen Foods
Greencore’s Grocery business in the UK manufactures ambient
cooking sauces, table sauces and pickles for most of the major
retailers. It is distinctive to other manufacturers in these areas
in that it focuses on manufacturing under the private label of
its customers rather than under its own brand. The business
operates out of its facility in Selby, which is the largest facility
of its kind in Europe. Greencore’s Frozen Food business is based
at its facility in Leeds and is a leading manufacturer of private
label frozen Yorkshire puddings.
Fast Fact:
3m
This year Greencore
will produce 3 million
Christmas cakes for
UK consumers
Cakes & Desserts
Greencore has three distinct ‘sweet’ businesses in the UK.
Its largest business, based in Hull, produces ambient cakes
and chilled baked desserts for the major retailers sold
under their own private label. Our business in Evercreech
specialises in premium dairy based desserts for one of the
leading UK retailers. Finally, our Ministry of Cake business in
Taunton is a leading supplier of cakes and desserts to the
foodservice sector in the UK.
Greencore Group plc Annual Report and Accounts 2013 4
Business Review and Strategic Report
Chairman’s Statement
Gary Kennedy
Dear Shareholder, it is with
great pleasure that I write to
you towards the end of my
first year as Chairman.
I was honoured to succeed Ned Sullivan in
January. I would like to again thank Ned for his
huge contribution to the Group during his past
ten year tenure. He chaired the Board during
a period of enormous strategic, regulatory,
marketplace, cultural and people changes.
In doing so he demonstrated vision, resilience,
wisdom, a collegial spirit and a deep knowledge
and insight of the international food industry.
FY13 has been a very successful year for our
Group on many levels despite challenging
market conditions. We continue to reap the
benefits of a focused portfolio of convenience
foods businesses, internationalisation, dynamic
customer mix and a dedicated workforce.
Financial Performance*
The Group continued its momentum and
delivered a strong financial performance
against a background where, in its principal
market, volume growth was very challenging
and there was the added disruptive impact
of the horsemeat scandal. Group revenue
increased by 3.0% to £1,197.1 million with
revenue growth in the Convenience Foods
division of 3.5% to £1,129.2 million. Following
a stronger fourth quarter, the UK business
recorded like for like revenue growth for
the year of 0.2%.
Group operating profit grew by 8.1% to
£76.5 million. Adjusted earnings per share
were 14.5p, an increase of 13.3% on FY12.
Free cash flow generation was again strong
with a net cash inflow from operating activities
of £65.7 million. Year end net debt was £232.8
million, a reduction of £25.2 million, resulting
in a net debt: EBITDA leverage (on a reported
basis) of 2.3 times. We have made consistent
progress on de-leveraging and it continues to
be an area of focus.
UK Development
The integration of Uniq was completed with
the transfer of all premium desserts production
to the refurbished Evercreech facility and
the subsequent disposal in January of the
Minsterley facility. International Cuisine was
successfully integrated within the Prepared
Meals business unit and has performed in line
with expectations, delivering strong synergies.
*
Definitions of Key Financial Performance Indicators
are provided on page 9.
Greencore Group plc Annual Report and Accounts 2013 3.0%
Revenue growth
13.3%
Adjusted EPS growth
Revenue by Division
Operating Profit by Division
5
Convenience
Foods – 94%
Ingredients
& Property – 6%
Convenience
Foods – 97%
Ingredients
& Property – 3%
US Development
The integration of the MarketFare and Schau
businesses was completed, creating a business
with six production facilities. The product
portfolio in Newburyport was rationalised
to leave the business focused on food to go
formats. Between January and April, food to go
assembly for Starbucks USA was commenced
at four of the facilities further increasing our
exposure to the fast-growing convenience
and small store channel. We had an excellent
launch process with this strategic customer and
look forward to building our profile with them.
The US as part of our internationalisation
strategy, is well positioned to become an
important second pillar of the Group.
Dividends
The Board of Directors is recommending a
final dividend of 2.9 pence per share. This will
result in a total dividend for the year of 4.8
pence per share representing an increase in
dividend per share of 12.9% in line with the
growth in adjusted earnings per share.
Board Composition
We have seen a significant level of change
this year in the composition of the Board
of Directors. I have already referenced
Ned’s retirement. We also said farewell
to Mr Pat McCann during January who showed
unswerving commitment to the Group over
nine years and to Ms Di Walker who made
an enormous contribution to the Group over
many years, latterly as Chief Operating Officer.
We have been able to attract a very high calibre
of non-executive directors to the Board during
the year with the appointments of Ms Heather-
Ann McSharry, Ms Sly Bailey, Mr John Moloney
and Mr John Warren. Their biographies can be
found on page 35; as you will see, they bring a
wealth of experience to the Board and they have
already made a significant contribution. I very
much look forward to continue working with
them and all of the Board and management
in shaping Greencore’s future success.
Finally, I would also like to recognise at this
point the contribution of Mr David Simons who
will step down from the Board at the conclusion
of the AGM in January 2014. David has been a
real stalwart, a source of wise counsel for the
Board and senior management over a period
of nine years and we will miss his experience
and insight.
Management
and Employees
As we draw a line under FY13 I would like
to particularly thank all of my colleagues in
both management and the wider environment
for their outstanding contribution during the
year. Their sense of purpose and commitment
is admirable.
Outlook
The Group remains well positioned as a focused
and disciplined private label convenience foods
business in its chosen markets of the UK and
US. Recent portfolio transformation has further
developed our position in the attractive and
strongly growing food to go market in
both geographies.
While economic conditions have steadily begun
to improve, there has yet to be a positive impact
on the UK grocery retail market. In addition,
input cost inflation pressures have recently
increased particularly in the UK protein and
dairy markets.
Whilst conditions remain challenging, we
have strong market positions, a clear strategy
and enter the new financial year with good
momentum in our businesses. We remain well
positioned to deliver further progress in FY14
and beyond.
Gary Kennedy
Chairman
25 November 2013
Greencore Group plc Annual Report and Accounts 2013 Business
Excellence
We strive to be best in class.
We aim to be a business which drives growth and
performance with our customers. A business which
operates as a Lean enterprise across the supply
chain and a business which manages resources in
a disciplined manner consistent with our strategy.
Greencore Group plc Annual Report and Accounts 2013 8
Business Review and Strategic Report
Strategy and Business Model
Vision & Strategy
To be a fast growing international convenience food leader
To drive and deepen food to go leadership
supplemented by selected other attractive
convenience food categories
To win in the UK and US markets now, and
in time develop food to go propositions
in other geographic markets
Model & Performance Goals
Model
– Focus on convenience foods categories that
capitalise on the favourable, long-term
consumer and customer trends in the UK and
the US
– Focus on private label and on building enduring
customer partnerships
– Build market leading positions in the categories
in which we operate
People at the Core
Business Excellence
‘Making Greencore a Great Place to Work’
– Live our company values
– A place to develop your career
– A fun place to work
Performance Goals
– Above market like for like revenue growth
– Operating margins > 6%
– Strong cashflows reducing leverage
– Drive return on invested capital > 12%
– A healthy and safe place to work
– A place where everyone’s contribution is recognised
Business Excellence
‘We strive to be best in class’
– Drive growth and
performance
with our customers
– Operate as a Lean enterprise
across the supply chain
– Manage resources in a
disciplined manner and
consistent with our strategy
– Business in control
Cost Effectiveness
‘We have a cost culture aligned
to our business model’
– A constant pipeline of clear
identifiable cost initiatives
– Continually challenging the
status quo
– Everyone treats resources as
if they were their own
Great & Safe Food
‘Keeping the passion for food
central to our culture’
– A culture centred around
great tasting food
– Known externally to have
real food credentials as a
business
– Continuously driving food
technologies
Greencore Group plc Annual Report and Accounts 2013
9
Key Performance Indicators
The Group uses a set of headline key performance
indicators to measure the performance of its
operations and of the Group as a whole.
Although the measures are separate, the relationship between all five is also monitored. In addition,
other performance indicators are measured at individual business unit level.
#01.
Sales Growth
Group revenue increased by
3.0% in FY13.
In our Convenience Foods business, the
Group measures weekly sales growth. In FY13,
revenue growth was 3.5%. A more accurate
guide to underlying revenue performance is
provided by like for like measures which exclude
the impact of acquisitions or disposals in the
year. In the UK in FY13, we recorded like for like
revenue growth of 0.2% that is excluding both
the International Cuisine Limited business for
the period October to August and the Uniq
Desserts activities, which were exited or sold.
A reliable like for like revenue figure cannot
be calculated for the US business due to the
absence of reliable historic weekly data for
acquired businesses.
In the Ingredients & Property division, we track
monthly sales, although this is not the primary
measure of performance for this division. In
FY13, the division recorded a 5.3% decline in
revenue on a constant currency basis.
#02.
Operating Margin
The Group’s operating margin in FY13
was 6.4% compared to 6.1% in FY12.
In Convenience Foods, the operating
margin was 6.5% compared to 6.3% in FY12.
The division maintained tight financial and
operating discipline throughout the year and
delivered improvements in returns in several
lower margin businesses. Operating margin
is calculated using operating profit before
exceptional items and amortisation of
acquisition related intangibles divided by
reported revenue.
Group Operating Margin
6.4%
Convenience Foods Operating Margin
6.5%
Revenue (£m)
+3.0%
2013
2012
#03.
Cash Flow
Net cash inflow from operating
activities was £65.7 million compared
to £72.1 million in FY12 which
benefitted from one-off working
capital reductions in acquired
businesses.
1,197.1
1,161.9
Net Cash Inflow
£65.7m
#04.
Return on
Invested Capital
The Group’s return on invested capital
in FY13 was 12.9% (FY12: 11.9%).
The return is calculated as net operating profit
after tax (“NOPAT”) divided by average invested
capital. NOPAT is calculated as operating profit,
including share of associates, less tax at the
effective rate in the Income Statement of 1%
(4% in FY12). Invested capital is the sum of
all current and non-current assets (including
intangibles), less current and non-current
liabilities with the exception of net debt items,
derivatives and retirement benefit obligations.
The average is calculated by adding together
the invested capital from the opening and
closing balance sheets and dividing by two.
Return on Invested Capital
+100 bps
2013
2012
12.9%
11.9%
#05.
Adjusted Earnings
per Share
Adjusted earnings per share were
14.5 pence compared to 12.8 pence
in FY12, an increase of 13.3%.
Adjusted earnings per share is stated
before exceptional items, pension finance
items, acquisition related amortisation,
FX on inter-company and certain external
balances and the movement in the fair value
of all derivative financial instruments and
related debt adjustments. Note 10 to the
Financial Statements provides the details
of the calculation of adjusted earnings and
the weighted average number of ordinary
shares in issue.
Greencore Group plc Annual Report and Accounts 2013 10
Business Review and Strategic Report
Risks and Risk Management
As a leading food manufacturer in a highly
competitive environment it is critical that
Greencore identifies, assesses and prioritises
its risks. This, along with the development of
appropriate mitigating actions, enables us to
monitor, minimise and control the probability
and impact of these risks.
Business Risk Management Table
Greencore Group plc Board
Audit Committee
Risk Management Group
Integrated Business Risk Management System
Strategic
Risks
Commercial
Risks
Operational
Risks
Financial
Risks
Greencore Group plc Annual Report and Accounts 2013 11
Risks
Description of Risks
Measures to Reduce Risks
Strategic Risks
Competitor Activity
Growth
The Group operates in highly competitive
markets, particularly within the Convenience
Foods division. Significant product innovations,
technical advances or the intensification
of price competition by competitors could
adversely affect the Group’s results.
In order for the Group to continue its strategy
of growth and expansion, it is necessary that it
makes appropriate capital investment decisions
and pursues and identifies suitable corporate
development opportunities which are all
consistent with Group strategy. In addition it
is important that major capital projects and
acquisitions are executed in an efficient and
sustainable manner.
The Group invests in research and development
and ensures that the introduction of both new
products and improved production processes
places the Group at the forefront of customer
needs in its chosen markets. The Group also
continually works to streamline its cost base
to ensure it remains competitive.
The Board and the Group Executive Board
engage in a robust, formal and thorough
process for identifying, measuring and deciding
on the suitability of capital investment projects,
including corporate development opportunities.
Post project reviews are carried out on all major
capital investment projects to monitor the
effectiveness of execution. In the case of
acquisitions, an integration team reporting to
Senior Group Management and the Board is
established to ensure a successful integration.
Commercial Risks
Changes in Consumer Behaviour and Demand
Loss of Key Customer Relationships
In common with other food industry
manufacturers, unforeseen changes in
food consumption patterns may impact the
Group. In addition, demand for a number
of the Group’s products can be adversely
affected by the global economic recession.
The Group benefits from close commercial
relationships with a number of key customers.
The loss of any of these key customers, or a
significant worsening in commercial terms, could
result in a material impact on the Group’s results.
Margin and Cost Pressures
The Group’s cost base and margin can be
affected by fluctuating raw material and energy
prices and changes in cost and price profile.
The Group works closely with its customers to
adapt to changing consumer trends and invests
in market research, innovation and new product
development to ensure regulatory, customer
and consumer requirements are addressed. In
FY13, 43% of all of the products that Greencore
manufactured across the UK and the US were
new to market versus the same period last year.
The Group invests significant resources to
maintain deep, multi-level relationships which
drive value and minimise risk for both itself
and its key customers. The Group continues to
focus on a broad range of customers and the
exploration of other geographic markets such
as the US where the Group has continued to
expand its service offering during the year.
The Group maintains a strong commercial focus
on purchasing, process and cost improvement
to manage and mitigate these risks. In addition,
the Group adopts strategies that diversify risk,
thereby improving the positioning of its
businesses and the defensibility of its margins.
The Group has mitigated the impact of 4% input
cost inflation in each of FY11 and FY12 and 1%
in FY13 through this combined approach.
Greencore Group plc Annual Report and Accounts 2013 12
Business Review and Strategic Report
Risks and Risk Management (continued)
Risks
Description of Risks
Measures to Reduce Risks
Operational Risks
Food Industry Regulations
Product Contamination
As a producer of convenience foods and
ingredients, Greencore is subject to rigorous
and constantly evolving regulations and
legislation particularly in the areas of food
safety, environmental protection and
employee health and safety.
The Group produces a large volume of food
annually and there are risks of product
contamination through either accidental
or deliberate means. This may lead to
products being recalled, which could have
both a financial and/or reputational impact
on the Group.
Disruption to Day to Day Group Operations
The Group is at risk of disruption to its day to day
operations from poor operational management,
the breakdown of individual facilities or the loss
of a significant manufacturing plant.
Loss of Key Personnel
The ongoing success of the Group is dependent
on attracting and retaining high quality senior
management and staff who have the ability to
effectively manage the Group’s operations in a
period of economic stability and in a downturn.
The Group maintains a strong technical
function which sets high standards for food
safety controls, health and safety systems
and environmental controls which strive for
best practice above and beyond the minimum
compliance requirements. In addition,
Greencore closely monitors emerging issues in
an ever-changing regulatory environment to
address increasing compliance requirements.
The Group maintains industry leading
food safety and traceability processes and
procedures. Each facility in the UK and the US
has a team dedicated to ensuring compliance
with Group and industry standards in this area
and the Group constantly monitors performance
against a detailed set of metrics and measures.
The Group operates stringent controls across its
supply chain including audits and strict approval
of its suppliers supported by rigorous quality
checking of all ingredients. The Group’s facilities
are subject to significant amounts of audits by
internal teams, customers and independent
bodies auditing against recognised global food
safety standards. In FY13, 81 and 167 internal
and external audits respectively were carried
out at our facilities and 214 audits were carried
out on Group suppliers.
The Group maintains industry leading operational
processes and procedures to ensure effective
operational management at each facility. The
Group significantly invests in high calibre on-site
teams with responsibility across engineering
and maintenance, supply chain, planning and
operational excellence. The Group also maintains
robust security and comprehensive operational
disaster recovery plans. In addition, the Group
undertakes regular reviews of all sites with
external insurance and risk management
experts, with these reviews being aimed at
improving the Group’s risk profile.
The Group mitigates the risk associated with
loss of key personnel through robust succession
planning, strong recruitment processes, long
term management incentives and retention
initiatives. In addition, the Group has also
established the Group Executive Board which
will support succession planning at the senior
management level.
Greencore Group plc Annual Report and Accounts 2013 13
Risks
Description of Risks
Measures to Reduce Risks
Financial Risks
Interest Rates, Foreign Exchange Rates,
Liquidity and Credit
Employee Retirement Obligations
In the multi-currency and multi-national
trading environment in which the Group
operates, there are inherent risks associated
with fluctuations in both foreign exchange
rates and interest rates. In addition, in the
current economic climate, the Group’s credit
rating and its related ability to obtain funding
for future development and expansion are
specific risks.
The Group’s defined benefit pension funds are
exposed to the risk of changes in interest rates
and the market values of investments, as well
as inflation and the increasing longevity of
scheme members. The recent volatility in world-
wide equity markets and decline in bond yields
has brought the risk of employee retirement
obligations to the fore.
These risks are actively managed by the
Group’s Treasury Department. The Treasury
function operates within the framework of
strict Board-approved policies and procedures
which are explained further in Note 20 to the
Group Financial Statements. The Group has
recently increased its weighted average
committed facility profile through the issuance
of $65 million of US Private Placement notes
and the extension of a £50 million bilateral
banking facility.
These risks are mitigated by paying appropriate
contributions into the funds and through
balanced investment strategies which are
designed to avoid a material worsening of the
current surplus or deficit in each fund. The
Group has closed all defined benefit pension
schemes to future accrual. Where relevant,
the Group also uses specific arrangements
with schemes to improve the security of
scheme benefits while reducing contributions.
In FY13, as explained in Note 23 to the Group
Financial Statements, the Group entered into
such an arrangement with the Hazlewood
Foods Retirement Benefit Scheme Trustees
in the UK to address £40 million of the actuarial
deficit in the scheme.
Greencore Group plc Annual Report and Accounts 2013 14
Business Review and Strategic Report
Chief Executive’s Review
Patrick Coveney
Greencore has had a good
year in 2013, with clear
commercial, strategic and
organisational progress
delivered across the Group.
Introduction
It was a year in which we consolidated our
portfolio after the extensive deal activity of
the three preceding years, increased revenues
at our US business by over 60%, realigned our
resources behind a food to go led strategy,
strengthened our position on the London stock
market – culminating in entry into the FTSE250
– and revitalised our senior executive team
and plc Board. All of this was achieved despite
a weak UK consumer environment, limited
growth in retail food markets, persistent input
cost inflation, and the negative impact of the
horsemeat scandal.
Despite these challenges, we grew revenues,
strengthened margins and delivered double
digit growth in adjusted EPS. Furthermore, our
financial performance improved through the
year and, importantly, we drove strong free
cash flows which helped us strengthen our
balance sheet for further growth. We have
carried this momentum and progress into 2014.
Delivering on our
Vision & Strategy
Our vision is to be a fast growing international
convenience foods leader.
This vision is underpinned by two core beliefs:
1. That consumers and customers will
continue to seek out and value ever
more convenient food propositions; and
2. That our Group has the people, the culture,
the relationships and the capabilities to
capitalise on these trends.
During the year we have reshaped our strategy
to deliver this vision. Given the performance,
growth capability and potential that we have
developed in our food to go model, we have
tightened our convenience foods strategy to
focus on deepening our leadership of that
market. However, we continue to participate in
a select number of other, structurally attractive
convenience foods categories. For now, our
geographic focus remains on the UK and US.
I am pleased to report that we have made
excellent strategic progress. In the UK,
the remaining elements of the Uniq and
International Cuisine integrations exceeded
expectations in all respects – cost synergies,
depth of customer relationships, timing of
Minsterley disposal and tax and working
capital benefits.
Greencore Group plc Annual Report and Accounts 2013 15
The Future
It is a privilege to lead Greencore as Chief
Executive. I am more excited than ever about
our strategy, our people, our capability and our
prospects. Across our Group we have worked
hard to reshape our portfolio, build our skills,
deepen our customer relationships and excite
consumers with our food. We are in a good
place, but there is plenty more to do.
I would like to thank all our stakeholders for
their support and efforts in 2013, including
our colleagues and teams across the business,
our Board of Directors, our customers and
our investors.
Patrick Coveney
Chief Executive Officer
25 November 2013
We are a customer focused business. The
relationships we build, the products we develop,
the service we provide, and the value we deliver
to our customers is central to all that we do.
We choose to focus on customer owned brands,
and we like to build deep, cross-functional,
insight-driven, trust-based relationships. We
take pride in the depth and length of those
relationships, but we never become complacent
and work relentlessly to improve them even
further. We build teams that are passionate
about helping their customers win in the
marketplace. We view ourselves as partners to
our customers and take the trust they place in
us extremely seriously.
Our People
We operate in a complex industry. Across
the majority of our sites, we assemble raw
materials into a finished food proposition for
consumption within 48 hours of manufacture.
Our teams have to get it right at every critical
step along the way, from sourcing and supply
chain to safe manufacture, logistics and
customer relationship management. The fact
that we do this consistently is testament to
the quality of the people that we have at
Greencore. Some of these teams have only
recently joined our Group as a result of
acquisitions, but together we are building
an increasingly strong, distinctive and
widely admired culture.
When customers, suppliers and industry
observers visit our sites and meet our teams,
they consistently comment positively on who
we are and what we do. I am very proud of the
people, the teams, the sense of community
and the passion within our business.
This year we again led the food industry in
shaping and implementing the IGD’s Feeding
Britain’s Future programme. In September
we organised 50 events across 15 UK sites for
nearly 750 young people in order to showcase
the food industry and demonstrate proactively
how to find and build a career in this sector.
In the US, we have reshaped our business into
a larger scale, profitable, food to go, small-
store-focused business. In particular, we have
delivered Starbucks as a major new customer
across four regions, and have also delivered
growth and innovation to our largest US
customer, 7-Eleven. While there is more to
do to bring returns in our US business in line
in what we earn in the UK, we now have a
material, growing, multi-regional, insight-
driven US business which we believe will be
scalable in the years ahead.
Our Consumers
& Customers
2013 was a difficult year for consumers.
Volumes were softer than in prior years,
with weak economic data, poor consumer
sentiment and a seemingly endless winter
resulting in little, if any, market growth in the
first half of the year.
The horsemeat scandal compounded these
challenges with consumer trust in, and demand
for, processed beef products being severely
dented by the events of January to March 2013.
There was clearly some unacceptable behaviour
across parts of the food industry, and many
supply chains had become far too complex.
Consumers were right to be both concerned
and angry. For a time, Greencore was pulled
directly into this scandal, although we were
relieved to eventually find that our supply
chain had not been compromised in any way.
The UK food industry has reacted positively and
substantively to this scandal. Species specific
testing is now a way of life, supply chains have
been shortened, sources of raw material have
been narrowed, local protein provenance has
become more important, and consumer
communication is clearer. Despite these
actions, we anticipate that it will take some
time for growth to return to certain sectors,
such as chilled ready meals, that consumers
still associate with the horsemeat scandal.
Fortunately, we saw clear evidence of consumer
confidence and volume growth returning more
broadly to our categories in the second half of
FY13. This uplift was in part influenced by a
great British summer, but we saw evidence of
returning consumer confidence and improving
market sentiment too.
Greencore Group plc Annual Report and Accounts 2013 Cost
Effectiveness
We have a cost culture aligned
to our business model.
We aim to be a business with clear identifiable
cost initiatives, a culture which challenges
the status quo and a business where everyone
treats resources as if they were their own.
Greencore Group plc Annual Report and Accounts 2013 18
Business Review and Strategic Report
Operating Review*
Reported revenue in the Convenience Foods division increased
by 3.5% in the year to £1,129.2 million. This growth rate was
impacted by changes in the portfolio during the year.
Convenience Foods**
Revenue and Operating Profit
growth in value terms was ahead of unit sales
and was driven by growth in promotional meal
deals activity on premium lines.
FY13
£m
FY12
£m Change
Revenue
1,129.2 1,091.1
+3.5%
Operating profit
Operating margin
73.9
6.5%
69.1
+7.0%
6.3% +20bps
The impact of currency is not material.
In the UK, like for like revenue growth was
0.2%. This was impacted versus prior year by
both the lower market growth rate in chilled
convenience foods and in particular by the
effect of the horsemeat scandal on the ready
meals business.
In the US, reported revenues were over
60% higher than in FY12 as a result of both the
acquisitions of MarketFare and Schau and the
commencement of a multi-site, multi-year
supply arrangement with Starbucks.
Input cost inflation across the year was lower
than in previous years at around 1%, although
pressure increased in the second half in both
UK proteins as a result of greater focus from
retailers on provenance, and in dairy.
Operating profit grew by 7.0% to £73.9 million
with a 20 basis points improvement in operating
margin to 6.5%. The division maintained tight
financial and operating discipline throughout
the year and delivered improvements in returns
in several lower margin businesses. This helped
us to offset the significant impact to operational
gearing from lower chilled ready meals volumes.
UK Convenience Foods
Food to Go
The UK Food to Go business represents
approximately 40% of Convenience Foods
revenues and comprises sandwiches, sushi,
snack and side of plate salads.
Both the sandwiches sub-category and the
broader chilled food to go market experienced
good growth over the year. Following a slow
first half, the market was helped by good
summer weather in July and early August.
The sandwiches sub-category grew by 5.1% in
the year while the broader chilled food to go
market (i.e. sandwiches, sushi, snack and side
of plate salads) grew by 5.6%. The market
Against this backdrop revenue in the combined
Food to Go business grew by 4.4%. During
the year, we strengthened our position in
sandwiches with a number of major customers
and also saw promising early results from
several significant range refreshes. Following
additional investment, most retail customers
are now using cardboard packaging rather
than plastic. The market remained highly
competitive leading to us choosing not to renew
several marginal return smaller contracts.
Prepared Meals
The Prepared Meals business comprises chilled
ready meals, quiches, chilled soup and chilled
sauces and represents approximately 25% of
Convenience Foods revenues. Following several
years of near double digit growth, the chilled
ready meals market experienced growth in
FY13 of just 1.4%, while the Italian ready meals
market, our major sub-category, declined by
3.7%. This was predominantly driven by the
impact of the horsemeat scandal which
affected the broader processed beef market
from late January. Although all industry tests
on chilled ready meals were negative for the
presence of horsemeat, the chilled ready
meals market and, in particular Italian ready
meals, was negatively impacted in Q2 and
remained in year on year decline in H2. Both
the chilled soup market and the quiche market
exhibited more robust performances with soup
ahead by 7.8% and quiche ahead by 7.6%,
while chilled pasta sauces experienced a
1.2% decline.
The Prepared Meals business grew reported
revenues by 9.1% in the year due to the
acquisition of the International Cuisine
business in August 2012. On a like for like basis
revenue was 5.2% lower as a result of the
decline in ready meals. Whereas we grew
revenues ahead of the market in soups and
quiche, our ready meals business was behind
the market due to our exposure to Italian ready
meals and the concentration of our business in
a few customers. Returns in the business were
significantly impacted by negative operational
gearing as volumes in ready meals declined
and we were unable fully to recover fixed costs.
The integration of International Cuisine was
completed during the year which has enhanced
our capabilities in the longer life part of the
chilled ready meal market. Notwithstanding the
impact of the horsemeat scandal, the business
has performed in line with expectations and
has delivered strong synergies.
Grocery and Frozen
The Grocery and Frozen business provides meal
components with Grocery activity focused on
cooking sauces, table sauces and pickles and
Frozen supplying Yorkshire puddings. The own
label cooking sauces market grew by 1.1% in
value in the year whilst the frozen Yorkshire
puddings market declined by 1.9%.
The business performed well and grew revenue
by 2.6% with strong business performance in
cooking sauces in the discounter sub-channel
and a net gain in new listings in Yorkshire
puddings.
During the year, management of the retail
cakes operation in Hull was transferred to the
Grocery and Frozen business.
Cakes and Desserts
The Group’s cakes and desserts activity
includes the Hull facility, the food service
desserts facility in Taunton and the chilled
desserts facility in Evercreech. The Celebration
Cake market, the largest sub-category in which
we participate, declined by 1.3% in the year
while the total chilled desserts market
experienced a 2.1% decline.
Overall, Cakes and Desserts revenues were
5.1% lower on a like for like basis as the
business concentrated on improving returns.
The financial performance of the Hull facility
improved significantly versus the previous year
with good operational improvements delivered.
While volumes in the food service market were
impacted by the warm summer weather,
additional business was secured with a key
customer, which should provide good growth
in FY14.
The refurbishment of the Evercreech facility
was completed during the year and the
remaining premium desserts lines were all
successfully transferred from the Minsterley
facility. The disposal of the Minsterley facility
was completed as planned at the beginning
of January.
Greencore Group plc Annual Report and Accounts 2013 19
Ingredients & Property
Revenue
Operating profit
The Ingredients and Property division
represented 6% of Group revenues in the year
and a smaller proportion of Group profits. The
revenue decline in the year was driven by the
edible oils trading activity. Revenue performance
was robust in the molasses feed business as
the poor winter and spring weather increased
demand for feeds. Operating profit benefitted
both from better mix in edible oils and the
increased molasses revenues.
Marketing of the Littlehampton site
commenced in the Summer, expressions of
interest have been received and are under
consideration. As detailed in Note 6 to the
financial statements on exceptional items,
the Group recognised an exceptional charge
of £9.2 million in the first half related to its
Irish property portfolio. This comprises an
impairment charge following the rezoning
of a large proportion of the Group’s property
assets in Ireland and reflecting the continued
soft property market, together with a charge
for the expected costs to complete the
remediation of the former Irish sugar sites.
FY13
£m
FY12
£m
Change
Actual
Currency
Change
Constant
Currency
67.9
2.5
70.8
1.6
-4.1%
+59.4%
-5.3%
+57.4%
Ingredients & Property Revenue (£m)
-4.1%
2013
2012
67.9
70.8
Ingredients & Property Operating Profit (£m)
+59.4%
2013
2012
2.5
1.6
US Convenience Foods
The US business has been transformed following
the acquisitions of MarketFare and Schau in
FY12 and the addition of Starbucks as a major
new customer during the year. Reported
revenues were over 60% higher than in FY12.
The financial performance of the business
improved during the year, and is now profitable.
The integrations of MarketFare (Fredericksburg
and Salt Lake City facilities) and Schau (Chicago
and Jacksonville facilities) were completed
during the year with capital investments at all
four facilities. The product range in the ‘legacy’
business was simplified with a significant
SKU rationalisation programme to focus
the business more on food to go lines. This
programme reduced operational complexity
at the Newburyport facility in particular. During
Q2 and Q3, the business successfully rolled out
a range of food to go products (sandwiches,
bistro boxes and parfaits) for Starbucks from
four facilities (Newburyport, Chicago,
Jacksonville and Fredericksburg).
The US business has a clear strategy and we
remain focused on building out the business
with existing customers in the small store
and convenience channels. The business now
has significant scale and we continue to build
capability both with reassignments from the
UK business and with local hires.
Convenience Foods Revenue (£m) (£'m)
+3.5%
2013
2012
1,129.2
1,091.1
Convenience Foods Operating Profit (£m)
+7.0%
2013
2012
73.9
69.1
*
**
Definitions of Key Financial Performance Indicators
are provided on page 9.
Market growth rates are based on Nielsen data for
the 52 weeks to 28 September 2013.
Greencore Group plc Annual Report and Accounts 2013
20
Business Review and Strategic Report
Financial Review*
Alan Williams
Reported revenues in the
year were £1,197.1 million,
an increase of 3.0% versus FY12.
Revenue and
Operating Profit
Group operating profit of £76.5 million was
£5.8 million or 8.1% higher than in FY12. Group
operating margin was 6.4%, 30 basis points
ahead of the prior year. The improvement in
operating profit and operating margin was
driven by tight financial management of the
Group, including a focus on improvements in
returns in lower margin businesses. The impact
of currency in the year was not material.
Interest Payable
The Group’s bank interest payable in FY13 was
£15.6 million, a decrease of £0.8 million. This was
driven by a combination of lower net debt and
a lower effective interest rate payable on the
Group’s committed facilities. The composition
of the charge was £14.3 million of interest
payable, commitment fees for undrawn facilities
of £0.7 million and an amortisation charge in
respect of facility fees of £0.6 million.
Non-Cash Finance
Charges/Credit
The Group’s non-cash finance credit in FY13
was £0.5 million (£1.8 million charge in FY12).
The change in the fair value of derivatives and
related debt adjustments was a non cash
credit of £4.4 million (£2.8 million credit in
FY12) reflecting the mark to market of the
Group’s interest rate swap portfolio. The non
cash pension financing charge of £3.8 million
was lower than the charge in FY12 of £4.7
million and reflects a reduction in interest
rates and lower expected return on assets.
The charge in respect of the increase in the
present value of assets and liabilities held was
£0.2 million (£0.1 million credit in FY12).
From FY14, the Group will adopt the revised
accounting standard on employee benefits,
‘IAS 19 (revised 2011): Employee Benefits’. This
will result in a higher net non-cash financing
charge related to pensions. Further details and
an estimate of the impact are given below
under ‘Pensions’.
Taxation
The Group’s effective tax rate in FY13
was 1% compared to a rate of 4% in FY12.
The low effective tax rate reflects the
considerable tax attributes assumed by
the Group in September 2011 following
the acquisition of Uniq plc.
Exceptional Items
The Group recognised a net exceptional
credit of £18.1 million (FY12: net charge
of £5.6 million).
Greencore Group plc Annual Report and Accounts 2013 21
The credit is analysed as follows:
– a charge of £2.7 million in connection
with the completion of the integration
of the Uniq business, including the Chilled
Desserts restructuring, and the completion
of the integration of International Cuisine;
– a charge of £1.5 million in connection with
the completion of the integration of the
MarketFare and Schau acquisitions in the US;
– a charge of £9.2 million related to the
Group’s Irish property portfolio. This
comprises an impairment charge of £4.3
million following the change in zoning of
a large area owned by the Group together
with soft property market conditions,
and an additional charge of £4.8 million
in connection with the remediation of
the former sugar processing sites;
– a credit of £4.4 million representing a
curtailment gain in connection with
the Greencore Group pension scheme;
– a tax credit of £18.9 million following a
reassessment of the utilisation of deferred
tax assets acquired as part of the Uniq
transaction;
– a tax credit of £7.8 million in connection
with the resolution of a number of tax
positions, including the settlement of
an overseas tax case; and
– a tax credit of £0.3 million in respect
of integration charges in the year.
Earnings per Share
Adjusted earnings of £56.9 million were
15.6% or £7.7 million above prior year. Adjusted
earnings per share of 14.5 pence were 13.3%
ahead of FY12.
Cash Flow and Net Debt
A net cash inflow from operating activities of
£65.7 million was recorded compared to an
inflow of £72.1 million in FY12. Whereas FY12
benefitted from a one-time working capital
inflow following acquisition activity of £23.4
million, the corresponding inflow in FY13 was
£9.9 million.
Capital expenditure of £34.9 million was
incurred in the year compared to £30.4 million in
FY12. The increase was predominantly driven by
investment in capacity upgrades in soup, sushi
and further carton packaging investments in
sandwiches. In addition capital investments
were undertaken in businesses acquired in FY12.
Interest costs of £15.1 million were paid
in the year (FY12: £15.7 million) with cash
dividends to equity holders of £11.1 million
(FY12: £9.2 million).
The Group’s net debt at 27 September 2013,
a seasonal low point, was £232.8 million,
a reduction of £25.2 million from 28 September
2012. The reduction was driven by strong free
cash flow conversion and disposal proceeds
partly offset by higher capital expenditure
and an increase in cash dividends paid.
During the year, the Group extended the
maturity of a £50 million bilateral loan facility
by two years to 2018. Subsequent to the year
end, the Group refinanced $65 million of
maturing US private placement notes with
a new eight year facility. This leaves the Group
with £430 million of committed facilities with
a weighted average maturity of 3.2 years.
The net debt at year end of £232.8 million
resulted in a reduction in leverage (expressed
as the ratio of net debt to reported EBITDA)
from 2.75 times to 2.3 times. The Group remains
focused on further underlying leverage reduction.
Pensions
The net pension deficit (before related deferred
tax) reduced to £137.5 million at 27 September
2013 from £141.8 million at 28 September
2012. The net pension deficit after related
deferred tax was £114.3 million, a decrease
of £1.6 million from 28 September 2012.
The fair value of total plan assets relating to
the Group’s defined benefit pension schemes
(excluding associates) increased to £373.5
million at 27 September 2013 from £345.7
million at 28 September 2012. The present
value of the total pension liabilities for these
schemes increased to £511.0 million from
£486.9 million over the same period.
All defined benefit pension scheme plans
are closed to future accrual and the Group’s
pension policy with effect from 1 January 2010
is that future service for current employees
and new entrants is provided under defined
contribution pension arrangements.
On 10 May 2013, the Group entered into
arrangements with the Hazlewood Foods
Retirement Benefit Scheme Trustees to address
£40 million of the actuarial deficit in the scheme.
The substance of this arrangement is to reduce
the cash funding which would otherwise be
required based on the latest triennial valuation,
whilst improving the security of the pension
scheme members’ benefits. This arrangement
has no impact on the acturial valuation under
IAS 19. This agreement is described in further
detail in Note 23 of the financial statements.
From 1 October 2013, the Group will be
applying ‘IAS 19 (Revised 2011): Employee
Benefits’. Applying the revised standard is
expected to increase the non cash financing
charge, as a single liability discount rate will
be applied to the net of assets and liabilities
rather than, at present, a separate expected
rate of return being applied to the assets and a
finance charge applied to the liabilities. Had the
change applied in FY13, the non cash financing
charge to the Income Statement would have
been £1.7 million higher. Under the revision,
scheme administration costs including the UK
Pension Protection Fund levy will be recognised
as an operating cost through the Income
Statement. These costs had previously been
taken directly to scheme liabilities as the
schemes are all closed to future accrual. The
costs in FY13 were approximately £2.0 million.
The changes have no impact to cash funding
requirements for the schemes and no impact
on the deficit for actuarial purposes.
Alan Williams
Chief Financial Officer
25 November 2013
Operating Profit (£m)
Convenience Foods
2013
2012
Ingredients & Property
2013
2012
Total
2013
2012
1.6
Bank Interest Payable (£m)
2013
2012
Adjusted EPS (pence)
2013
2012
+13.3%
Net Debt (£m)
2013
2012
-£25.2m
73.9
69.1
2.5
76.5
70.7
15.6
16.4
14.5
12.8
232.8
258.0
*
Definitions of Key Financial Performance Indicators
are provided on page 9.
Greencore Group plc Annual Report and Accounts 2013
22
Business Review and Strategic Report
Group Executive Board
The Group’s Executive Board is responsible for
driving the strategic, organisational and capability
performance and direction for the Group. It reports
into the Greencore Group plc Board.
5
6
4
2
1
7
3
* Greencore Group plc Board Director.
Greencore Group plc Annual Report and Accounts 2013 23
5.
Phil Taylor
HR Director, Greencore Group
Phil is Group HR Director. Prior to this
appointment Phil was Managing Director
for Greencore Grocery with responsibility
for three UK manufacturing facilities. Phil
joined Greencore in 1999 and has worked
in a number of senior roles across various
Greencore categories. Before joining Greencore
Phil worked in a number of commercial roles
in a variety of non-food branded businesses.
6.
Eoin Tonge
CSO, Greencore Group
Eoin is Chief Strategy Officer with responsibility
for Group Strategy, Mergers & Acquisitions,
Corporate Affairs and Communications.
Eoin also has responsibility for our desserts
business in Evercreech and our Ministry of Cake
foodservice business in Taunton. Eoin joined
Greencore in 2006 having previously worked
within the financial services area for 12 years
in many locations around the world.
7.
Alan Williams *
CFO, Greencore Group
Alan is Chief Financial Officer. He has
responsibility for Group Finance, Risk
Management, Group IT, Group Secretariat &
Legal, as well as our Ingredients & Property
Division. Alan joined Greencore in 2011 from
Cadbury Group, where he served in a number
of significant financial and management roles
for 18 years.
1.
Patrick Coveney *
CEO, Greencore Group
Patrick chairs the Group Executive Board. Patrick
has been Chief Executive Officer since 2008.
He joined Greencore in 2005 as Chief Financial
Officer having previously served as a partner
at management consulting firm, McKinsey
and Company.
2.
Chris Kirke
MD, Greencore, Food to Go
Chris is the Managing Director of Greencore
Food to Go which is the leading manufacturer
of sandwiches, salads and sushi for major
retailers in the UK. Chris joined Greencore
in 2008. Prior to joining Greencore, Chris
worked for ten years in a number of senior
management roles within the food industry.
3.
Liam McClennon
CEO, Greencore USA
Liam has been Chief Executive Officer for
Greencore USA since 2010, having joined
Greencore USA in 2008. Liam is responsible
for our fast growing business in the US, which
is becoming a leading manufacturer of fresh
food to go products. Liam has more than
25 years food manufacturing experience
prior to joining Greencore.
4.
Kevin Moore
MD, Greencore Prepared Meals
Kevin is the Managing Director for Greencore
Prepared Meals, which is a leading manufacturer
of chilled ready meals, quiche, soups and sauces
in the UK. Kevin joined the Group in 1999. Before
joining the business, Kevin worked for more
than a decade in senior roles in management
consultancy and retail.
Greencore Group plc Annual Report and Accounts 2013 Greencore Group plc Annual Report and Accounts 2013 Great and
Safe Food
Keeping the passion for food
central to our culture.
We aim to have a culture centred around great
tasting food, to be known externally to have real
food credentials as a business and continuously
driving food technologies.
Greencore Group plc Annual Report and Accounts 2013
26
Business Review and Strategic Report
Corporate Social
Responsibility Report
As a leading food manufacturer and
major employer in the core markets
in which we operate, we believe
we have a duty to maintain strong
integrity and sustainable corporate
and social responsibility practices
for the benefit of our people, our
customers, our suppliers, the
environment, our shareholders
and our communities.
Our Values
Greencore conducts its business in a manner which is in line
with its culture and values, which are centred on the following
overriding principles:
Performance
People
– We expect and reward results.
– We never accept the status
quo and we continuously seek
a better way.
– We always do what we say
we will do.
– We set, measure and monitor
highly ambitious targets.
– We maintain the highest
manufacturing/technical
standards.
– We adhere to a strict
financial rigour.
– We believe that people make
the difference.
– We treat one another with
respect and dignity. Individuals
at all levels of the business feel
valued and valuable.
– We provide ample
opportunities for professional
growth and development.
Passion
Responsibility
– We maintain the highest levels
of customer-focused service.
– The quality of our products
is the best in the industry.
– We have fun and enjoy the
work we do.
– We are passionate about
good food.
– We leave responsibility with the
people at the level where it can
be best exercised.
– We treat Greencore’s resources
(i.e. money/time/reputation) as
if they were our own.
– We maintain the highest levels
of ethics and integrity.
Group CEO presenting the Food First Chairman’s
Award to representatives from Greencore Grocery.
Introduction
We aim to operate in a sustainable and
responsible manner. To embed and drive
this approach within our organisation we
have developed a framework, which we call
‘The Greencore Way’. This framework is based
on four core operating principles as described
in the ‘Strategy and Business Model’ section
on page 8:
1) People at the core
2) Great and safe food
3) Business excellence
4) Cost effectiveness
The Greencore Way sets out how we apply
these principles to our behaviours and actions
on a day to day basis. It also creates a vision
and goals for our desired outcomes with our key
stakeholders – our people, our customers, our
suppliers, the environment, our communities
and our shareholders. This report therefore
discusses our vision and goals and how we
are doing against each of these stakeholders
(other than Shareholders which is the key focus
of the other sections of the Business Review
and Strategic Report).
People at the Core
‘Making Greencore
a great place to work’
People are at the core of The Greencore Way
but are of course also a key stakeholder. We
believe that people make the difference to our
business and they make Greencore a great
place to work.
27
Our Company Values
Greencore has a well-established set of
company values, which are recognised
across the Group. The values are built on
‘Performance Matters’, ‘People Matter’,
‘Responsibility Matters’, and ‘Passion to
Succeed’. These values are used as part
of our Group performance management
programme, which we call a PRIDE Review.
A Healthy and Safe Place to Work
Greencore aims to have industry-leading
standards of health and safety to ensure the
safest conditions for our people, visitors and
contractors at all of our facilities.
We continue to benchmark the Group
accident incident rate, shown below. During
the period 2003/04 to 2012/13 there has been
a reduction in the accident incident rate
(AIR), from 2.49 to 0.87 accidents per 100
employees. Specifically in the past year:
– The total accident rate for the 2012-13 year
is down 19%
– Reportable accidents have decreased by
38% year on year
Our AIR figures demonstrate a continuing
improvement in health and safety risk
management.
3.0
2.5
2.0
1.5
1.0
0.5
0.0
4
/
3
0
0
2
5
/
4
0
0
2
6
/
5
0
0
2
7
/
6
0
0
2
8
/
7
0
0
2
9
/
8
0
0
2
0
1
/
9
0
0
2
1
1
/
0
1
0
2
2
1
/
1
1
0
2
3
1
/
2
1
0
2
Despite these figures we continue to focus
on improving our health and safety risk
management. We regularly conduct detailed
health and safety risk management audits
across each of our sites. These audits are an
important driver for managing risk reduction
across the business. A number of our facilities
are independently certified to OHSAS 18001:
2007 and have successfully maintained
this distinction.
Over and above the Group audits, we
commission specialist third party experts to
support our continuous improvement process.
As an example, all recommendations from the
specialist machinery safety audits carried out
across all UK manufacturing sites between
2009 and 2011 are now complete. Machinery
safety is one of the main causes of major injury
incidents in the food industry and these audits
are key to Greencore’s control of this type
of risk.
Greencore continues to support the HSE
Food Manufacturing Forum by providing a
representative through our membership of
the Chilled Foods Association.
Greencore is a signatory to the UK
Government’s Public Health Responsibility
Deal pledges on Health at Work and Physical
Activity, supporting the health of our
employees. Greencore provides Occupational
Health services across manufacturing sites as
appropriate to the size and specific risks of
the facility. Occupational health is measured
annually against industry best practice as
part of the Group health and safety audit.
A Place to Develop your Career
Greencore’s goal is to be recognised as a place
where people can develop their careers. We
therefore put much emphasis on learning and
development to help our employees achieve
their potential.
Individual and team development is supported
across Greencore by learning and development
programmes. These are formulated to deliver a
wide range of training needs at all levels. They
include basic technical skills offered to all of
our operations staff, such as food safety and
hygiene training, right through to executive
development programmes across the UK,
the US and Ireland.
Learning and development needs are
identified through Greencore’s PRIDE
performance review system. All Greencore
salaried staff and management participate
in a PRIDE Review at least once a year.
Four thousand learning activities will be
delivered throughout the coming year to
meet both personal development and skills
enhancement opportunities identified in
this year’s PRIDE reviews.
Greencore’s manufacturing sites have
dedicated learning and development
staff and there is also a Group Learning
and Development Manager, whose
role is to develop, coordinate and drive
programmes throughout the business.
Colleagues from our Food to Go category.
Greencore is now an ILM (Institute of
Leadership and Management) accredited
centre with dedicated Regional Training
Centres. We work with a number of external
providers to ensure that we build effective
leadership skills and food manufacturing
capabilities for our people. Since its launch in
2006, nearly 2,000 Greencore colleagues have
participated in the Leadership Academy.
This has more recently been rolled out at
Greencore’s US facilities.
A Place Where Everyone’s
Contribution is Recognised
At Greencore, putting people at our core
means that we recognise and celebrate the
outstanding achievements of our colleagues.
This year Greencore has launched the Star
Awards programme across UK sites. Star
Awards began at our Northampton facility
three years ago to recognise the great work
done by individuals and teams. All UK sites
can now highlight their star performers
each month.
Greencore facilities in the US recognise the
Employee of the Month. The scheme is being
extended this year with the opportunity to
nominate Employee of the Year.
Some of our sites seek external accreditation
that helps to demonstrate the value placed
on our people. In September, the Food to Go
facility in Manton Wood was re-accredited
with its Investors in People standard.
Greencore Group plc Annual Report and Accounts 2013 28
Business Review and Strategic Report
Corporate Social Responsibility Report (continued)
Diversity
The Group recognises the importance and
benefit of ensuring diversity throughout
the business. We ensure there is a balance
between different cultures, ages and
gender. We strive to create a culture
which recruits, promotes and ensures
the constant development of women
in the workplace.
Ratio of Men and Women
Women currently make up approximately
38% of our Group-wide employees. In
Ireland, 46% of the workforce are female,
in the UK approximately 36% of our
employees are female whilst in the
US 49% of employees are female.
All Employee gender breakdown
Country
No. of Employees
Male
Female
Total
Ireland
United
Kingdom
US
5,709
3,251
606
22
589
19
41 8,960 1,195
Female representation on the Greencore
Group plc board is 20%, further details are
set out on page 34. Female representation
on our subsidiary company boards is
currently at 19%. The senior management
of the business is composed of the Group
Executive Board (“GEB”), details of which
are set out on page 22. Since the departure
of Di Walker, this is now composed of two
Executive Directors and five other senior
managers. Whilst the Board is satisfied that
the GEB has the appropriate balance of
skills, experience and expertise necessary
to fulfil its role, should there be further
compositional changes, the Board will
give due regard to diversity.
Greencore celebrates long service by its staff,
with recognition given to those that have
served for 20, 25 and 30 years. At the Prepared
Meals facility in Sheffield, one colleague
celebrated 45 years with the business earlier
this year. Greencore Grocery in Selby holds an
annual Christmas Party for pensioners and
colleagues with 25 years or more service.
Long service and retired staff enjoy lunch,
entertainment and products from the site.
We celebrate and recognise our food culture
through our unique Food First programme
which was established in 2003. Each year the
Food First Chairman’s Awards are given to the
sites or teams that have demonstrated just
that, both from a commercial and a cultural
perspective. In 2013 Greencore USA was
awarded the Food First Commercial Award for
its work on the Starbucks launch. Greencore
Grocery in Selby won the Food First Culture
Award for its ‘Learning Lunches’ programme,
an education programme amongst site
colleagues on international cuisines.
Successes and achievements at Greencore
are shared through regular communications
including site briefings, staff notice boards,
the Greencore magazine ‘On the Menu’ and
our staff intranet ‘On the Menu online’.
A Fun Place to Work
Whilst maintaining a professional approach to
our work, Greencore does also encourage its
colleagues to have fun and enjoy their work.
At many of Greencore’s sites this is centred
on charity fundraising.
A number of Greencore’s UK facilities
celebrated ‘Red Nose Day’ in March and in
doing so raised much-needed funds for Comic
Relief. Greencore teams across the UK and in
Chicago participated in October’s ‘Wear it
Pink’ day in aid of Breast Cancer Support.
We celebrate our food culture through our
unique Food First programme which involves
the whole workforce joining in with fun, and
occasionally novel, events. In May, colleagues
from Greencore Food to Go participated in the
British Sandwich Association’s world record
attempt at the most people making sandwiches
at the same time. This was achieved with more
than 600 colleagues from across the industry
participating.
Greencore staff also get together to enjoy social
clubs and sporting events – a group of colleagues
at Greencore’s facility in Wisbech have set up
their own local football club, Greencore FC.
Engagement is encouraged through regular
employee surveys giving colleagues the
opportunity to comment on all aspects
of life at Greencore.
Customers
‘Delivering Excitement,
Intimacy and Trust’
Greencore believes in building strong
relationships with our customers, and
in turn consumers. Our goals are:
– to understand our customers deeply
and commit to helping them win
– to be an industry leader in food safety
standards and supply chain security
– to be known for innovative and great
tasting food products
Understanding our Customers
Deeply and Commitment to
Helping Them Win
Our dedicated key account teams work closely
with our customers to ensure that our four
operating principles (people at the core,
great and safe food, business excellence, cost
effectiveness) are aligned to the strategies
and expectations of our customers. This is
recognised through the status that we have
with many of our customers as ‘category
captains’ or as key strategic suppliers. This year
we received awards and recognition from
our customers for the work we do for them,
including ‘Asda Account Manager of the Year’,
‘Sainsbury’s Technical Excellence Award’ and
‘Tesco Values Awards’.
We also continue to work with customers
to help drive and deliver their sustainability
strategies, including supporting nutrition
improvements to extend the portfolio of
healthy products available to consumers
and meeting both our customers’ and
Greencore’s environmental and ethical criteria
throughout our operations and supply chains.
An Industry Leader in Food Safety
Standards and Supply Chain
Effectiveness
Food safety is an absolute priority for
Greencore and we maintain the highest
standards throughout our operations. We have
a strong set of key performance indicators,
which measure our food safety performance
on a daily, weekly and monthly basis as well
as setting technical strategies that respond
to internal performance and external factors.
Our facilities undergo multiple audits to ensure
we meet specific standards on food safety and
hygiene. This year, 81 internal inspections by
Greencore technical personnel, including health
checks and unannounced audits, were carried
out. These were accompanied by 167 formal
audits by external bodies against retailer and
accredited standards of quality and safety.
We have always maintained robust procedures
to ensure traceability and authenticity within
our supply chains and we continue to challenge
and improve these through our internal testing
processes and our dedicated supply chain
audit team.
Greencore Group plc Annual Report and Accounts 2013 29
Learning & Development Manager, Richard Everitt
presenting the Kiveton site learning and development
notice boards.
Greencore sites within the UK undergo internal
ethical audits in addition to those conducted
by our customer and independent 3rd party
auditors against the SEDEX Members Ethical
Audit (SMETA).
Our customers expect high standards of
animal welfare for their products. All raw beef
used within our prepared meals is produced
from UK origin farm assured cattle.
Responsible sourcing of raw materials is
important to Greencore and to our customers.
We use Marine Stewardship Council (MSC)
certified Pollock in our products and 95% of
the tuna in our sandwiches is pole and line
caught. 86% of the cold water prawns we use
are sustainably sourced.
Our specialist team of auditors has conducted
214 physical audits of companies supplying our
business throughout FY13.
Known for Innovative and
Great Tasting Food Products
Our core principle of Great & Safe Food is
widely recognised by both our colleagues
and customers as a platform for competitive
advantage by demonstrating a genuine love
and passion for great food. At Greencore
we employ high calibre food development
professionals who drive this food agenda.
We make significant investments in
uncovering and understanding new food
trends and developments, through market
data, consumer research and market visits.
All of this expertise and knowledge forms
the basis of our product and packaging
development activities. 43% of all of the
products manufactured by Greencore across
the UK and US in the last 12 months are new
to the market. However, the focus on great
and safe food doesn’t stop with our product
development teams – every employee within
Greencore is encouraged to demonstrate and
share a passion for great and safe food.
Products manufactured by Greencore are
regularly shortlisted and winners at key
industry product awards. Last year 11 products
were shortlisted at The Grocer Own Label Food
& Drink Awards and seven products have
made The Quality Food & Drink awards
shortlist. Greencore has also won awards at
The Sandwich Industry Awards as well as
the British Frozen Food Federation Awards.
Health and nutrition are a particular focus for
Greencore and our customers. We signed the
UK government’s Public Health Responsibility
Deal commitments on salt reduction and
removal of artificial trans fats in 2011.
We have met the 2012 salt reduction targets
for products across the majority of categories
in which we operate, including sandwiches,
prepared meals, soups, cakes, tomato ketchup,
pasta sauces, pastes and puddings. For the
small number of products that do not meet
the targets, our technologists continue to
work towards them, where food safety and
quality allow.
We met the commitment to remove artificial
trans fats from products at an early stage.
Partially hydrogenated vegetable oil is
not used as an ingredient in our products.
Furthermore, oils and fats containing trans
fats are not used in their preparation.
Our development teams are supported by our
company nutritionist and recently appointed
Group Sustainability Manager, who are in
contact with external bodies including, in the
UK, the Department of Health, Public Health
England, the East Midlands Platform on Public
Health, the Chilled Food Association (CFA),
Institute of Grocery Distribution (IGD) and Food
Standards Agency Scotland. We continue to
engage with the Department of Health in the
UK on the Public Health Responsibility Deal and
the review of salt targets scheduled for 2013-14.
Health awareness is part of a calendar of site
activities, aiming to encourage our workforce
to maintain a healthy lifestyle.
Suppliers
‘Operating Effective and
Transparent Supply Chains’
By the very nature of the typically short
shelf-life food categories in which we operate,
it is critical for Greencore to work closely with
its suppliers to have effective and transparent
supply chains. Our goals for suppliers are:
– to be a business that sets clear standards
for its suppliers
– to be a business with deep supplier
insight and supply chain capability
– to be a business that partners with its
suppliers for responsible sourcing of key
materials
A Business that sets Clear
Standards for its Suppliers
Greencore has a central technical and
purchasing function that works with our
suppliers to ensure that our requirements
and standards are met. All of our suppliers
undergo regular auditing processes, either by
our dedicated in-house supplier auditing team
or via approved third party supplier auditors.
In addition to the auditing and approval
processes described above, each ingredient
supplier has its own specification, which sets
out the required quality and safety standards.
A Business with deep Supplier
Insight and Supply Chain Capability
Greencore operates to the highest customer
service levels of 99+% for the vast majority of
its products. These standards can be difficult
to achieve within most product areas, but
due to the capabilities of our purchasing and
supply chain teams we are able to achieve
these levels in traditionally challenging short
shelf-life product categories.
A Business that Partners with
Suppliers for Responsible Sourcing
of Key Materials
We set ethical standards within our business
and aim to ensure fair working practices
throughout our supply chains.
As a member of SEDEX, Greencore encourages
suppliers to its UK business to register with
the organisation. The majority of the top 100
suppliers to our UK sites are SEDEX members
and we are working across our broader supply
base to encourage membership.
Greencore Group plc Annual Report and Accounts 2013 30
Business Review and Strategic Report
Corporate Social Responsibility Report (continued)
Global GHG emissions data for period 1 October 2012 to 30 September 2013
Emissions from:
Combustion of fuel and operation of facilities (Scope 1)
Electricity, heat, steam and cooling purchased for own use (Scope 2)
Total emissions (Scope 1 & 2)
Intensity measurement (Kg CO2e per £1 sales revenue)
Tonnes of CO2e
Current
reporting
year
FY13
Comparison
year1
FY12
85,067
65,618
150,685
0.126
84,583
75,369
159,952
0.137
We are working with our suppliers to transition
all of the palm oil ingredients we use in our
products to the Round Table on Sustainable
Palm Oil (RSPO) standard. Our bakery at
Kiveton is RSPO certified for the use of
segregated palm oil in its quiches. Across our
other sites we support the Book and Claim
model operated by GreenPalm and have
recently undergone an independent audit to
demonstrate our compliance with this system.
Environment
‘Respecting our Environment’
Greencore believes it makes sense, both
economically and ethically, to seek ways to
reduce the effect of our operations and our
business on the Environment. Our goals for
the Environment are:
– to be an efficient user of resources
– to be a leader in material usage and
sustainability
– to be an influencer in reducing consumer
food waste right the way across the food
chain
An Efficient User of Resources
In 2013 we again responded to the Carbon
Disclosure Project Climate Change Programme
and continue to work on improving our carbon
reporting and reducing our carbon footprint.
For the first time this year we have also
responded to the Carbon Disclosure Project
Forests Programme.
In FY13 a number of energy and carbon
reduction projects were completed across our
business, including investments in inverters,
compressed air improvements, energy efficient
lighting, refrigeration upgrades, including the
use of ‘free cooling’ in colder weather to reduce
refrigeration system energy consumption.
In the last year we have delivered an overall
1.3% total energy reduction and 1.7%
reduction in energy per tonne of product2.
Details of our carbon footprint are shown above.
This is produced following the guidelines and
principles of the WBCSD/WRI Greenhouse Gas
Protocol, and covers our scope 1 emissions
(fossil fuels, transport fuel & refrigerant losses)
and scope 2 (electricity), using emission factors
from UK Government’s GHG Conversion Factors
for Company Reporting. The footprint includes
all Greencore operating companies for FY13.
We have reported on all of the emission
sources required under the UK Companies Act
2006 (Strategic Report and Directors Reports)
Regulations 2013.
We have continued to focus on reducing
water usage. Our total water consumption
has remained broadly flat, as has consumption
(m3) per tonne of product at 6.78 compared
to 6.73 in the previous financial year. This
is against an overall reduction in water
consumption per tonne of product of 25%
in the previous five years.
In addition to reducing water consumption,
we aim to minimise effluent production at
source. We have also improved the quality of
discharge through investment in an upgrade
to our effluent plant at Greencore Grocery in
Hull and a new treatment plant at Greencore
Food to Go in Bow.
Greencore Prepared Meals Kiveton received
a highly commended in the Sustainable
Resources category at the inaugural Yorkshire
Water Taking Responsibility for Business
Awards 2013.
A Leader in Material
Usage and Sustainability
We aim to use our raw materials as efficiently
as possible within our processes and to reduce
waste of all types.
Our priority for waste management continues
to be in line with the waste hierarchy, as we
strive to eliminate waste at source, minimise
where practical, and then look to reduce the
environmental impact of unavoidable waste
through better recycling and recovery.
We continue to support the Courtauld
Commitment, and undertook a successful
WRAP supported waste prevention exercise
at our Food to Go facility in Worksop. As a
result the site was highly commended in
the sustainability category at the ‘Made in
Midlands’ awards 2013. We are now looking
to roll out the benefits from this project across
the Group through incorporating some of
the key learning into our Lean Environment
programme.
During the last financial year we have made a
significant change to our waste management
services by directly employing a full time Group
Waste Manager and administrative support.
This has helped to further drive improvements
in managing our unavoidable waste. During
FY13, we achieved our aim of sending zero
waste directly to landfill, and delivered a year
on year reduction in total waste of 3.2%, and
waste per tonne of product of 3.4%.
2011/12
2012/13
Year on
year
change2
Tonnes of waste
per tonne of
product
0.153
0.148
-3.4%
An Influencer in Reducing
Consumer Food Waste Right
the Way Across the Food Chain
Greencore continues to engage in the broader
aspects of food supply chain sustainability,
through chairing the Chilled Food Association
Sustainability Working Group, active
involvement in the IGD Industry Sustainability
Group and active engagement with a number
of customer sustainability and environmental
working groups and forums.
1
2
Note – the FY12 data has been re-calculated with the
new emission factors for individual years produced
by the UK Government, replacing the previous five
year grid rolling average factors.
Note – Based on the 15 UK manufacturing sites (out
of a total of 16) owned and operated by Greencore
in each of the last two financial years.
Greencore Group plc Annual Report and Accounts 2013 31
We work closely with our customers to
continue to develop and improve packaging
formats, which reduce the environmental
impact of the packaging itself, but also helps
to reduce food wastage for the consumer.
In January, Greencore Food to Go Northampton
became one of the first suppliers to be validated
to the silver level of the M&S Plan A supplier
framework.
Communities
‘Making a Positive Impact’
Greencore is aware of its responsibility to
ensure that it makes a positive impact on the
communities in which it operates. Our goals
for Communities are:
– to be a good neighbour
– to be a champion for the food industry
– to be a company with charitable giving
as part of its culture
A Good Neighbour
Greencore aims to be a good neighbour by
active engagement in the communities serving
its facilities and employees. We are committed
to establishing and maintaining good
community relationships, both in the role of
employer and also in terms of any impact our
operations may have on local communities. In
this regard Greencore aims to respond rapidly
to resolve any nuisance complaints which may
arise from its operations.
Several Greencore sites have company
representatives who participate in local
community meetings as the ‘eyes and ears’ on
the ground, able to identify quickly emerging
issues or concerns. Greencore’s Newburyport
facility in the US is also a member of the local
Chamber of Commerce and Industrial Park
Board.
Greencore engages with schools and other
local institutions in community projects.
For example in Selby in the UK, Greencore
supported a project led by the local police force
in which school children painted a decorative
mural on a disused wall close to our facility.
A Champion for the Food Industry
As a major employer within our industry,
Greencore has a responsibility to champion the
food industry. We do this in a number of ways,
including participating in and taking leading
roles in industry-wide projects, organised by
leading trade organisations and charities such
as the Chilled Foods Association (CFA) and the
Institute of Grocery Distribution (IGD).
Group Environmental Advisor, Norman Watson, with Mick McKernon and Paul Sharp of Greencore Food to Go.
In the past 12 months, Greencore has played
an active role in the CFA led ‘Chilled Education’
initiative with the objective of raising interest
in schools and colleges of the technical careers
available in the food industry. We have
contributed support materials and provided
STEM (Science, Technology Engineering and
Maths) ambassadors to visit schools. We have
also invited school teachers to our facility in
Northampton to showcase what our industry
has to offer young people.
Together with our peers across the industry,
Greencore has for the second consecutive year
played a leading role in the Feeding Britain’s
Future initiative in the UK. We invited young
unemployed people to our facilities in order to
give them an insight into what a career in the
industry has to offer. The young people were
also given basic skills training with the aim
of improving their employability prospects.
In October 2013, Greencore was recognised
with the IGD President’s Cup for the role it
has played in supporting the IGD and Feeding
Britain’s Future.
In addition to these activities Greencore has
sponsored places for young people run by
the Food Science Summer Schools at the
Universities of Nottingham and Leeds. We
support the charity Young Enterprise with
its development activities within schools
and colleges.
A Company With Charitable
Giving as Part of its Culture
Greencore supports a number of charities,
both from a Group perspective and through
local site initiatives. Greencore is a long-
standing supporter of the industry charity
GroceryAid and was the proud recipient of
a Silver Achievement Award for its product
donations, participation in fundraising events
and committee work – all for the benefit of
former industry workers that have fallen on
hard times.
Greencore also supports FareShare in the
UK and Feeding America in the US. Both
organisations redistribute surplus food
products to those in need through a
variety of different channels.
At a local level, Greencore sites support
a wide range of organisations, including
Comic Relief, Jeans for Genes, Great Ormond
Street Hospital, The Disability Games, Acorn
and Breast Cancer Research in the UK and
charities such as Poverty Aid and Food Banks
in the US.
Greencore also supports individual colleagues
in their various fundraising activities. Our
Group Technical Director, Helen Sisson took
part in a Farm Africa-led project in Kenya to
dig a fish pond providing a source of food and
income for the local community; Managing
Director of our Food to Go Convenience
business, Steve Evans, cycled from Paris to
London as part of a Marks & Spencer initiative
to raise funds for a number of cancer charities;
Group CSO, Eoin Tonge, participated in the
Dublin Marathon for the second year running
to raise funds for childrens’ orthopaedic
surgery in a local hospital. These are just three
examples of the many individual fundraising
activities by our colleagues across the UK,
Ireland and the US.
Greencore Group plc Annual Report and Accounts 2013 Greencore Group plc Annual Report and Accounts 2013
People At
The Core
Making Greencore
a great place to work.
We aim to live our company values, be a healthy
and safe place to work and a place to develop
your career. We want to be a place where everyone’s
contribution is recognised and to be a fun place
to work.
34
Corporate Governance
Board of Directors
10
4
6
7
5
2
1
3
11
8
9
Audit Committee
JA Warren* ** (appointed to Committee 20 March 2013)
SG Bailey* (appointed to Committee 25 July 2013)
JT Herlihy* (appointed to Committee 11 March 2010)
HA McSharry* (appointed to Committee 20 March 2013)
Nomination Committee
DM Simons * ** (appointed to Committee 1 July 2004)
PF Coveney (appointed to Committee 1 April 2008)
PG Kennedy* (appointed to Committee 26 July 2012)
JJ Moloney* (appointed to Committee 20 March 2013)
Option and Remuneration Committee
EL Nicoli* ** (appointed to Committee 29 January 2013)
JT Herlihy* (appointed to Committee 22 April 2009)
PG Kennedy* (appointed to Committee 11 March 2010)
* Denotes Non-Executive Director
Denotes Chairman of Committee
**
Greencore Group plc Annual Report and Accounts 2013 35
1.
PG Kennedy, BA, FCA
Non-Executive Director (Aged 55)
5.
HA McSharry, B. Comm, MBS
Non-Executive Director (Aged 52)
9.
EL Nicoli, CBE, BSc
Non-Executive Director (Aged 63)
Eric was appointed to the Board on 14 May
2010. He previously served as Group Chief
Executive of United Biscuits (Holdings) plc
from 1991 to 1999, and was Chairman and
Chief Executive of EMI Group plc until 2007.
He is currently Chairman of Ulysses Enterprises
Ltd (formerly uSwitch), R & R Music Ltd and
Wentworth Media & Arts Ltd and serves on
the advisory Board of nFluence Media Inc.
10.
DM Simons, CBE,
BSc Econ, FCMA
Non-Executive Director (Aged 66)
David was appointed to the Board on 1 July
2004 and has served as Senior Independent
Director since 22 March 2012. Previously he
held the position of Chairman of Littlewoods
Shop Direct Group Limited for five years.
David was also Chief Executive of Somerfield
plc for seven years and has held many senior
executive and non-executive positions in
major UK and International retail companies.
11.
C O’Leary, ACIS
Group Company Secretary (Aged 44)
Conor was appointed Group Company
Secretary on 4 June 2010. Previously he
held the position of Deputy Group Secretary
from 2005. Prior to joining the Group in 2001,
he held senior company secretarial roles in
Glanbia plc and Cable & Wireless plc and
trained with PricewaterhouseCoopers.
Heather Ann joined the Board on 30 January
2013. She currently serves as a Non-Executive
Director of CRH plc, Jazz Pharmaceuticals plc,
Ergonomics Solutions International and is
Chairman of the Bank of Ireland Pension Fund
Trustee Board. In addition, she serves on the
Board of the Institute of Directors, and the IDA,
the Industrial Development Agency in Ireland,
where she is also Chair of the Audit and
Finance Committee. Heather Ann is a former
Managing Director Ireland of Reckitt Benckiser
and Boots Healthcare.
6.
SG Bailey
Non-Executive Director (Aged 51)
Sly joined the Board on 17 May 2013 and
is currently a Non-Executive Director of
Ladbrokes plc and a Governor of the English
National Ballet School. Sly previously served as
Chief Executive Officer of Trinity Mirror plc and
Non-Executive Director of the Press Association
and Littlewoods plc and was also a Non-
Executive Director and Senior Independent
Director of EMI plc.
7.
JA Warren, BSc, FCA
Non-Executive Director (Aged 60)
John joined the Board on 30 January 2013 and
is currently a Non-Executive Director of Bovis
Homes Group plc, Spectris plc, 4imprint plc and
Welsh Water. John is former Group Finance
Director of United Biscuits plc and WH Smith
plc and previously served as Chairman of Uniq
plc, Non-Executive Director of The Rank Group
plc, BPP Holdings plc, Arla Foods UK plc, RAC
plc and Rexam plc.
8.
JJ Moloney, B.Ag.Sc, MBA
Non-Executive Director (Aged 59)
John joined the Board on 8 February 2013.
John served as Group Managing Director of
Glanbia plc until 12 November 2013 having
previously held a number of senior positions
within the international nutritional solutions
and cheese group, including Chief Executive of
Food Ingredients and Agribusinesses. John is
also a Non-Executive Director of DCC plc.
Gary joined the Board on 20 November 2008
and was appointed Chairman in January 2013.
In June 2013 he was appointed Chairman of
Green REIT plc. He is a Director of Elan plc as
well as being Chairman of its Audit Committee.
He is a Director of Friends First Holdings Ltd
as well as Chairman of a number of private
companies. He was Group Director of Finance
and Enterprise Technology at Allied Irish Banks
plc and a member of its main Board together
with subsidiary Boards in the US and Poland.
Prior to that, he was Group Vice-President of
Nortel Networks Europe. He served on the
Board of the Industrial Development Authority
of Ireland for a period of ten years until he
retired in December 2005.
2.
PF Coveney, B Comm,
M Phil, D Phil
Chief Executive Officer (Aged 43)
Patrick joined the Board on 5 September 2005
and was appointed Chief Executive Officer
with effect from March 2008. Previously he
held the position of Chief Financial Officer for
the Group. Patrick was a partner with McKinsey
& Company, serving as Managing Partner of
McKinsey, Ireland before joining Greencore.
He also served as President of the Dublin
Chamber of Commerce from February 2012
until February 2013, having been a Council
member since 2003.
3.
AR Williams, BA Hons,
ACMA, CGMA, AMCT
Chief Financial Officer (Aged 44)
Alan was appointed to the Board as Chief
Financial Officer on 7 March 2011. Prior to
joining Greencore, he held a number of senior
positions within the Cadbury Group over an
18 year period, which included the role of
Global Corporate Finance Director. He has
previously served as Head of Finance for the
US confectionery operations of Cadbury and
also of its French beverages business.
4.
JT Herlihy, B Comm, FCA
Non-Executive Director (Aged 46)
John joined the Board on 13 March 2009. He is
head of Google Ireland and also Vice President
of International Sales at Google. He previously
held senior management positions at global
technology companies including First Data (US
and EMEA), Epiphany (US and Asia-Pacific) and
Oracle Corporation (US and EMEA).
Greencore Group plc Annual Report and Accounts 2013 36
Corporate Governance
Directors’ Report
Introduction
The Directors submit their Report and Financial Statements for the year ended 27 September 2013. The Directors’ Report is contained in pages 36 to 62.
Principal Activities and Review of Business
Greencore is a leading producer of convenience foods with strong market leadership positions in the UK convenience food market across sandwiches,
chilled prepared meals, chilled soups and sauces, cooking sauces and pickles, cakes and desserts and Yorkshire puddings and has an extending
presence outside the UK with a fast-growing convenience food business in the US. Detailed commentaries on the Group’s development and
performance for the year are contained in the Chairman’s Statement, the Chief Executive’s Review and the Operating and Financial Reviews.
The principal subsidiary and associate undertakings are listed in Note 32 to the Group Financial Statements and form part of this report.
Results for the Year
The results of the Group for the year are set out in the Group Income Statement on page 76. The operating profit for the year before amortisation and
exceptional items was £76.5 million (2012: £70.7 million), whilst the profit after taxation and exceptional charges was £71.7 million (2012: £35.6 million).
Dividends
An interim ordinary dividend of 1.90 pence (2012: 1.75 pence) per share was paid on 3 October 2013. The Directors recommend the payment of
a final ordinary dividend of 2.9 pence (2012: 2.5 pence) per share. Subject to shareholders’ approval, this dividend is to be paid on 2 April 2014
to shareholders who are on the register of members at 5.00pm on 6 December 2013.
Share Capital
During the year 6,486,959 (2012: 6,336,318) Ordinary Shares were issued under the Company’s Scrip Dividend Scheme and 525,105 (2012: 708,061)
Ordinary Shares were issued under the Company’s ShareSave schemes. Further details are set out in Note 24 to the Group’s Financial Statements.
At the Annual General Meeting (“AGM”) held on 29 January 2013, shareholders approved the conversion of 3,904,782 Treasury Shares into stock which
were thereafter converted into 3,904,782 Ordinary Shares of £0.01 each, representing circa 1% of the Issued Share Capital of the Company and were
subsequently reissued at their nominal value to the Company’s employee benefit trust to be held for the purpose of satisfying vestings under the
Company’s employee share schemes.
Pursuant to the Articles of Association, the Company has bought back for nil consideration, and cancelled, all Deferred Shares that were in issue.
There is one Special Share of €1.26 in the capital of the Company. The Articles of Association provide that the Special Share may be held only by, or transferred
only to, the Minister for Agriculture, Food & the Marine or some other person appointed by the Minister. In 2011, many of the rights attaching to the Special
Share were abolished. Under the Articles of Association, the consent of the holder of the Special Share is required in the winding up of the Company.
The Directors are currently authorised to allot shares up to a maximum nominal amount equal to £1,310,642.56 under an authority that was conferred
on them at the AGM held in January 2013. As this authority will expire at the forthcoming AGM, shareholders will be asked to renew, until the date of
the AGM to be held in 2015 or 28 July 2015 (whichever is the earlier), the authority of the Directors to allot new shares. This authority will be limited to
the allotment of up to an aggregate nominal value of 33% of the nominal value of the Company’s Issued Share Capital.
Additionally, at the forthcoming AGM, shareholders will be asked to approve, until the day following the AGM to be held in 2015, or 28 July 2015,
whichever is the earlier, the Directors’ power to disapply the strict statutory pre-emption provisions relating to the issue of new equity for cash.
The disapplication will be limited to the allotment of equity securities in connection with any rights issue or any open offer to shareholders and
the allotment of shares in lieu of dividends, and/or the allotment of shares up to an aggregate nominal value equal to 5% of the nominal value
of the Company’s Issued Share Capital.
At the AGM held in January 2013, the shareholders passed a resolution to give the Company, or any of its subsidiaries, the authority to make market
purchases of up to 10% of its own shares. At the forthcoming AGM, shareholders will be asked to renew this authority until the date of the AGM to
be held in 2015 or 18 months after this forthcoming AGM, whichever is the earlier. The Directors do not have any current intention to exercise the
power to purchase the Company’s own shares. Furthermore, such purchases would be made only at price levels which the Directors considered
to be in the best interests of the shareholders generally, after taking into account the Group’s overall financial position. In addition, the authority
being sought from shareholders will provide that the minimum price which may be paid for such shares shall not be less than the nominal value
of the shares and the maximum price will be the higher of 105% of the then average market price of such shares and the amount stipulated by
Article 5(1) of the EU Market Abuse (Buyback and Stabilisation) Regulations.
Subject to the necessary approval from shareholders at the forthcoming AGM, the Directors have decided to continue the Scrip Dividend Scheme
reactivated in February 2003, so that eligible shareholders will be offered the opportunity of taking all or part of the 2013 final dividend of 2.9 pence
per Ordinary Share in the form of fully paid new Ordinary Shares.
Greencore Group plc Annual Report and Accounts 2013 37
Future Developments
The Group showed further growth and development during the year, in particular with the completion of the integration of Uniq and International
Cuisine in the UK and the integration of MarketFare and Schau also successfully completed in the US. Future prospects are outlined in the Chairman’s
Statement, the Chief Executive’s Review and the Operating and Financial Reviews.
Principal Risks and Uncertainties
As with any large Group, Greencore faces a number of risks and uncertainties. Individual business unit management teams primarily drive the
process by which individual risks and uncertainties are identified, these teams being best placed to identify significant and emerging risks and
uncertainties in their businesses. The output from this process feeds into the regular management reporting structures. Risks and mitigating controls,
common across all categories, are managed and reviewed at Group level. Risks identified and associated mitigating controls are subject to review as
part of the Group’s health and safety, technical compliance and operational/financial audit programmes. Under Irish company law (the Transparency
(Directive 2004/109/EC) Regulations 2007, as amended), the Directors are required to give a description of the principal risks and uncertainties which
the Group faces. These principal risks and uncertainties form part of the Directors’ Report and are set out on pages 11 to 13.
Further detail in relation to the Group’s internal controls is included on pages 42 and 43 of this report. Details of the Group’s financial risk management
and hedging policies are set out in Note 20 to the Group Financial Statements. Details of the Group’s key performance indicators are set out on page 9.
These disclosures form part of this report.
Directors
In accordance with provision B.7.1. of the UK Corporate Governance Code (“the Code”) and the Irish Corporate Governance Annex (“the Annex”), each
of the Directors shall retire at all future AGMs of the Company and shall submit themselves for re-election where appropriate. No re-appointment will be
automatic and a review of the Directors who are seeking re-appointment will be undertaken, assessing their suitability for re-election. The Board will not
endorse a Director for re-election if he or she has not been considered effective in carrying out their duties. The Board recommends the appointment of
the Directors seeking re-appointment as they continue to be effective and demonstrate commitment to the role.
Directors’ Interests in Share Capital at 27 September 2013
The interests of the Directors and Group Company Secretary in the shares of the Company are set out in the Report on Directors’ Remuneration.
The Directors and Group Company Secretary have no beneficial interests in any of the Group’s subsidiary or associated undertakings.
Significant Shareholdings
At 27 September 2013, the Company has been advised of the following notifiable interests in its Ordinary Share Capital:
Letko Brosseau & Associates
Polaris Capital Mgt
Sheffield Asset Mgt
Norges Bank Investment Mgt
SEB Asset Mgt
Legal & General Investment Mgt
Henderson Global Investors
At 25 November 2013, the Company has been advised of the following notifiable interests in its Ordinary Share Capital:
Polaris Capital Mgt
Letko Brosseau & Associates
Fidelity Mgt & Research
Norges Bank Investment Mgt
SEB Asset Mgt
Henderson Global Investors
Legal & General Investment Mgt
Global Thematic Partners
BlackRock Investment Management
No. of
interests
in Ordinary
Shares
42,850,203
37,814,480
15,665,680
15,078,189
14,409,206
13,128,948
12,532,018
No. of
interests
in Ordinary
Shares
36,939,038
35,686,400
26,049,186
15,264,447
14,987,249
13,505,629
12,626,141
12,579,591
12,139,736
% of
Issued
Share
Capital
10.68
9.42
3.90
3.76
3.59
3.27
3.12
% of
Issued
Share
Capital
9.15
8.84
6.45
3.78
3.71
3.34
3.13
3.12
3.00
Other than these holdings, the Company has not been notified as at 25 November 2013 of any interest of 3% or more in its Ordinary Share Capital.
Greencore Group plc Annual Report and Accounts 2013 38
Corporate Governance
Directors’ Report (continued)
Corporate Governance
Statements by the Directors in relation to the Group’s application of corporate governance principles, compliance with the provisions of the Code and
the Annex, the Group’s system of internal controls and the adoption of the going concern basis in the preparation of the Financial Statements are set
out on pages 39 to 43, 56, 58 and 61 to 62.
As Greencore Group plc is an Irish registered company with a year end of 27 September 2013, the Group is not subject to the disclosure requirements
contained in the recently enacted Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 in the UK. However, we are committed to
ensuring transparency and therefore have implemented certain provisions of the regulations. In particular, we have provided information on environmental
matters, the Group’s employees and social, community and human rights issues as set out on pages 26 to 33. This additional information does not however
constitute a strategic report for the purpose of Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 and should therefore not be
relied upon in that respect. The Report on Directors’ Remuneration is set out on pages 44 to 55.
Corporate Social Responsibility
As a Group, we are committed to maintaining integrity and sustainable corporate and social responsibility practices for the benefit of all of our
related parties and stakeholders. More details in relation to our Corporate Social Responsibility agenda can be found on pages 26 to 33.
Research and Development
The Group continued its research and development programme in relation to its principal activities during the year. Further information is contained
in the reviews on pages 18 and 19 and in Note 2 to the Group Financial Statements.
Taxation Status
So far as the Directors are aware, the Company is not a close company within the meaning of the Taxes Consolidation Act.
Accounting Records
The Directors believe that they have complied with the requirements of Section 202 of the Companies Act 1990 with regard to books of account by
employing accounting personnel with appropriate expertise and by providing adequate resources to the finance function. The books of account of
the Company are maintained at No.2 Northwood Avenue, Northwood Business Park, Santry, Dublin 9.
Auditor
The auditor, KPMG, Chartered Accountants, continues in office in accordance with Section 160 (2) of the Companies Act 1963.
Notice of Annual General Meeting and Special Business
Notice of the 2014 AGM, together with details of special business to be considered at the meeting, will be circulated to shareholders in December 2013.
On behalf of the Board
PG Kennedy
Director
AR Williams
Director
Dublin
25 November 2013
Greencore Group plc Annual Report and Accounts 2013 39
Directors’ Report (continued)
Corporate Governance Report
Corporate Governance defines how companies are directed and controlled. The Directors are committed to ensuring that the Company maintains
the highest standards of corporate governance to ensure accountability and transparency towards all of our stakeholders.
This statement explains how the Group has applied the principles set out in the 2012 UK Corporate Governance Code (“the Code”) as adopted by the
Irish and London Stock Exchanges. Although Greencore is no longer listed on the Irish Stock Exchange it has chosen to voluntarily adopt the provisions of
the Irish Corporate Governance Annex (“the Annex”). The Annex implements the nine recommendations arising from a report on corporate governance
which was commissioned by the Irish Stock Exchange and the Irish Association of Investment Managers in early 2010. The Board understands the
importance of good corporate governance and has therefore taken into account the revised provisions of the 2012 UK Corporate Governance Code which
apply to financial years which commenced on or after 1 October 2012. The Board believes that the Group has complied fully with the 2012 UK Corporate
Governance Code and the relevant provisions of the Annex throughout the financial year ended 27 September 2013 where the requirements are of a
continuing nature. The full text of the UK Code and the Irish Annex can be found on the Financial Reporting Council’s website, www.frc.org.uk and the
Irish Stock Exchange’s website, www.ise.ie, respectively.
PG Kennedy
Chairman
25 November 2013
Board of Directors
The Board is responsible for the leadership, monitoring and control of the Group and promoting the long-term success of the Group. The Board
currently comprises two Executive and eight Non-Executive Directors. Biographical details for each of the Board members are set out on page 35
and include their dates of appointment. The Board considers that, between them, the Directors have the range of skills, knowledge, expertise,
dedication and experience necessary to lead the Group, in addition to vast international strategic experience, both within the food industry and in
the broader commercial arena. The four Non-Executive Director appointments to the Board in the year under review have strengthened the Board’s
collective vision and added deep sectoral and international experience to the Board, which will bring a new focus for the Group as it moves forward
in its development.
All the Directors bring independent judgement to bear on issues of risk, culture, health and safety, strategy, performance, resources, key appointments,
ethics and standards. The Board has determined that each of the Non-Executive Directors is independent, which is in line with the Code requirement
which recommends that at least half the Board, excluding the Chairman, must be independent Non-Executive Directors. The independence of each
Director is determined prior to appointment and annually thereafter. No Non-Executive Director has any material interest or other relationship with
the Group.
It is intended that Mr David Simons will retire from the Board immediately after the forthcoming AGM of the Company. Mr Simons joined the Board
on 1 July 2004 and was appointed Chairman of the Nomination Committee on 29 January 2013 having been a member of the Committee since
his appointment to the Board. Given Mr Simons’ key strengths and attributes, he was appointed Senior Independent Director on 22 March 2012.
Following Mr Simons’ retirement from the Board in January 2014, Mr Eric Nicoli will be appointed Senior Independent Director.
The Directors believe that following the recent key appointments the Board is of the correct size and structure wherein the balance between Non-Executive
Directors and Executive Directors ensures that the Board continues to have the appropriate skills, expertise and experience required to ensure the Board
fulfills its function effectively and no undue reliance is placed on any individual Non-Executive Director. The Board recognises the importance of ensuring
that each of the Non-Executive Directors is independent of both mind and judgement in order to meet the challenges of the role.
The Board agrees a schedule of regular meetings to be held in each calendar year and also meets on other occasions as necessary. Meetings are held
at the head office in Dublin, as well as at the offices of the Group’s operating subsidiaries. If a Director is unable to attend a Board meeting, he or she
will receive Board papers in advance of the meeting and can communicate his or her views to the Chairman, the Chief Executive Officer or the Company
Secretary on any items which will be raised at the meeting and these views are thereafter communicated to the Board as appropriate. A list of the
Directors’ attendances at scheduled meetings throughout the year can be found on page 41.
There is an agreed list of matters which the Board has formally reserved to itself for consideration and decision and includes approving the interim and
final Financial Statements, approval of the interim dividends and recommending final dividends to shareholders, Board membership, major acquisitions
and disposals, major capital expenditure, risk management, treasury policies and the approval of all circulars and listing particulars. The list of matters
reserved for Board decision is reviewed regularly by the Board and is amended as appropriate. The matters and agenda reserved for Board consideration
are planned in order to best utilise the skills, expertise and experience of the Directors. In addition, the Board ensures that the value of the Group over
the longer term is both enhanced and preserved through the approval of the Group’s commercial strategy, trading and capital budgets. The Directors
acknowledge that they are responsible for the proper stewardship of the Group’s affairs, both on an individual and collective basis.
In order to ensure that the Board is fully familiar with the business operations, the Board meets with key Executives within the Group during the year
and site visits are arranged at least twice a year. The Board is provided with external investor analysis on the Group at its Board meetings together
with shareholder data. Legislative changes and any developments in accounting, governance and other standards are communicated to the Board
where appropriate.
Greencore Group plc Annual Report and Accounts 2013 40
Corporate Governance
Directors’ Report (continued)
Corporate Governance Report (continued)
Board of Directors (continued)
There is an agreed procedure for Directors to take independent legal advice, at the expense of the Company, in the furtherance of their duties as
Directors of the Company. The Group has a policy in place which indemnifies the Directors in respect of legal action taken against them in respect
of matters pertaining to their duties as Directors. All Directors have access to the advice and services of the Company Secretary who ensures that
Board procedures are followed. The appointment and removal of the Company Secretary is a matter for the Board as a whole.
All Directors receive Group management accounts and reports on a monthly basis. Full Board papers are sent to each Director in advance of the
Board meetings. Any further supporting papers and information are readily available to all Directors upon request. The Board papers include the
minutes of all Board and committee meetings held since the previous Board meeting and the Chairman of each committee is available at the
Board meetings to give a report on the committee’s proceedings, if appropriate.
The Board has acknowledged that there should be a recognised senior member of the Board, known as the ‘Senior Independent Director’. Mr Simons
is the current Senior Independent Director and was appointed to this role on 22 March 2012. Following Mr Simons’ retirement from the Board at the
conclusion of the 2014 AGM, it is intended that Mr Eric Nicoli will be appointed Senior Independent Director. The Senior Independent Director is available
to shareholders who have concerns that cannot be addressed through the Chairman, Chief Executive or Chief Financial Officer and also acts as a
confidential sounding board and intermediary for the other Directors, if necessary.
The Board alone holds the authority for planning, directing and controlling the activities of the Group. Whilst the roles of Chairman and Chief
Executive Officer are separate and there is a clear division of responsibilities between each role, the Board has delegated operational responsibility
for the management of the Group to the Chief Executive Officer who is accountable to the Board.
It is expected that the Non-Executive Directors will constructively challenge management proposals where appropriate and will contribute their
expertise and knowledge towards the development of the Group. Prior to each Non-Executive Director’s election to the Board and relevant committee,
he or she is made aware of the scheduled calendar of meetings and the time commitment involved in the role and is required to confirm that he or she
is able to meet the time commitment required.
In the year under review, further to the compositional changes to the Board, the process of annual evaluation was amended such that each of the
Directors completed a questionnaire which detailed how the Board collectively and individually discharged its responsibilities during the year, the
performance of the committees and the general corporate governance of the Group. Following the completion of the questionnaire, the Chairman
met with each of the Directors to discuss the results of the questionnaire and also to evaluate each individual Director’s performance and the conduct
of Board meetings. The purpose of individual Director evaluation is to focus on the contribution of the Director to the Board and how each member
met their expectations during the year. It is intended that the Chairman of the Board will present the results of the Board effectiveness review at the
December Board meeting and any issues which have been identified will be discussed, with key areas for focus in the forthcoming year addressed.
In addition, every year the Chairman meets with the Non-Executive Directors without the Executive Directors present. As part of the performance
evaluation process, the Non-Executive Directors, led by the Senior Independent Director, meet annually without the Chairman present to appraise
the Chairman’s performance and take the views of the Executive Directors and the Company Secretary into account. This forms part of the broader
Board effectiveness review and ensures a robust, independent and effective Board. In line with the Code, the Board, both collectively and individually,
will be evaluated by an external evaluator at least every three years.
Board Committees
The Board has established an effective committee structure (“the Committees”) in order to assist in the discharge of its responsibilities. Details of
the various committee memberships, together with the relevant biographies are set out on pages 34 and 35 of this report. Further details on the role
of the Committees and the work undertaken by each in the year under review are set out on pages 44 to 61.
Average number of Executive Directors
Average number of Non-Executive Directors
2013
2012
2
8
10
3
6
9
Greencore Group plc Annual Report and Accounts 2013 41
Attendance at scheduled Board and Board committee meetings during the year ended 27 September 2013 was as follows:
PF Coveney
SG Bailey (i)
JT Herlihy
PG Kennedy
PA McCann (ii)
HA McSharry (iii)
JJ Moloney (iv)
EL Nicoli
DM Simons
EF Sullivan (ii)
DS Walker (v)
JA Warren (iii)
AR Williams
Board
Audit
Nomination
Option and Remuneration
A
8
2
8
8
2
5
5
8
8
2
6
5
8
B
8
2
6
8
2
5
5
8
7
2
5
4
8
A
–
1
3
1
–
2
–
2
1
–
–
2
–
B
–
1
1
1
–
2
–
2
1
–
–
2
–
A
1
–
–
1
–
–
–
–
1
–
–
–
–
B
1
–
–
1
–
–
–
–
1
–
–
–
–
A
–
–
3
3
–
–
–
2
–
1
–
–
–
B
–
–
2
3
–
–
–
2
–
1
–
–
–
Column A indicates the number of scheduled meetings held during the year where the Director was a member of the Board and/or committee.
Column B indicates the number of scheduled meetings attended during the year where the Director was a member of the Board and/or committee.
(i) Appointed 17 May 2013
(ii) Retired 29 January 2013
(iii) Appointed 30 January 2013
(iv) Appointed 8 February 2013
(v) Ceased to be a Director on 24 May 2013
In addition, where appropriate the Board establishes sub-committees on an ad-hoc basis to deal with matters which arise throughout the year.
The sub-committees comprise of members of the Board who are deemed to have the skills and expertise necessary for the purpose for which the
committee was established.
Communication with Shareholders
The Board represents the Group’s shareholders and is accountable to them for effective governance of the business. The Group has regular dialogue
with institutional and major shareholders throughout the year, other than during close periods. In addition, shareholder presentations are made
at the time of the issue of the Company’s half year and full year results. Details of any major changes in the Group, including mergers, acquisitions
and divestments are released through a Regulatory News Service of the London Stock Exchange.
The Group promotes communication with shareholders throughout the year and encourages shareholders to make use of their votes at all general
meetings of the Company.
The views of the shareholders and the market in general are communicated to the Board on a regular basis, along with expressed views on corporate
governance and strategy, as well as the outcome of analyst and broker briefings. Analyst reports on the Group are also circulated to the Board members
on a regular basis. The Group’s website, www.greencore.com, provides the full text of the Annual Reports, Interim Management Statements, Half Yearly
Financial Reports and presentations to analysts and investors. Shareholders can elect to receive the Annual Report in paper form, or may elect to receive
an email notification stating that the documents are available on the website.
In addition, shareholders can also elect to receive an email notification when new information concerning the Group is available on the website
which can be accessed through the Investor Relations section of the website. Stock Exchange announcements are also made available on the
Investor Relations section of the website, after release to the London Stock Exchange.
The Board members attend the AGM and are available to shareholders to answer questions. Separate resolutions are proposed on substantially
different issues. The agenda of business to be conducted at the AGM includes a resolution to receive and consider the Annual Report and Financial
Statements. Each committee chairman is available at the AGM. The notice of the AGM, together with the Annual Report and Financial Statements,
is sent to shareholders at least 20 working days before the meeting, and details of the proxy votes for and against each resolution and the number
of abstentions are announced after each vote on a show of hands. In the year under review, the Company held its AGM on 29 January 2013, wherein
all shareholders were given the opportunity to verbalise any concerns.
The Company also welcomes queries from shareholders throughout the year via post, telephone or email.
Shareholders’ Meetings
The Company operates under the Companies Acts 1963 to 2012 (“the Acts”). These Acts provide for two types of shareholder meetings: the Annual
General Meeting (“AGM”) with all other meetings being called Extraordinary General Meetings (“EGM”).
Greencore Group plc Annual Report and Accounts 2013 42
Corporate Governance
Directors’ Report (continued)
Corporate Governance Report (continued)
Shareholders’ Meetings (continued)
The Company must hold a general meeting in each year as its AGM in addition to any other general meetings held in that year. Not more than 15
months may elapse between the date of one AGM and the next. The Directors may at any time call an EGM. EGMs shall also be convened on the
requisition of members holding not less than 5% of the voting share capital of the Company. The notice period for an AGM and an EGM to consider
any special resolution (a resolution which requires a 75% majority vote, not a simple majority) is 21 days. The Company may call any other general
meeting on 14 days’ notice subject to obtaining shareholder authority to do so.
No business shall be transacted at any general meeting unless a quorum is present at the time when the meeting proceeds to business. Three
members present in person or by proxy and entitled to vote shall be a quorum. Only those shareholders registered on the Company’s register of
members at the prescribed record date, being a date not more than 48 hours before the general meeting to which it relates, are entitled to attend
and vote at a general meeting.
The Acts require that resolutions of the general meeting be passed by the majority of votes cast (ordinary resolution) unless the Acts or the
Company’s Articles of Association provide for 75% majority of votes cast (special resolution). Any shareholder who is entitled to attend, speak and
vote at a general meeting is entitled to appoint one or more proxies to attend, speak and vote on his or her behalf. A proxy need not be a member
of the Company. At meetings, unless a poll is demanded, all resolutions are determined on a show of hands, with every shareholder who is present
in person or by proxy having one vote. On a poll every shareholder who is present in person or by proxy shall have one vote for each share of which
he/she is the holder. A shareholder need not cast all votes in the same way.
The business of the Company is managed by the Directors who may exercise all the powers of the Company unless they are required to be exercised by
the Company in general meeting. Matters reserved to shareholders in general meeting include the election of Directors, the declaration of dividends on
the recommendation of the Directors, the fixing of the remuneration of the External Auditor, amendments to the Articles of Association, measures to
increase or reduce the Ordinary Share Capital and the authority to issue shares.
The information required to be provided to shareholders in accordance with the Shareholders Rights (Directive 2007/36/EC) Regulations 2009 is
available on the Company’s website.
Going Concern
The Directors, after making enquiries, have a reasonable expectation that the Company, and the Group as a whole, have adequate resources to
continue operating for the foreseeable future. For this reason, the going concern basis continues to be adopted in preparing the Financial Statements.
Internal Control
The Board has overall responsibility for the Group’s system of internal control, for reviewing its effectiveness and for confirming that there is a process
in place for identifying, evaluating and managing the significant risks for the achievement of the Group’s strategic objectives.
This process has been in place throughout the financial year up to the date of the approval of the Annual Report and Financial Statements, accords
with the Turnbull Guidance (Internal Control: Revised Guidance for Directors on the Combined Code) and is regularly reviewed by the Board. This system
of internal control is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable and
not absolute assurance against material misstatement or loss.
The systems involve the Board considering the following:
– the nature and extent of the risks facing the Group;
– the extent and categories of risks it regards as acceptable for the Group to bear;
– the likelihood of the risk concerned materialising;
– the Group’s ability to reduce the incidence and impact on its business of risks that do materialise; and
– the costs of operating particular controls relative to the benefits thereby obtained in managing related risks.
The risks faced by the Group are reviewed regularly with management and with the Board’s Audit Committee whose Terms of Reference require it to
conduct an annual assessment and make a report to the Board on (a) the nature and extent of the significant risks facing the Group, (b) the design,
operation and monitoring by management of internal control systems and the adequacy and frequency of reports from management to the Board,
and (c) whether they give a balanced assessment of the significant risks and the effectiveness of the system of internal control in managing those risks.
The key elements of the system are as follows:
– clearly defined organisation structures and lines of authority;
– corporate policies for financial reporting, treasury and financial risk management, information technology and security, project appraisal and
corporate governance;
– annual budgets and five year time horizon business plans for all operating units, identifying key risks and opportunities;
– monitoring of performance against budgets and reporting thereon to the Directors on a regular basis;
– a Risk Management Group which reviews key business processes and controls; and
– the Audit Committee which approves plans and deals with significant control issues raised by the Risk Management Group or External Audit.
Greencore Group plc Annual Report and Accounts 2013 43
The preparation and issue of financial reports are managed by the Group finance department as delegated by the Board. The Group financial
reporting process is controlled using the Group accounting polices and reporting systems. The Group finance department supports all reporting
entities with guidance in the preparation of financial information. In the year under review, this process was supported by the Group financial control
department and Group treasury function. Each category entity has a Financial Director or Controller who has responsibility and accountability for
providing information which is in keeping with agreed policies.
The financial information for each entity is subject to a review at reporting entity and Group level by the Chief Executive Officer and the Chief Financial
Officer, along with the category Managing Directors. The Annual Report is reviewed by the Audit Committee in advance of its presentation to the Board
for approval.
The Group maintains a Risk Register to ensure that all significant risks within each business unit have been appropriately identified and also to
ensure that all risk is mitigated or managed as appropriate. It is understood that regular and detailed assessment is important given the volatile
and uncertain economic environment. Further detail on risk and risk management is set out on pages 11 to 13 and in Note 20 to the Group
Financial Statements.
In addition, during the year under review, the Managing Director or the Finance Director of each operating unit completed a Financial Internal Control
Questionnaire which was used to identify control strengths and weaknesses across all financial areas which were subsequently addressed.
In accordance with the process outlined above, the Board has satisfied itself on the effectiveness of the internal control systems in operation and it
has approved the reporting lines to ensure the ongoing effectiveness of the internal controls and reporting structures.
Finally, the Directors, through the use of appropriate procedures, systems and the employment of competent persons, have ensured that measures
are in place to secure compliance with the Company’s obligation to keep proper books of account. The books of account are kept at the registered
office of the Company.
Greencore Group plc Annual Report and Accounts 2013 44
Corporate Governance
Directors’ Report (continued)
Report on Directors’ Remuneration
Dear Shareholder,
As Chairman of the Option and Remuneration Committee (“the Committee”), I am pleased to present our Directors’ Remuneration Report for the
year ended 27 September 2013. This is my first Report as Chairman of the Committee having taken over the role from Mr Gary Kennedy in January
2013 when Gary was appointed Chairman of the Company. On behalf of the Committee I would like to thank Gary for his work in the role.
Remuneration Framework
As outlined in the Report on Directors’ Remuneration included in the 2012 Annual Report, the Committee, supported by Deloitte LLP (“Deloitte”),
undertook a review of the remuneration arrangements for senior Executives to ensure that all arrangements continued to effectively met the aims
of the remuneration policy. Following the review, the Committee concluded that, while the structure created alignment between the long-term
interests of shareholders and Executives by providing part of the package in deferred shares, the arrangements were not sufficiently aligned with the
long-term financial performance of the business and therefore a new long-term Performance Share Plan (“PSP”) was proposed by the Committee to
create further alignment between the interests of the Executives with those of the shareholders by making a portion of Executive reward contingent
on delivery of long-term performance.
This proposal was overwhelmingly approved by shareholders at the AGM of the Company on 29 January 2013 with circa 99% of voting shareholders
approving the resolution. As a result of the passing of the resolution, the remuneration arrangements were amended whereby the bonus opportunity
for Executive Directors was reduced from 200% of base salary to 150% of base salary, 75% of salary in cash and 75% of salary in shares deferred for
three years, with the introduction of a PSP award of 100% of salary.
The first awards under the PSP were granted in March 2013. These awards will vest over three years, subject to the achievement of stretching
Earnings Per Share (“EPS”) and Return on Invested Capital (“ROIC”) performance targets. With the introduction of the PSP, the Committee is confident
that the current remuneration arrangements align the long-term interests of shareholders and Executives, as they focus on long-term shareholder
value creation through the improvement of long-term returns and earnings growth.
Business Performance and Incentive Payouts
In making a decision on Executive remuneration in respect of FY13, the Committee took into account the excellent strategic delivery in the year, including
the transformation of the US business with the integration of MarketFare and Schau, the successful integration of the Uniq and International Cuisine
businesses in the UK and inclusion in the FTSE250. The Committee considered the results relative to the annual budget to be very strong in both absolute
and relative terms which resulted in a payout on the EPS element of 43 out of 50. Furthermore, ROIC targets were set against budget and 100bps growth
on 11.9% resulted in a pay-out of 22 out of 25. In the context of strong Company performance and the contribution of the Executive Directors to delivery of
this performance, the Committee decided that it was appropriate to pay bonuses of 89% of maximum to the Chief Executive Officer and 90% of maximum
to the Chief Financial Officer. Half of the bonus is paid in cash with the remaining half paid in shares deferred for three years.
Departure of Di Walker
Following an internal reorganisation, on 24 May 2013 Ms Di Walker ceased to be an Executive Director and Chief Operating Officer having served over
four years on the Board. Ms Walker played an integral role in the Group since joining in 2004, in particular in recent years when she made an invaluable
contribution to the acquisition and integration of both Uniq and International Cuisine and also helped define and develop the US business. Ms Walker’s
termination arrangements are outlined on page 51.
Chief Financial Officer’s Salary
During the year the Chief Financial Officer took on additional responsibilities in relation to the leadership of the Purchasing and Company Secretariat
functions. In light of the increased scope of his role and to reflect his strong performance, the Committee determined that it was appropriate to increase
his base salary from £375,000 to £425,000 (13% increase) with effect from 1 January 2014.
Changes to the Option and Remuneration Committee Membership
Mr Ned Sullivan served on the Committee from 30 January 2003 until 29 January 2013 when he retired from the Board. I would like to take this
opportunity to thank Ned for his significant contribution to the Committee during his tenure. As outlined above, in accordance with best practice,
Mr Gary Kennedy stood down from his role as Chairman of the Committee upon his appointment as Chairman of the Board, at which time I was
elected Chairman of the Committee.
I look forward to receiving shareholders’ support on the Directors’ Remuneration Report at the AGM in January 2014. I will be available to answer
questions from shareholders at the AGM.
Eric Nicoli
On behalf of the Option and Remuneration Committee
25 November 2013
Greencore Group plc Annual Report and Accounts 2013 45
This Report on Directors’ Remuneration provides information on our remuneration strategy and policy as well as details of remuneration paid and
awarded in respect of FY13. On 1 October 2013, the Department of Business, Innovation and Skills implemented new Directors’ Remuneration
Regulations in the UK which require companies incorporated in the UK to disclose additional information surrounding remuneration. Although
Greencore is an Irish incorporated entity and as such is not required to comply with the new UK regulations, we recognise the importance of
shareholder transparency. In that regard, the Company intends to comply with the new UK regulations from next year onwards, which is the
year in which we would be required to comply with the regulations if we were a UK company. For the current year’s report, we have included
some of the disclosures required under the new UK reporting regulations such as a remuneration policy table and scenario charts.
The Role of the Option and Remuneration Committee
The role of the Option and Remuneration Committee (“the Committee”) is to ensure that all remuneration arrangements are aligned with the Group’s
strategy and vision. The Terms of Reference of the Committee include the determination of the remuneration packages for Executive Directors, the
Company Secretary and other members of the executive management team as appropriate. Such remuneration packages generally consist of salary,
annual bonus, long-term incentive plans and pension arrangements. The Committee also makes recommendations to the Board Chairman and the
Executive Directors in relation to the Non-Executive Directors’ fees. The Terms of Reference for the Committee are updated as appropriate and are
available on the Group’s website, www.greencore.com, under the Corporate Governance section.
Membership of the Committee
The Nomination Committee recommends the co-option of Non-Executive Directors to the Committee based on the skills and attributes required
for the role. In the year under review, Mr Eric Nicoli, Mr Gary Kennedy and Mr John Herlihy were members of the Committee. Mr Kennedy served as
Chairman of the Committee until 29 January 2013 when he was appointed Chairman of the Board, at which stage Mr Nicoli was elected Chairman
of the Committee. In addition, Mr Ned Sullivan was a Committee member from January 2003 until his retirement from the Board in January 2013.
The biographical details for each of the Committee members are set out on page 35 and include their dates of appointment to the Committee.
In the year under review, the Committee held three scheduled meetings, details of the attendances at these meetings are set out on page 41.
In addition, the Committee met on four unscheduled occasions during the year, to discuss the implementation of the Performance Share Plan (“PSP”)
and also to consider the arrangements in respect of Ms Walker’s departure.
The Group Company Secretary acts as secretary to the Committee. The Chief Executive Officer and the Chief Financial Officer attend meetings at
the invitation of the Committee and provide support when requested, however, neither is present when their own remuneration is being discussed.
Remuneration Policy
The main aim of the Group’s remuneration policy is to align the interests of Executive Directors with the Group’s business strategy and the long-term
creation of shareholder value. The policy aims to pay the Executive Directors competitively, whilst considering the remuneration practices of other
international companies of similar size and scope, the current economic climate, the regulatory and governance framework and the need to ensure
that the Directors are remunerated appropriately, whilst ensuring that the Group pays no more than is necessary. The Committee also takes into
consideration the remuneration practices throughout the Group when considering Executive Directors’ pay.
The Committee obtains external independent advice on remuneration from Deloitte LLP (“Deloitte”) as appropriate. Deloitte are one of the founding
members of the Remuneration Consulting Group and comply with the voluntary code of conduct in respect of the provisions of remuneration
consultancy services. Deloitte also provide tax advice to the Group. The Committee is satisfied that the Deloitte engagement partner and team,
which provide remuneration advice to the Committee, do not have connections with the Group that may impair their independence. The Committee
reviews the potential for conflicts of interest and adjudicates on whether there are appropriate safeguards against such conflicts. During the year
under review, the Committee was provided with advice by Deloitte, primarily in respect of the design and implementation of the PSP in the amount
of £30,500.
Greencore Group plc Annual Report and Accounts 2013 46
Corporate Governance
Directors’ Report (continued)
Report on Directors’ Remuneration (continued)
Dialogue with Shareholders and Shareholder Voting
The Committee is committed to ensuring open dialogue with shareholders in relation to remuneration. In advance of the proposal to introduce
the PSP awards, Mr Kennedy, who was Chairman of the Committee at the time, met with key shareholders and proxy advisory firms to obtain their
feedback. The Committee would normally consult with shareholders regarding any significant future changes to remuneration arrangements.
The table below highlights the voting outcome of the resolution passed at the 2013 AGM in relation to the introduction of the PSP.
To authorise the introduction of a Performance Share Plan
Valid Proxies
For
Against
(c.64% of Issued Share Capital)
251,891,634 249,419,042
(99.02%)
2,417,655
(0.96%)
Vote
Withheld
54,937
(0.02%)
Each year at the AGM, shareholders are asked to receive and consider the Directors’ Remuneration Report. The table below highlights the voting
outcome of the resolution proposed at the 2013 AGM in relation to the 2012 Directors’ Remuneration Report.
To receive and consider the Report on Directors’ Remuneration
Valid Proxies
For
Against
251,891,634
(c.64% of Issued Share Capital)
247,453,575
(98.24%)
3,745,268
(1.49%)
Vote
Withheld
692,791
(0.27%)
The Committee is pleased with the level of support received for the PSP and the FY12 Report on Directors’ Remuneration. The Committee Chairman is
available to answer any queries in relation to Executive remuneration at the Company’s AGM.
Remuneration Principles
The following principles have been adopted as a framework for evaluating changes to executive remuneration. The remuneration arrangements for
Executive Directors are designed to:
– promote value creation;
– promote sound risk management;
– support the business strategy;
– ensure that the interests of Executive Directors are aligned with the long-term interests of the shareholders;
– deliver a competitive level of pay for the Executive Directors;
– ensure the Executive Directors are rewarded for their contributions to the success of the Group; and
– motivate the Executive Directors to deliver enhanced sustainable performance.
Remuneration arrangements throughout the Group are based on the same remuneration principles, i.e. individuals are rewarded based on their
contribution to the Group and to the success of the Group, and that reward should be competitive in the market without paying more than is necessary
to recruit and retain individuals. Reward packages differ taking into account location, seniority and level of responsibility, but they are all built around
the common reward objectives and principles outlined above.
Greencore Group plc Annual Report and Accounts 2013 47
Summary of Key Elements of Executive Directors’ Remuneration
The table below sets out the element and purpose of Executive Directors’ packages and how each operates.
Purpose of this element
Operation
Maximum potential value
Performance metrics
Element of
remuneration
Basic Salary
To provide the basis of a market
competitive overall remuneration
policy.
Takes account of the role, skills
and contribution of individuals.
Pension and
Other Benefits
To provide post-retirement
remuneration and market
typical benefits to ensure
that the overall remuneration
package is competitive.
Executive Director salaries
from 1 January 2014 are
set at the following levels:
n/a
CEO
CFO
€764,783
£425,000
Contributions are as
follows:
n/a
35% of pensionable salary
for CEO
25% of pensionable salary
for CFO
Basic salaries are determined
taking into account practice at
other companies of a similar
size and complexity, individual
responsibilities, performance
and experience and the pay
arrangements throughout
the organisations.
Salaries are reviewed during
November and any increases
will normally be effective from
1 October.
The Chief Executive Officer receives
a taxable non-pensionable cash
allowance in lieu of participation in
a Defined Contribution Pension
Scheme. The Chief Financial Officer
participates in part to a Defined
Contribution Pension Scheme
and receives a partial taxable
non-pensionable cash allowance.
The Chief Executive Officer
participated in the Defined Benefit
Scheme until it was closed to
future accrual in 2009.
Executive Directors also receive
health insurance and a car
allowance.
Annual Bonus
Plan
To support the business strategy
by incentivising the delivery of
annual financial targets as well
as the achievement of personal
and strategic objectives.
A cash bonus award delivered
following year end with a deferred
share award of equal value which
vests over three years, subject to
continued employment.
Maximum cash bonus
opportunity of 75% of
base salary with a deferred
share award of equal value
(total bonus award of
150% of base salary).
75% of the award is based
on financial targets (50%
based on EPS and 25%
based on ROIC) and 25%
is based on personal and
strategic goals.
To provide market competitive
reward opportunities for the
achievement of strong financial
performance.
To align the interests of Executives
and shareholders and provide
a strong retention mechanism.
To create alignment between
the interests of Executives and
shareholders through the delivery
of rewards in Company shares.
To incentivise Executives to
deliver long-term shareholder
value creation and the
achievement of financial targets.
The Committee has the discretion
to reduce the number of deferred
shares if, prior to vesting, the
participant is in fundamental
breach of his or her employment
contract.
An award of Greencore shares
that vest over a three year period
subject to meeting stretching
performance goals. PSP awards
can be “clawed back” in certain
circumstances, at the discretion
of the Committee prior to vesting.
Performance
Share Plan
100% of salary
Vesting over three years
based on the delivery of
stretching EPS (50%) and
ROIC (50%) targets.
Greencore Group plc Annual Report and Accounts 2013 48
Corporate Governance
Directors’ Report (continued)
Report on Directors’ Remuneration (continued)
Remuneration Opportunities in Different Scenarios
The Committee believes that the current remuneration arrangements provide an appropriate balance between fixed and variable pay linked to
short and long-term strategic objectives. The charts below illustrate the current value and composition of the Executive Directors’ remuneration
opportunity in minimum, “on-target” and maximum performance scenarios.
Minimum
– No bonus payout
– No vesting under the Performance Share Plan
On target performance
– 50% of maximum annual bonus payout
– 25% of maximum vesting under the Performance Share Plan
Maximum performance
– 100% of maximum annual bonus payout
– 100% of maximum Performance Share Plan vesting
CEO*
£3,000,000
£2,500,000
£2,000,000
£1,500,000
£1,000,000
£925K
£2,529K
26%
38%
£1,567K
10%
31%
£500,000
£0
100%
59%
36%
CFO
£3,000,000
£2,500,000
£2,000,000
£1,500,000
£1,000,000
£500,000
£0
£562K
100%
£987K
11%
32%
57%
£1,624K
26%
39%
35%
Minimum
On-target performance Maximum performance
Minimum
On-target performance Maximum performance
Fixed Pay Annual Bonus Long-term incentive
Fixed Pay Annual Bonus Long-term incentive
*
The above figures for the Chief Executive Officer are based on an exchange rate of €1:£0.8389 which was the average exchange rate in FY13.
CEO (Patrick Coveney)
CFO (Alan Williams)#
Salary with
effect from
1 January
2014
€/£’000
€765
£425
Benefits
€/£’000
€53
£31
Pension with
effect from
1 January
2014
€/£’000
Total
Fixed
Pay with
effect from
1 January
2014
€/£’000
€286
£106
€1,104
£562
# Mr Williams receives part of his salary in euro and part of his salary in sterling reflecting his responsibilities across Ireland and the UK.
Further Details
Basic Salary
Executive Directors’ basic salaries are reviewed annually by the Committee and any changes are normally effective from 1 October. Basic salaries
are determined taking into consideration the role, skills, experience and contribution of the individuals concerned, the pay and conditions across the
wider organisation, market practice of other companies of a similar size and complexity and the wider market environment. The Committee considers
that salaries are appropriately positioned, given the history of the Group as well as the calibre and experience of the individuals.
The Committee approved a 2.5% increase to the Chief Executive Officer’s base salary with effect from 1 January 2014. In addition, to reflect both the strong
performance and the additional responsibilities undertaken by the Chief Financial Officer during FY13, including leadership of the Purchasing and Company
Secretariat functions, the Committee approved a pay increase for the Chief Financial Officer from £375,000 to £425,000 with effect from 1 January 2014.
The Committee considers that this level of salary is appropriate taking into account the new scope and responsibility of the Chief Financial Officer’s role.
Pension Benefits
Since 1 January 2010, pension contributions are as follows:
CEO
CFO
35% of pensionable salary
25% of pensionable salary
The Chief Executive Officer participated in the Company’s defined benefit arrangements until December 2009 when the scheme closed to future accrual.
At the time of the closure of the scheme, the scheme actuaries determined that a defined contribution of 35% of pensionable salary was broadly
equivalent to his existing entitlements under the defined benefit arrangements. No changes have been proposed to the pension benefits for 2013.
Details of pension contributions made on behalf of the Executive Directors are outlined on page 50.
Greencore Group plc Annual Report and Accounts 2013 49
Annual Bonus
The maximum cash bonus opportunity for Executive Directors is 75% of basic salary. A deferred share award with an equal value of the cash award
will also be awarded. The deferred share award vests over three years, subject to continued employment.
Performance is measured based on Group financial targets (75% of the award) and on personal and strategic goals (25% of the award). The financial
targets are adjusted EPS (50%) and ROIC (25%). Personal and strategic goals are set in relation to each Executive Director’s responsibilities and are
aligned with the short and medium-term strategic priorities. Measures are generally calibrated to be specific and measurable. The balance
of targets is illustrated below.
The targets for the FY14 annual bonus are based around the Group’s stretching budget and the Committee considers these to be appropriate.
If maximum performance targets are achieved, the Committee considers that this would represent exceptional performance and value add. The balance
of measures is illustrated in the chart below:
EPS – 50%
ROIC – 25%
Personal and
Strategic Goals
– 25%
Long-Term Incentives
As outlined above, a PSP was introduced in 2013 under which Executive Directors can receive a maximum award of up to 100% of salary. The Committee
may determine that awards can be made above this level in exceptional circumstances. This award will vest over three years and will be subject to the
delivery of stretching adjusted EPS (50% of the award) and ROIC (50% of the award) performance.
The Committee considers that the adjusted EPS and ROIC performance measures are appropriate as they focus on the delivery of long-term
shareholder value creation through the focus on long-term earnings improvement, alongside improving returns for shareholders.
It was also determined that the management team should be sufficiently able to influence outcomes through the effective financial management
of the business and therefore these metrics will act as a strong incentive.
FY13 Awards
The targets that apply to the awards granted in March 2013 in respect of the year ended 27 September 2013 are as follows:
Vesting
100%
Straight line between 25% and 100%
25%
Nil vesting
EPS element
Compound annual growth in period FY13-15
Versus FY12 base
ROIC element
Assessed based on FY15 performance
15% p.a.
Between 5% – 15% p.a.
5% p.a.
Below 5% p.a.
14.5%
12% – 14.5%
12%
Below 12%
Prior to determining the level of vesting, the Committee considers the underlying financial performance of the business, as well as the value added
to shareholders, and the level of vesting may be adjusted where it considers that there is a material difference (the “performance underpin”).
When assessing the underpin, the Committee will take into consideration a number of factors including absolute Total Shareholder Return (“TSR”)
performance, relative TSR against a range of comparators and cash flow performance. The Committee has set targets taking into account internal
and external forecasts, as well as market practice for similar sized companies.
In the event of material misstatement of Financial Statements, material failure of risk management, a material breach of health and safety regulations,
or serious reputational damage to the Group as a result of participant misconduct, the Committee may scale back awards prior to vesting.
Greencore Group plc Annual Report and Accounts 2013 50
Corporate Governance
Directors’ Report (continued)
Report on Directors’ Remuneration (continued)
Long-Term Incentives (continued)
FY14 Awards
The Committee considered the planned targets and vesting criteria for FY14, and it was agreed that these would remain unchanged from the
FY13 targets.
At the AGM in 2004, shareholders approved the introduction of a long-term incentive scheme for senior Executives. However, since the introduction of
this plan, no awards have been made to any Executive Director. Therefore no awards vested in the year under review.
Remuneration and Fees Paid in Respect of FY13
The following sets out remuneration paid to Executive and Non-Executive Directors in respect of FY13.
Salary/Fees
£’000
Pension contributions
£’000
Other benefits*
£’000
Performance Bonus**
£’000
Termination payment
£’000
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
Executive Directors
PF Coveney
DS Walker (i)
AR Williams (ii)
Non-Executive Directors
EF Sullivan (iii)
SG Bailey (iv)
JT Herlihy
PG Kennedy
PA McCann (iii)
HA McSharry (v)
JJ Moloney (vi)
EL Nicoli
DM Simons
JA Warren (v)
626
400
371
618
400
360
1,397
1,378
234
110
95
439
231
105
91
427
44
57
31
42
55
30
418
360
253
569
360
332
132
127
1,031
1,261
–
910
–
910
62
17
45
144
19
30
29
52
58
36
184
–
44
54
54
–
–
44
54
–
492
434
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total remuneration
1,889
1,812
439
427
132
127
1,031
1,261
910
* Other benefits comprise health insurance and/or car allowances.
** The performance bonus includes the cash value only.
*** The exchange rate used for the conversion of fees from euro to sterling for FY13 was €1:£0.8389. The exchange rate used for FY12 was €1:£0.8286.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2013***
Total
£’000
2012
Total
£’000
1,322
1,837
750
1,460
920
813
3,909
3,193
62
17
45
144
19
30
29
52
58
36
184
–
44
54
54
–
–
44
54
–
492
434
4,401
3,627
(i) Ms Walker ceased to be a Director on 24 May 2013, further details are set out on page 51 in relation to Ms Walker’s compensation for loss of office.
(ii) Mr Williams receives part of his salary in euro and part of his salary in sterling reflecting his responsibilities across Ireland and the UK. Mr Williams’ UK salary was redenominated
at an exchange rate of €1:£0.86 with effect from 1 October 2012 whilst the exchange rate used for the conversion of his Irish salary from euro into sterling was €1/£.8389 which
was the average exchange rate for the year.
(iii) Mr Sullivan and Mr McCann retired from the Board on 29 January 2013.
(iv) Ms Bailey was appointed to the Board on 17 May 2013.
(v) Ms McSharry and Mr Warren were appointed to the Board on 30 January 2013.
(vi) Mr Moloney was appointed to the Board on 8 February 2013.
Executive Directors’ Remuneration in respect of FY13
FY13 Bonus Out-Turns
The Group delivered excellent financial and operating performance for the year ended 27 September 2013 against the backdrop of challenging
market conditions. In addition, the Group made clear economic, strategic and organisational progress in the year. Bonus targets were set in terms
of adjusted EPS and ROIC. The Group delivered a 13.3% increase in adjusted EPS to 14.5 pence and a 100bps increase in ROIC to 12.9%. Against the
targets set, this delivered a 43% out of 50% reward for EPS and a 22% out of 25% reward for ROIC.
The Committee assessed personal and strategic performance objectives for the Chief Executive Officer and the Chief Financial Officer for the year
under review. During the year, the Group had solid revenue growth and enhanced operating margins, secured FTSE250 inclusion and reshaped the US
business. In the context of these achievements, as well as their performance against other personal objectives and contribution to the wider success
of the business, the Committee determined that 24% and 25% out of 25% for this element of the bonus should be awarded to the Chief Executive
Officer and Chief Financial Officer respectively.
Greencore Group plc Annual Report and Accounts 2013 51
This resulted in total bonus payment of 89% of maximum of base salary for the Chief Executive Officer and 90% of maximum for the Chief Financial Officer,
as follows:.
EPS
ROIC
Personal/strategic
Total bonus (% of maximum)
Total bonus (% of salary)
CEO %
CFO %
43
22
24
89
43
22
25
90
133.5%
135%
Half of this bonus is payable as a cash award and a deferred share award with an equal value to the cash award will also be granted.
Departure Arrangements for Di Walker
Ms Di Walker ceased to be an Executive Director and the Chief Operating Officer of the Company on 24 May 2013. As part of this change, her responsibilities
were reallocated across the wider leadership team. The role of Chief Operating Officer was not replaced. In order to ensure a seamless transition to the
new management structure, Ms Walker remained an employee of the Group until 27 September 2013.
Under her compromise agreement and in line with her Irish contract and statutory entitlements, Ms Walker was entitled to an aggregate payment
in lieu of notice of £863,450. The individual constituents of this payment represented a payment in lieu of 11 months’ salary of £366,000; a payment in
lieu of 11 months’ benefits of £137,450 and a payment of £360,000 in respect of her entitlement to a bonus for the financial year ended 26 September
2014. As Ms Walker was an employee of the Group until 27 September 2013 she was also entitled to receive a deferred share bonus award equivalent to
£360,000 for this performance period. Ms Walker was also entitled to receive a deferred share bonus award equivalent to her cash bonus of £360,000 for
the performance period covered by her contractual notice period. These deferred share awards will not vest until December 2014. In consideration of a
payment of £46,550, Ms Walker also agreed to abide by extended confidentiality, restrictive covenants and other restrictions for a period of 12 months
from leaving the Group compared to those set out in her contract of employment.
The deferred share awards granted to Ms Walker in December 2010, 2011 and 2012 will vest in December 2013.
Company TSR Performance
The following chart shows total shareholder returns when compared with the FTSE250 and FTSE All-Share Index over the last five years.
250
240
230
220
210
200
190
180
170
160
150
140
130
120
110
100
90
80
70
60
50
40
Sep
2008
Dec
2008
Mar
2009
Jun
2009
Sep
2009
Dec
2009
Mar
2010
Jun
2010
Sep
2010
Dec
2010
Mar
2011
Jun
2011
Sep
2011
Dec
2011
Mar
2012
Jun
2012
Sep
2012
Dec
2012
Mar
2013
Jun
2013
Sep
2013
Greencore Group plc FTSE All-Share FTSE250
Rebased to 100
Source: Thomson Datastream
Greencore Group plc Annual Report and Accounts 2013 52
Corporate Governance
Directors’ Report (continued)
Report on Directors’ Remuneration (continued)
Executive Shareholdings
The Company has adopted director shareholding guidelines whereby the Chief Executive Officer and Chief Financial Officer shall acquire a holding of
shares in the Company equal to 200% and 100% of base salary, respectively, over a five year period commencing on the date of their employment or
from when the policy was introduced in November 2013, whichever is earlier.
The level of Executives shareholdings are summarised below:
CEO (Patrick Coveney)
CFO (Alan Williams)
Value of shares (based on
3 month average share
price to year end)
£2,737,717
£237,006
Holding as a
percentage of
base salary
437%
64%
Directors’ Service Contracts
Executive Directors’ service contracts have an 11 month notice period. Each Executive Director is entitled to terminate his/her employment with 30
prior days notice at any time within six months after a change in control of the Company if the Executive has reasonable grounds to contend that
such change in control has resulted, or will result, in the diminution of his/her powers, duties or functions in relation to the Group. If the Executive’s
contract is terminated in the event of a change of control, the Executive can seek a payment from the Company in settlement of all and any claims
arising in those circumstances. The amount of the payment (subject to deduction of income tax) will be equal to the sum total of the basic salary
and the bonus paid to the Executive in the 11 months immediately preceding such termination. These provisions reflect Irish employment law.
The Non-Executive Directors do not have service contracts but have letters of appointment.
Executive Directors’ External Appointment
The Chief Executive Officer and the Chief Financial Officer do not currently hold any external Non-Executive Director roles at other companies.
Funding of Equity Awards
Executive incentive arrangements are funded by a mix of newly issued shares and shares purchased in the market. Where shares are newly issued,
the Company complies with the Association of British Insurers (“ABI”) guidelines in relation to issuing a maximum of 5% of share capital in respect of
discretionary schemes and a maximum of 10% in respect of all share schemes in a rolling ten-year period.
Change of Control
Long-term incentive awards may vest or become exercisable before their normal vesting date in the event of a change of control of Greencore Group
plc, subject to the rules of the applicable plans.
Non-Executive Directors’ Fees
The remuneration policy for the Chairman and Non-Executive Directors is to pay fees necessary to attract Non-Executive Directors of the calibre
required, taking into consideration the size and complexity of the business and the time commitment of the role, without paying more than is
necessary.
The fees for the Non-Executive Directors are determined by the Board following recommendations from the Committee. The fees for the Chairman
are determined by the Committee. The Chairman is not eligible to participate in any of the Group’s incentive arrangements and neither are the
Non-Executive Directors.
2012/2013
Euro €
Basic fee
Chairman
Non-Executive Directors
Additional fees
Chairman Additional Fee
Senior Independent Director*
Committee Chairman **
55,000
53,000
166,000
15,000
12,000/15,000
If a Non-Executive Director is a Chairman of more than one Committee, outside of the Audit Committee, the special fee is capped at €12,000 for all roles.
*
** If a Non-Executive Director holds the position of Senior Independent Director and Committee Chairman, the fee is capped at €15,000.
Details of Non-Executive Directors’ fees paid in respect of FY13 are set out on page 50.
FY14 Non-Executive Directors’ Remuneration Policy
Basic fees were last increased in October 2010 and are reviewed on an ongoing basis.
Greencore Group plc Annual Report and Accounts 2013 53
Performance Share Plan
Following approval of the PSP in January 2013, awards were granted to the Chief Executive Officer and Chief Financial Officer as follows:
Executive Directors
Patrick Coveney
Alan Williams
Date of Award
05/03/2013
05/03/2013
Price of
Award £
No. of Shares
Awarded
Holding Period*
0.9825
0.9825
658,417
381,639
05/03/2013 – 05/03/2016
05/03/2013 – 05/03/2016
It is intended that further PSP awards will be granted in respect of FY14 on 3 December 2013 which is the earliest practicable date following the
release of the Group’s FY13 financial results.
Deferred Bonus Plan Awards
Executive Directors
Patrick Coveney
Alan Williams
Market Price
On Day of
Award €/£
No. of Shares
Awarded
Holding Period*
€1.30
€0.64
£0.92
€0.64
£0.92
866,078**
909,375
603,739
03/12/2010 – 03/12/2013
09/12/2011 – 09/12/2014
03/12/2012 – 03/12/2015
309,375
352,794
09/12/2011 – 09/12/2014
03/12/2012 – 03/12/2015
Performance Share Plan Awards and Deferred Bonus Plan Awards were granted on the first day of the relevant holding period.
*
** Following the rights issue in August 2011, the Option and Remuneration Committee approved the recalculation of the awards, using a market standard methodology to reflect
the effect of the rights issue on the awards as the inherent value of the awards was also reduced. To take account of the impact of the rights issue on the awards, the Company
increased the number of awards in respect of awards granted in 2010.
In respect of the year ended 27 September 2013, the value of the Deferred Bonus Award that will be allocated as Deferred Share Awards to the
Executive Directors is:
PF Coveney
AR Williams
DS Walker
£418,000
£253,000
£360,000#
The allocation of the number of shares under the Deferred Bonus Plan will be determined on 3 December 2013 which is the earliest practicable date
following the release of the Group’s FY13 financial results.
# Ms Walker will also be granted shares to the value of £360,000 in respect of her contractual notice period. Further details surrounding Ms Walker’s departure are set out on page 51.
Directors’ Share Options
Details of movements on outstanding options over the Company’s Ordinary Share Capital and those granted during the year are as follows:
Executive Share Option Scheme1
No. of options*
PF Coveney
Basic
Basic
AR Williams
Basic
Date of
grant
Balance at
start of year
Exercised
during year
Lapsed
during year
Granted
during year
Balance at
end of year
Expiry date
Exercise
price
01/12/2005
22/06/2006
402,833
125,885
–
–
–
–
–
–
–
–
–
–
–
402,833
125,885
01/12/2008 – 01/12/2015
22/06/2009 – 22/06/2016
€2.66
€2.86
–
–
–
1 Awards have been granted under the Share Option scheme, which expired in 2011. Under this scheme, options were granted to Executive Directors and a number of other key
employees of the Company and can only be exercised subject to the Company’s EPS having grown in excess of the Consumer Price Index + 5% per annum, compounded over
three years. No options were granted to Executive Directors during the year as the Scheme has expired.
Greencore Group plc Annual Report and Accounts 2013 54
Corporate Governance
Directors’ Report (continued)
Report on Directors’ Remuneration (continued)
Directors’ Share Options (continued)
ShareSave Scheme
No. of options
PF Coveney
ShareSave
AR Williams
ShareSave
Date of
grant
Balance
at start
of year
Exercised
during
year
Lapsed
during
year
Exercise
price per
share
Granted
during
year
Exercise dates
Balance at
year end
02/07/2012
26,217
02/07/2012
15,000
–
–
–
–
€0.69
£0.60
–
–
01/09/2015 – 28/02/2016
26,217
01/09/2015 – 28/02/2016
15,000
There were no changes in the interests in share awards or options of the Directors between 27 September 2013 and 25 November 2013. In the
financial year under review, the share price ranged from a low of £0.80 to a high of £1.54. The closing price on 27 September 2013 was £1.455.
Directors’ and Company Secretary’s Share Interests
The beneficial interests of the Directors and Group Company Secretary (including those of their spouses and minor children), who held office at
27 September 2013, in the share capital of the Company were as follows:
Director
SG Bailey
PF Coveney
JT Herlihy
PG Kennedy
HA McSharry
JJ Moloney
EL Nicoli
DM Simons
JA Warren
AR Williams
Group Company Secretary
C O’Leary
As at
28.09.12
As at
27.09.13
As at
25.11.13
–
25,000
25,000
1,529,738 1,867,640 1,904,343
–
36,918
12,646
25,000
17,000
87,856
25,000
164,046
–
34,737
–
–
17,000
87,856
–
154,571
–
36,449
12,500
25,000
17,000
87,856
25,000
161,683
18,399
18,790
19,010
The Directors and Group Company Secretary have no beneficial interests in any of the Group’s subsidiary or associated undertakings.
The movement in shares from 28 September 2012 and 27 September 2013 was as a result of Directors taking interim and final scrip dividends or
where Non-Executive Directors who were appointed during the year acquired shares. In addition, Mr Coveney received shares in December 2012
as a result of the vesting of Deferred Share Awards granted in 2009. The changes which occurred in the interests of the Directors from 27 September
2013 to 25 November 2013 reflect the interim scrip dividend for FY13 for shareholders who were on the register of members at 5.00pm on 7 June
2013, shares for which were allotted on 3 October 2013.
Greencore Group plc Annual Report and Accounts 2013 Pension Benefits
Mr Coveney is a deferred member of the Group’s Defined Benefit Pension Scheme which was closed to future accrual from 31 December 2009.
The value of the frozen scheme benefits as at 27 September 2013 was as follows:
Mr Coveney
55
£’000
48
Share Based Payments
Until 2011, the Group operated an Executive Share Option Scheme which had been approved by shareholders. The Executive Share Option Scheme
expired in 2011, prior to that it was Group policy to grant options to key Executives across the Group to encourage identification with shareholders’
interests. There are currently 34 Executives with options outstanding in the scheme and options have been granted to approximately 270 Executives
to date, however, no further options may be granted by the Company. Non-Executive Directors did not participate in the scheme.
Under the Executive Share Option Scheme, the share options cannot be exercised before the expiration of three years from the date of grant and
then only if the Company’s Earnings Per Share has grown, over three years, at least to the same extent as the growth in the Irish Consumer Price
Index (“CPI”) over the same period.
The Group also operates a ShareSave scheme in Ireland and the UK which encourages eligible employees to save in order to buy shares in the
Company. The ShareSave scheme provides a means of saving and gives employees the opportunity to become shareholders. Currently, there are
approximately 1,308 participants in the scheme.
The Group’s Financial Statements recognise an Income Statement charge in accordance with IFRS 2 Share Based Payment in respect of options issued
under the Executive Share Option Scheme, ShareSave scheme, the Deferred Bonus Plan Awards and the Performance Share Plan. The related charge in
respect of options issued to Executive Directors totalled £141,000 (2012: £1,000). Full details of the Deferred Bonus Plan Awards and Performance Share
Plan Awards are outlined on page 53. The related expense recognised in the Income Statement for Executive Directors in the year totalled £0.82 million
(2012: £1.062 million) for Deferred Bonus Plan Awards and £0.6 million (2012: £nil) for Share Plan Awards.
Options outstanding under the Company’s Executive Share Option Scheme, the PSP, and ShareSave scheme at 27 September 2013 amounted to
12,117,203 Ordinary Shares (2012: 9,675,366) made up as follows:
Share option scheme
Performance Share Plan
ShareSave scheme
ShareSave scheme
Basic tier
Basic tier
Ireland
UK
3,848,352
3,869,355
282,648
4,116,848
No. of
Ordinary Shares
Price range
€0.64 – €3.88
£0.98
€0.66 – €1.20
£0.60 – £2.39
Normal dates
exercisable
2013 – 2021
2013 – 2016
2013 – 2016
2013 – 2018
Greencore Group plc Annual Report and Accounts 2013 56
Corporate Governance
Directors’ Report (continued)
Report of the Audit Committee
Dear Shareholder,
I am delighted to report on the activities of the Audit Committee for the year ended 27 September 2013.
Role of the Committee
The role, responsibilities, authority and duties of the Audit Committee (“the Committee”) are set out in our written Terms of Reference, which were
updated in September 2013 to take into account the revisions to the UK Corporate Governance Code (“the Code”). The Terms of Reference are
available under the Investor Relations section of our website at www.greencore.com.
The Committee’s responsibilities include, but are not limited to, the following matters with a view to bringing any relevant issues to the attention
of the Board:
– Monitoring the financial reporting process, integrity of the financial statements and any formal announcements relating to the Group’s
financial performance;
– Reviewing significant financial reporting judgements;
– Monitoring the effectiveness of the Group’s risk management and internal control arrangements;
– Monitoring the statutory audit of the annual and consolidated accounts;
– Reviewing the External Auditor’s performance, objectivity, qualification and independence;
– Making recommendations to the Board in relation to the appointment of the External Auditor, the approval of the Auditors’ remuneration and
terms of engagement;
– Reviewing the Group’s ‘whistleblowing’ arrangements; and
– Reviewing reports from specialist functions, such as health and safety, environmental, legal, regulatory and compliance issues and advising the
Board on the outcome of such reviews and making recommendations where appropriate.
The Committee undertook to early adopt the revised Code as introduced by the Financial Reporting Council (“FRC”) in September 2012. In line with
Provision C.3.4. of the Code, the Board has extended the Committee’s remit such that the Committee must now formally advise the Board on whether
the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to
assess the performance of the Group, along with its business model and strategy and in this regard, I confirm, on behalf of the Committee, that we
have fulfilled our responsibilities in line with our Terms of Reference.
Membership of the Committee
The Nomination Committee recommends to the Board, for appointment to the Audit Committee, those members who it believes have both the
financial and commercial experience and expertise necessary to ensure an effective Committee.
In March 2013, upon joining the Committee, I was delighted to be appointed Committee Chairman following Mr David Simons’ retirement from the
Committee. In accordance with Provision C.3.1., the Board has determined that I have the ‘recent and relevant financial experience’, as required by
the Code. At the same time, Ms Heather Ann McSharry was also appointed to the Committee. Following a further review of Committee membership in
July, Ms Sly Bailey was appointed following Mr Eric Nicoli’s retirement from the Committee.
On behalf of the Committee, I wish to thank Mr Simons and Mr Nicoli for their contribution since their co-option in July 2004 and May 2010 respectively.
All members of the Committee are deemed to be independent and the Committee has concluded that its membership meets the requirements of
the Code. Each Committee member is expected to be financially literate and to have knowledge of the following key areas:
– Financial reporting principles and accounting standards;
– The regulatory framework within which the Group operates;
– The Group’s internal control and risk management environment; and
– Factors impacting the Group’s Financial Statements.
Further details of the Directors’ experience and qualifications can be found on page 35.
As a Committee we meet at least three times in the year. The Chief Executive, the Chief Financial Officer, the Head of Risk Management, the Group
Financial Controller and representatives of the External Auditors attend upon invitation. At least once a year, other individuals from within the businesses
will attend the meeting and give a presentation to the Committee on certain key matters such as health and safety, insurance, IT and legislation. As with
the Nomination Committee and Option and Remuneration Committee, the Group Company Secretary acts as secretary to the Committee.
Acting as Chairman of the Committee, I am available to discuss any particular matter with my fellow Board members and in addition meet with the
Auditor and Risk Management without the presence of management.
In order to ensure an effective working Committee, the meetings of the Committee take place in advance of three scheduled Board meetings.
In order to ensure that all Directors are kept informed of the Committee’s agenda, I provide a verbal report to the Board meeting on key matters
discussed at the Committee meetings. In addition, the minutes of the meetings are made available to the Board.
Greencore Group plc Annual Report and Accounts 2013 57
How the Committee has Discharged its Responsibilities
In the year under review, the Committee met three times, attendance at which is set out on page 41. In order to ensure that the Committee executes
its duties efficiently, the Committee’s agenda corresponds with the Group’s financial calendar. This year, the Committee meetings focused on the
following key areas:
Monitoring the Integrity of the Financial Statements including Significant Judgements
– We reviewed the appropriateness of Group accounting principles, practices and policies and monitored changes to, and compliance with,
accounting standards on an ongoing basis;
– Prior to recommending their publication to the Board, we reviewed the half-year results for FY13, having discussed them with the External Auditor
and compared the results with management accounts and budgets, focusing on key areas of judgement; and
– We reviewed, prior to making any recommendations to the Board, the statement of annual results for the year ended 27 September 2013. In
undertaking this review, we discussed with management and the External Auditor the critical accounting policies and judgements that had been
applied, these were:
Taxation
Significant judgement is exercised by management, working with our tax advisors Deloitte, in arriving at the amounts to be provided for both
current and deferred tax. The final tax determination of many transactions is uncertain and may not be known for several years. As part of their
audit KPMG reviewed the judgements that had been made, using tax specialists as appropriate, and provided the Committee with an assessment.
The most significant judgement made within tax this year was the recognition of an additional deferred tax asset arising from the Uniq acquisition.
This was treated as an exceptional item. Following discussion, we were satisfied that the judgements made were prudent and appropriate and that
the correct accounting treatment had been adopted. Further details are outlined in Note 9 to the Group Financial Statements.
Pensions Accounting
The Group operates a number of defined benefit schemes which have significant deficits as outlined in Note 23 to the Group Financial Statements.
Although these schemes are closed to future accrual they are sensitive to changes in actuarial assumptions. During their audit, KPMG evaluated
the assumptions and methodologies used by the Group’s actuarial advisors and assessed whether the assumptions made were appropriate and
not materially different from external benchmarks. KPMG reported to us that they were satisfied with the assumptions used and with the way
that our schemes had been accounted for.
Provisions
The Group has recorded provisions in the sum of £17.9 million as at 27 September 2013 as outlined in Note 22 to the Group Financial Statements
which, by their nature, are uncertain and highly judgmental in nature. As part of the year end audit, KPMG considered the nature of the provisions,
the potential outcomes, any developments relating to specific claims, and the prior history of lease obligations, provisions and claims in order
to assess whether the provisions recorded were appropriate and suitably conservative. We noted the KPMG work, which was satisfactory, and
discussed the key elements of judgement with management to assure ourselves as to the adequacy and appropriateness of the provisions.
Following this discussion, we were satisfied that the judgements exercised were appropriate.
Goodwill and Intangible Assets
As set out in Note 12 to the Group Financial Statements, as at 27 September 2013, the Group had goodwill of £446.2 million with intangible
assets amounting in total to £499.9 million. In order to satisfy itself that these balances were appropriately stated, the Committee considered the
impairment reviews carried out by management. These reviews involve the discounting of the forecasted cashflows at each cash generating unit at
the Company’s cost of capital. These assumptions are then subjected to sensitivity analysis. KPMG provided the Committee with their review of the
impairment review process and, following discussion, we were satisfied that the assumptions used were appropriate and that there was significant
headroom on all calculations thus obviating the need for any impairment.
Exceptional Items
Exceptional items are those which are separately disclosed by virtue of their nature or amount in order to aid the user’s understanding of underlying
performance. Group management exercises judgement in assessing each particular item and whether this treatment is consistent with our accounting
policies and practice. KPMG reviewed this treatment and were satisfied that the identification of items as exceptional was consistently applied. We
discussed these items with management and also enquired of management whether there were any other items which should have been identified as
exceptional and received confirmation that there were no such items. We were therefore satisfied with the treatment adopted, that it was consistent
with our accounting policy and previous practice and that the individual descriptions were clear. Further details are outlined in Note 6 to the Group
Financial Statements
Following discussions with the auditors, and the deliberations set out above, we were satisfied that the Financial Statements dealt appropriately with
each of the areas of significant judgement.
The Auditor also reported to the Committee on any misstatements that they had found in the course of their work and confirmed that no material
amounts remained unadjusted.
Greencore Group plc Annual Report and Accounts 2013
58
Corporate Governance
Directors’ Report (continued)
Report of the Audit Committee (continued)
How the Committee has Discharged its Responsibilities (continued)
Monitoring the Integrity of the Financial Statements including Significant Judgements
(continued)
As previously outlined, in accordance with the Code and our Terms of Reference, we also reviewed the Annual Report and were able to, taken
as a whole, and confirm to the Board that, in our view, the Annual Report and Financial Statements, taken as a whole, was fair, balanced and
understandable and provided the information necessary for shareholders to assess the Group’s performance, business model and strategy.
Risk Management and Internal Controls/Risk Management Group Function
The Board as a whole is responsible for the Group’s system of internal control, however, the Committee assists the Board in meeting its obligations
in this regard. More information on Group’s internal control mechanism is set out on pages 42 and 43.
In order to ensure that the Committee fulfills its role relating to the adequacy and effectiveness of the Group’s risk management and internal control
system, twice a year the Committee formally meets with the Head of Risk Management who reports on the risk management group’s key business
processes and control reviews.
In May 2013 the Head of Risk Management provided us with an interim update on progress against the plan for the year together with a presentation
on the reports completed to date and updates on the risk management charter.
In September 2013, we received a final report on the activities for the year which showed very good progress against the agreed plan and concluded
that the overall Group control environment remained satisfactory. It included a review of the objectives of the function and how those objectives had
been met. The Committee then reviewed and approved the Risk Management plan for the forthcoming year together with approval of the budget
and resource requirements.
During the year, the Committee has overseen a review of the Group’s corporate reporting responsibilities with regard to risk, which was undertaken by
risk management. A full review of the Group’s risks has been undertaken to validate and suggest changes to the current published listing which had
historically been a ‘top down’ view. Workshops with central functions and product categories were held to establish what the business considered to
be the most important and current risks. Upon completion of the workshops, the published listing was revised. The Group’s significant risks, along
with details of how they are controlled are outlined on page 11 to 13.
In addition, the Committee noted reports from the Head of Risk Management on good faith reporting (“whistleblowing”) at the Committee meetings
held in May and September. Under the Group’s whistleblowing policy, arrangements are in place for individuals to raise any issue, in confidence,
relating to accounting, risk issues, auditing issues or any other impropriety.
External Audit
It is the responsibility of the Committee to monitor the performance, objectivity and independence of the External Auditor. In September, we met
with the External Auditors to agree the audit plan for the year, highlighting the key financial statement and audit risks, to ensure that the audit was
appropriately focused. In addition, the External Auditor’s Letter of Engagement was reviewed by the Committee in advance of the commencement
of the audit.
In November 2013, in advance of the finalisation of the Group’s Financial Statements, we received a report from KPMG on their key audit findings,
including the management letter and the key areas of risk and significant judgements referred to above, and discussed the issues with them in order
for the Committee to form a judgement on the Financial Statements. In addition, we considered the Letter of Representation.
At least once a year, we meet with the External Auditors privately to discuss any matters the auditors may wish to raise without management
being present.
The last external audit tender was conducted in 2008 and KPMG were formally appointed as the Group’s auditors by shareholders at the AGM held in
February 2009. The lead partner is rotated every five years to ensure continued independence and objectivity.
The Committee continues to be fully satisfied with the performance of KPMG who remain effective, objective and independent. We have therefore
recommended to the Board that KPMG should continue as the Group’s auditors at the forthcoming Annual General Meeting.
Provision C.3.7 of the 2012 Code introduced a new provision whereby FTSE350 companies should put the external audit contract to tender at least
every ten years. The Group is also cognisant of the Competition Commission’s findings on 17 October 2013 whereby the external audit should be put
to tender every ten years. As noted above, the external audit was put to tender five years ago.
In advance of the commencement of the annual audit, the Committee reviewed a letter provided by the External Auditor confirming their
independence within the meaning of the regulations and professional standards. In addition, in order to satisfy itself as to the External Auditor’s
independence, the Committee undertook a review of auditor compensation and the balance between audit and non-audit fees.
Greencore Group plc Annual Report and Accounts 2013 59
Non-Audit Fees
In accordance with our Terms of Reference, it is the Committee’s responsibility to develop and implement policy on the engagement of the External
Auditor to supply non-audit services, taking into account relevant ethical guidance. The Committee has agreed that non-audit work may only be
undertaken by the external auditors in limited circumstances and non-audit fees must not exceed 20% of the total audit fee in any year without the
prior approval of the Committee. The Committee regularly reviews the nature of non-audit work performed by the auditors and the volume of that work.
Details of the amounts paid to the External Auditor during the year for audit and other services are set out in Note 3 to the Group Financial Statements,
from which you will note that non-audit fees amounted to only £16,000 in the year.
Committee Effectiveness
The effectiveness of the Committee is reviewed on an annual basis by both the Board and the Committee itself. Following such reviews, I am
delighted to advise that the Committee is considered to continue to operate effectively and efficiently.
Further questions
I will be available to shareholders at the forthcoming AGM to answer any questions relating to the role of the Committee.
Yours sincerely
John Warren
On behalf of the Audit Committee
25 November 2013
Greencore Group plc Annual Report and Accounts 2013 60
Corporate Governance
Directors’ Report (continued)
Report of the Nomination Committee
Dear Shareholder,
As Chairman of the Nomination Committee (“the Committee”), I am pleased to present the report of the Committee for the year ended
27 September 2013.
This has been an exceptionally eventful year for the Committee given the significant changes to the Board in recent times. On 27 November 2012
the Group announced that both Mr Ned Sullivan, Chairman, and Mr Pat McCann, Non-Executive Director, would be retiring from the Board at the
conclusion of the 2013 Annual General Meeting. On the same day, it was also announced that Mr Gary Kennedy, Non-Executive Director would
succeed Mr Sullivan as Chairman. In advance of these retirements, the Committee carried out extensive deliberations, mainly in terms of succession
planning for the Chairman and also to ensure that the Board remained fit for purpose. As a result of the deliberations, the Committee recommended
the co-option of four new Non-Executive Directors to the Board. MWM Consulting, which does not have any other affiliation with the Group, assisted
the Committee in its search for the most suitable candidates to join the Board based on a selected list of necessary criteria with specific emphasis
on the desired skills, knowledge, innovation and expertise. In that regard, I am delighted to welcome four extremely capable and knowledgeable
Non-Executive Directors to the Board. Ms Heather Ann McSharry and Mr John Warren joined the Board in January of this year, followed by the
appointment of Mr John Moloney in February and finally the appointment of Ms Sly Bailey in May of this year. Their biographical details are set
out on page 35. Each of the new Non-Executive Directors are already making a significant contribution to Board discussions.
The role of the Committee is to regularly review the size, structure and composition of the Board and how it compares to the Group’s requirements
and to recommend any proposed changes where appropriate. The Committee also ensures that succession plans are in place for the Directors and
senior Executives whilst reviewing the leadership needs of the organisation taking into consideration the policy on Board structure, the commercial
changes affecting the Group and the market in which the Group operates.
The Committee uses the services of independent consultants where necessary in order to assist in the search for any new appointments to the Board,
taking into consideration the correct balance of skills, experience and expertise necessary. The Committee understands the importance of ensuring
that any new members of the Board must be independent minded, self confident, passionate about business and must also be able to exercise
clear judgement.
When a suitable candidate has been identified, the Committee will recommend the appointment to the Board. All appointments to the Board are
approved by the Board as a whole.
In order to ensure that the independence of Non-Executive Directors is preserved, the Group will not normally extend their tenure for more than three
terms of three years.
In the past, all newly appointed Directors have been subject to election by shareholders at the AGM following their appointment. Since the Company’s
AGM in 2012, in compliance with the relevant provision of the Code, all Directors retire at the AGM of the Company and submit themselves for
re-election where appropriate.
In addition to myself, the Committee consists of two other Non-Executive Directors, Mr Kennedy and Mr Moloney, together with one Executive Director,
Mr Patrick Coveney. Details of Committee membership, together with meeting attendance during the year are set out on page 41. Mr McCann served
as Chairman of the Nomination Committee from 1 April 2008, having been elected to the Committee on 18 November 2004, until his retirement on
29 January, 2013, at which stage I was appointed Chairman of the Committee, a position I hold in addition to my role as Senior Independent Director.
Mr Sullivan was a member of the Committee from July 2003 until his retirement from the Board.
In line with the Terms of Reference of the Committee, the Group Company Secretary is secretary to the Committee and no one other than a member of
the Committee and the secretary is entitled to be present at its meetings, however, advisors and other members of the Board may be invited to attend
if appropriate. In the situation where a matter concerning any of the Committee members is to be discussed, then he or she will absent themselves
from the meeting as appropriate. The full Terms of Reference of the Committee are available on the Group’s website at www.greencore.com.
The terms and conditions of appointment of Non-Executive Directors are available for inspection at the Company’s registered office, during normal
office hours and at the AGM of the Company.
When a new Executive or Non-Executive Director joins the Group, an induction programme is arranged which includes, inter alia, visits to the trading
operations of subsidiaries. The Group understands the importance of effective induction which serves to build an understanding of the nature of the
Company, its business and markets. In addition, it provides an understanding of the Group’s main stakeholders and ensures a link between the
Group’s people.
In addition to the scheduled meeting held in the year under review, the Committee met an additional seven times to discuss the significant changes
to the Group Board. As outlined above, the Committee met to discuss succession planning in advance of Mr Sullivan’s and Mr McCann’s retirement.
In accordance with good corporate governance, Mr Kennedy absented himself from any meetings where the appointment of the Chairman designate
was discussed. The Committee also met to consider and recommend the appointment of Ms McSharry and Mr Warren and to recommend the further
co-option of Mr Moloney and Ms Bailey to the Board following on from a further review of the Board structure. The Committee met on two separate
occasions to discuss and recommend changes to the structures of each of the Nomination Committee, Audit Committee and Option and
Remuneration Committee.
Greencore Group plc Annual Report and Accounts 2013 61
The Committee and the Board understand the importance of ensuring diversity and the key role a diversified Board plays in the ensuring effectiveness,
with particular emphasis on gender diversity. The Board will always take diversity into account whilst also ensuring the best people are nominated
to all appointments. In that regard, we are pleased that there was an equal number of both male and female appointments to the Board in the year
under review, with the result that the Board now has 20% female representation. The Committee and Board are further cognisant of the report from
Lord Davies of Abersoch ‘Women on Boards’ which recommends that all FTSE250 companies have a minimum of 25% representation of females on the
Board by 2015. Notwithstanding this, suitable candidates are selected on the basis of relevant experience, backgrounds, skills, knowledge and insight,
having due regard for the benefits of diversity on the Board, including gender in accordance with Principle B.2. of the 2012 Code.
The Committee and Board further realise that diversity extends beyond the Board and in this regard all recruitment decisions are fair and non-
discriminatory. Further details on the breakdown of female and male employees can be found on page 28 of the Business Review and Strategic Report.
Each year, the Committee reviews the time required to fulfill the roles of Chairman, Senior Independent Director and Non-Executive Director, and is
satisfied that all members of the Board are devoting sufficient time to their duties.
After the conclusion of the AGM to be held in January 2014, I will be retiring from the Board after almost ten years, having joined the Board on
1 July 2004.
As I outlined above, Mr Sullivan and Mr McCann retired from the Board in January 2013 and I would like to reiterate the comments of the Board
Chairman and thank them both, on a personal basis, for the integral role they played on the Board over an 11 and ten year period respectively.
In addition, I wish to thank Ms Walker who ceased to be a Director in May of this year, for her enormous contribution to both the Group and
the Board over many years.
I am extremely confident and very pleased that following the recent additions to the Board, the Group has a strong, experienced, balanced Board
who will both complement and challenge the executive team in these exciting times for the Group.
David Simons
On behalf of the Nomination Committee
25 November 2013
Greencore Group plc Annual Report and Accounts 2013 62
Corporate Governance
Directors’ Report (continued)
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable laws and regulations. Irish
company law requires the Directors to prepare Financial Statements for each financial year which give a true and fair view of the state of affairs of
the Company and of the Group and of the profit or loss of the Group for that period. The Directors have prepared the Group Financial Statements in
accordance with International Financial Reporting Standards as adopted by the European Union (“EU”). The Directors have elected to prepare the
Company Financial Statements in accordance with Generally Accepted Accounting Practice in Ireland (Irish GAAP), comprising the financial reporting
standards issued by the Accounting Standards Board and published by the Institute of Chartered Accountants in Ireland together with the Companies
Acts, 1963 to 2012.
In preparing these Group Financial Statements the Directors are required to:
– select suitable accounting policies and apply them consistently;
– make judgements and estimates that are reasonable and prudent;
– comply with applicable International Financial Reporting Standards as adopted by the EU, subject to any material departures disclosed and
explained in the Financial Statements; and
– prepare the Financial Statements on the going concern basis, unless it is inappropriate to presume that the Group will continue in business.
The Directors are also required by the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank to
include a management report containing a fair review of the business and a description of the principal risks and uncertainties facing the Group.
The Directors confirm that they have complied with the above requirements in preparing the Annual Report.
The Directors are responsible for keeping proper books of account which disclose with reasonable accuracy at any time the financial position of the
Company, and which enable them to ensure that the Financial Statements of the Group are prepared in accordance with applicable International
Financial Reporting Standards as adopted by the EU and comply with the provisions of the Companies Acts, 1963 to 2012, and Article 4 of the
European Communities (International Financial Reporting Standards and Miscellaneous Amendments) Regulations 2005 (the ‘IAS Regulation’).
They are also responsible for safeguarding the assets of the Company and the Group, and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the website (www.greencore.com). Legislation in Ireland concerning the
preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.
In accordance with the 2012 Corporate Governance Code, the Directors, having taken all relevant matters into consideration, believe that the Annual
Report and Financial Statements, taken as a whole, is fair, balanced and understandable and gives shareholders the information needed to assess
the Group’s performance, business model and strategy.
Regulation 21 of SI 255/2006 ‘EC (Takeover Directive) Regulations 2006’
For the purpose of Regulation 21 of SI 255/2006 ‘EC (Takeover Directive) Regulations 2006’, the information given under the following headings on page 36 (Share
Capital), 35 and 37 (Directors), 37 (Significant Shareholdings), 47 (Performance Related Annual Bonus and Deferred Bonus Plan), 47 (Performance Share Plan), 55
(Share Option Schemes), 54 (Directors’ and Company Secretary’s Share Interests), 53 and 54 (Share Options), 52 (Directors’ Service Contracts), 55 (Share-Based
Payments) and 50 (Remuneration and Fees Paid in respect of FY13) are deemed to be incorporated in this part of the Directors’ Report. In addition, the Company’s
Memorandum and Articles of Association, which set out the rules that apply in relation to the appointment and replacement of Directors and the amendment of
the Articles of Association which are available on the Greencore website, are deemed to be incorporated in this part of the Directors’ Report.
The Group’s financing facilities contain provisions that may require repayment in the event that a change in control of the Company occurs.
In addition, the Company’s ShareSave Schemes and the Executive Share Option Scheme allow for the early exercise of outstanding options upon
a change in control of the Company, subject to the approval of the Option and Remuneration Committee.
Responsibility Statement in Regard to Annual Report
Each of the Directors, whose names and functions are listed on page 35 of this Annual Report, confirm that, to the best of each person’s knowledge
and belief:
As required by the Transparency Regulations:
– The Group Financial Statements, prepared in accordance with IFRS as adopted by the EU and the Parent Company Financial Statement prepared in
accordance with Irish GAAP, give a true and fair view of the assets, liabilities, financial position of the Group and Parent Company at 27 September
2013 and of the profit/loss of the Group and Parent Company for the year then ended; and
– The Directors’ Report contained in the Annual Report includes a fair review of the development and performance of the business and the position
of the Group and Parent Company, together with a description of the principal risk and uncertainties that they face;
As required by the UK Corporate Governance Code:
– The Annual Report and Financial Statements, taken as a whole, provides the information necessary to assess the Group’s performance, business
model and strategy and is fair, balanced and understandable.
On behalf of the Board
PG Kennedy AR Williams
Director
Director
Dublin
25 November 2013
Greencore Group plc Annual Report and Accounts 2013
63
Independent Auditor’s Report
to the Members of Greencore Group plc
Opinion and Conclusions Arising from our Audit
1. Our Opinion on the Financial Statements is Unmodified
We have audited the financial statements of Greencore Group plc for the year ended 27 September 2013 as set out on pages 66 to 125, which
comprise the Group Income Statement, the Group Statement of Recognised Income and Expense, the Group Balance Sheet, the Group Cash Flow
Statement, the Group Statement of Changes in Equity, the Group Accounting Policies and the related Notes 1 to 34; and the Company Balance Sheet,
the Company statement of Accounting Policies and the related Notes 1 to 10. Our audit was conducted in accordance with International Standards
on Auditing (ISAs) (UK and Ireland).
In our opinion:
– the Group financial statements give a true and fair view, in accordance with IFRSs as adopted by the EU, of the state of the Group’s affairs as at
27 September 2013 and of its profit for the year then ended;
– the Company Financial Statements give a true and fair view, in accordance with generally accepted accounting practice in Ireland, of the state
of the Company’s affairs as at 27 September 2013; and
– the Financial Statements have been properly prepared in accordance with the requirements of the Companies Acts 1963 to 2012 and, as regards
the Group Financial Statements, Article 4 of the IAS Regulation.
2. Our Assessment of Risks of Material Misstatement
The risks of material misstatement detailed in this section of this report are those risks that we have deemed, in our professional judgment, to have
had the greatest effect on: the overall audit strategy; the allocation of resources in our audit; and directing the efforts of the engagement team. Our
audit procedures relating to these risks were designed in the context of our audit of the financial statements as a whole. Our opinion on the financial
statements is not modified with respect to any of these risks, and we do not express an opinion on these individual risks.
In arriving at our audit opinion above on the Group Financial Statements, the risks of material misstatement that had the greatest effect on our
Group audit were as follows:
Retirement Benefit Obligations (£137.5 million)
Refer to page 57 (Report of the Audit Committee), page 73 (accounting policy) and Note 23 to the Group Financial Statements.
The Risk
The Group operates large defined benefit pension schemes which, although closed to future accrual, have significant deficits which are sensitive to
changes in actuarial assumptions and modest changes to the assumptions used to value the Group’s net pension deficit would have a significant
effect on the results and financial position of the Group.
Our Response
Our audit procedures included using a KPMG actuarial specialist to assist the Group audit team in evaluating the assumptions and methodologies
used by the Group’s actuarial advisors, in particular those relating to the discount rate, inflation and mortality assumptions. We compared the
Group’s assumptions to externally derived data as well as our own assessments in relation to these and other key inputs in assessing whether the
assumptions used by the Group are reasonable. We also assessed whether the disclosures reflected the risks inherent in the accounting for the
pension schemes.
Taxation (current tax liabilities of £24.8 million; deferred tax assets of £66.6 million and deferred tax liabilities
of £21.3 million)
Refer to page 57 (Report of the Audit Committee), page 73 (accounting policy) and Note 9 to the Group financial statements.
The Risk
The Group is subject to income taxes in a number of jurisdictions and certain acquisitions made in recent years (particularly Uniq plc) have involved
complex tax aspects. As a consequence, the Group’s current and deferred tax balances are sensitive to assumptions used in determining the
appropriate liabilities and assets.
Our Response
Our audit procedures included using KPMG international and national taxation specialists to assist the Group audit team in evaluating the assumptions
and methodologies used by the Group and its taxation advisors, in particular those relating to the recoverability and recognition of deferred tax assets.
We considered the Group’s assumptions in relation to the utilisation of losses carried forward against projected taxable profits and applied sensitivities
to determine the appropriateness of the judgements applied. We also assessed the accounting for movements in tax balances and whether the
treatment of the recognition of an additional deferred tax asset and the treatment of the settlement of a number of tax cases, including an overseas
liability, as exceptional items was appropriate (see Note 6) and whether the Group’s disclosures reflected the risks inherent in the accounting for the
taxation balances.
Greencore Group plc Annual Report and Accounts 2013 64
Financial Statements
Independent Auditor’s Report
to the Members of Greencore Group plc (continued)
Provisions (£17.9 million)
Refer to page 57 (Report of the Audit Committee), page 71 (accounting policy) and Note 22 to the Group financial statements.
The Risk
The Group has significant provisions which are inherently judgemental in nature, comprising principally onerous lease obligations, remediation and
closure provisions and certain warranty and other claims arising from previously disposed of businesses.
Our Response
Our audit procedures included consideration of the nature of the provisions, the range of potential outcomes, any recent correspondence in relation
to specific claims and relevant settlement history of lease obligations, provisions and claims. We also tested the accounting for movements in the
provision balances and the related disclosures.
Goodwill and Intangible Assets (£499.9 million)
Refer to page 57 (Report of the Audit Committee), pages 69 and 70 (accounting policy) and Note 12 to the Group financial statements.
The Risk
The Group has significant goodwill and intangible assets which are reviewed periodically for impairment. Recoverability of these assets is based on
forecasting and discounting future cash flows, which is inherently judgemental.
Our Response
Our audit procedures included evaluating the assumptions used by the Group in its impairment model for goodwill, specifically the cash flow projections,
perpetuity rates and discount rate used. We compared the Group’s assumptions, where possible, to externally derived data and performed sensitivity
analysis on the impact of changes in significant assumptions. We also assessed whether the disclosures about the sensitivity of the outcome of the
impairment assessment to changes in key assumptions were appropriate.
3. Our Application of Materiality and an Overview of the Scope of our Audit
Materiality is a term used to describe the acceptable level of precision in financial statements. The concept of materiality is applied in planning and
performing the audit and in evaluating the effect of identified misstatements on the audit and of uncorrected misstatements, if any, on the financial
statements and in forming our opinion on them. In accordance with ISAs (UK and Ireland), we identify a monetary amount, “materiality for the
financial statements as a whole”, based on our judgment as to the quantitative misstatement or omission that might reasonably be expected to
influence the economic decisions of users taken on the basis of the financial statements.
The materiality for the Group financial statements as a whole was set at £3.0 million. This has been calculated using a benchmark of Group profit
before taxation and exceptional items (of which it represents 5.5%), which we have determined, in our professional judgement, to be one of the
principal benchmarks within the financial statements relevant to members of the Company in assessing financial performance.
We agreed with the Audit Committee to report to it all corrected and uncorrected misstatements we identified through our audit in excess of
£100,000, in addition to other audit misstatements below that threshold that we believe warranted reporting on qualitative grounds.
The structure of the Group’s finance function is such that certain transactions and balances are accounted for by the central Group finance team,
with the remainder accounted for in the operating units. We performed comprehensive audit procedures, including those in relation to the significant
risks above, on those transactions and balances accounted for at Group level. In relation to the group’s operating units, audits for Group reporting
purposes were performed at the key reporting components in Ireland, the United Kingdom and the United States. Our audits covered 93% of total
Group revenue, 98% of Group profit before taxation and 96% of Group total assets.
The audits undertaken for Group reporting purposes at the key reporting components of the Group were all performed to materiality levels set by the
Group audit team. These local materiality levels were set individually for each component and ranged from £500,000 to £2,000,000.
Detailed audit instructions were sent to the auditors in all of these identified locations. These instructions covered the significant audit areas to
be covered by these audits (which included the relevant risks of material misstatement detailed above) and set out the information required to be
reported to the Group audit team. The Group audit team, including the lead engagement partner, attended each divisional closing meeting at which
the results of all component audits were discussed with divisional and Group management. Statutory audits are performed in other subsidiaries that
are not included in scope for Group reporting purposes and certain of these are completed after the date of this report.
4. We Have Nothing to Report in Respect of the Matters on which we are Required to Report by Exception
ISAs (UK and Ireland) require that we report to you if, based on the knowledge we acquired during our audit, we have identified information in the
annual report that contains a material inconsistency with either that knowledge or the financial statements, a material misstatement of fact, or that
is otherwise misleading.
In particular, we are required to report to you if:
– we have identified any inconsistencies between the knowledge we acquired during our audit and the directors’ statement that they consider the
annual report is fair, balanced and understandable and provides the information necessary for shareholders to assess the entity’s performance,
business model and strategy; or
– the Report of the Audit Committee does not appropriately disclose those matters that we communicated to the Audit Committee.
Greencore Group plc Annual Report and Accounts 2013 Greencore Group plc Annual Report and Accounts 2013
65
The Listing Rules of the UK Listing Authority require us to review:
– the statement of directors’ responsibilities, set out on page 62, in relation to going concern;
– the part of the Corporate Governance report on page 39 relating to the Company’s compliance with the nine provisions of the UK Corporate
Governance Code specified for our review; and
– certain elements of disclosures to shareholders by the Board in the Report on Directors’ Remuneration.
In addition, the Companies Acts require us to report to you if, in our opinion, the disclosures of directors’ remuneration and transactions specified
by law are not made.
5. Our Conclusions on Other Matters on which we are Required to Report by the Companies Acts 1963 to 2012 are set
out below
We have obtained all the information and explanations which we consider necessary for the purposes of our audit.
The Company balance sheet is in agreement with the books of account and, in our opinion, proper books of account have been kept by the Company.
In our opinion the information given in the Directors’ Report is consistent with the financial statements and the description in the Corporate
Governance Report of the main features of the internal control and risk management systems in relation to the process for preparing the Group
financial statements is consistent with the Group financial statements.
The net assets of the Company, as stated in the Company balance sheet, are more than half of the amount of its called-up share capital and, in our
opinion, on that basis there did not exist at 27 September 2013 a financial situation which, under Section 40(1) of the Companies (Amendment) Act,
1983, would require the convening of an extraordinary general meeting of the Company.
Basis of our Report, Responsibilities and Restrictions on Use
As explained more fully in the Statement of Directors’ Responsibilities set out on page 62, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the Group and
Company financial statements in accordance with applicable law and International Standards on Auditing (ISAs) (UK and Ireland). Those standards
require us to comply with the Financial Reporting Council’s Ethical Standards for Auditors.
An audit undertaken in accordance with ISAs (UK and Ireland) involves obtaining evidence about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes
an assessment of: whether the accounting policies are appropriate to the Group’s circumstances and have been consistently applied and adequately
disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial
statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired
by us in the course of performing our audit. If we become aware of any apparent material misstatements or inconsistencies we consider the
implications for our report.
Whilst an audit conducted in accordance with ISAs (UK and Ireland) is designed to provide reasonable assurance of identifying material misstatements or
omissions it is not guaranteed to do so. Rather the auditor plans the audit to determine the extent of testing needed to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected misstatements does not exceed materiality for the financial statements as a whole. This
testing requires us to conduct significant audit work on a broad range of assets, liabilities, income and expense as well as devoting significant time of the most
experienced members of the audit team, in particular the engagement partner responsible for the audit, to subjective areas of accounting and reporting.
Our report is made solely to the Company’s members, as a body, in accordance with section 193 of the Companies Act 1990. 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.
David Meagher
for and on behalf of
25 November 2013
Chartered Accountants, Statutory Audit Firm
1 Stokes Place, St. Stephen’s Green
Dublin 2, Ireland
66
Financial Statements
Group Statement of Accounting Policies
Year Ended 27 September 2013
Statement of Compliance
The Group Financial Statements of Greencore Group plc have been prepared in accordance with International Financial Reporting Standards (IFRS)
and their interpretations approved by the International Accounting Standards Board (IASB) as adopted by the European Union (EU) and those parts
of the Companies Acts, 1963 to 2012, applicable to companies reporting under IFRS and Article 4 of the IAS Regulation.
The accounting policies applied in the preparation of the Group Financial Statements for the year ended 27 September 2013 are set out below.
The IFRS adopted by the EU and applied by the Group in the preparation of these Financial Statements are those that were effective for the
accounting period ending 27 September 2013.
Basis of Preparation
The Group Financial Statements, which are presented in sterling and rounded to the nearest thousand (unless otherwise stated), have been prepared
under the historical cost convention, as modified by the measurement at fair value of certain financial assets and financial liabilities, including share
options at grant date and derivative financial instruments. The carrying values of recognised assets and liabilities that are hedged are adjusted to
record the changes in the fair values attributable to the risks being hedged. Share options and share awards granted to employees are recognised
at fair value at the date of grant.
The accounting policies set out below have been applied consistently by all the Group’s subsidiaries and associates, and have been consistently
applied to all years presented, unless otherwise stated.
The preparation of the Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, as well as the disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are based on management’s best estimate of the amount, event or actions, actual
results ultimately may differ from those estimates.
The Financial Statements of the Group are prepared to the Friday nearest to 30 September. Accordingly these Financial Statements are prepared for
the 52 week period ended 27 September 2013. Comparatives are for the 52 week period ended 28 September 2012. The Balance Sheets for 2013 and
2012 have been prepared as at 27 September 2013 and 28 September 2012 respectively.
The loss attributable to equity shareholders dealt with in the Financial Statements of the Company was £7.6 million (2012: profit of £3.9 million).
In accordance with section 148(8) of the Companies Act 1963 and section 7(1A) of the Companies (Amendment) Act 1986, the Company is availing
of the exemption from presenting its individual profit and loss account, which forms part of the approved Financial Statements, to the Annual General
Meeting and from filing it with the Registrar of Companies.
New Standards and Interpretations
The following standards and interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting
Interpretations Committee (IFRIC) are effective for the first time in the current financial year and have been adopted with no significant impact on
the Group’s result for the period or financial position:
New/Revised International Financial Reporting Standards
Effective Date – periods beginning on or after
IAS 1
IAS 12
Presentation of Financial Statements
– Revision to the presentation of other comprehensive income
Income Taxes
– Amendment to provide a presumption that recovery of the carrying amount
of an asset measured using the fair value model in IAS 40 Investment
Property will, normally, be through sale
1 July 2012
1 January 2012
Greencore Group plc Annual Report and Accounts 2013 67
The IASB and the IFRIC have issued the following standards and interpretations with an effective date after the date of the Group Financial
Statements, which the Group has not early adopted:
New/Revised International Financial Reporting Standards
Effective Date – periods beginning on or after
IFRS 1
IFRS 7
IFRS 9
IFRS 10
IFRS 11
IFRS 12
IFRS 13
IAS 16
IAS 19
IAS 27
IAS 28
IAS 32
IAS 34
Government loans
– Requires first time adopters to apply the requirements in IAS 20 prospectively
Financial Instruments: Disclosures
– offsetting financial assets and financial liabilities
Financial Instruments (2010)
– Introduces new requirements for classifying and measuring financial assets, for the
classification and measurement of financial liabilities, and carrying over the existing
derecognition requirements from IAS 39 Financial Instruments:
Recognition and Measurement
Consolidated Financial Statements
– Requires a parent to present consolidated financial statements as those of a single
economic entity, replacing the requirements previously contained in
IAS 27 Consolidated and Separate Financial Statements
Joint Arrangements
– Replaces IAS 31 Interests in Joint Ventures. Requires a party to a joint arrangement to
determine the type of joint arrangement in which it is involved by assessing its rights
and obligations and then account for those rights and obligations in accordance with
that type of joint arrangement
Disclosure of Interests in Other Entities
– Requires the extensive disclosure of information that enables users of financial
statements to evaluate the nature of, and risks associated with, interests in
other entities and the effects of those interests on its financial position, financial
performance and cash flows
Fair Value Measurement
– Replaces the guidance on fair value measurement in existing IFRS accounting
literature with a single standard
Property, Plant and Equipment
– Classification of servicing equipment
Employee Benefits (2011)
– Revised requirements for pensions and other post retirement benefits, termination
benefits and other changes
Separate Financial Statements (2011)
– Only deals with the requirements for separate financial statements. Requirements
for consolidated financial statements are now contained in IFRS 10 Consolidated
Financial Statements
Investments in Associates and Joint Ventures (2011)
– accounting for investments in associates and sets out the requirements for the
application of the equity method when accounting for investments in associates and
joint venture
Financial Instruments: Presentation
– Clarification that tax effect of a distribution to holders of equity instruments should
be accounted for in accordance with IAS 12 Income Taxes
– Offsetting of financial assets and financial liabilities
Interim Financial Reporting
– Clarify interim reporting of segment information for total assets in order to enhance
consistency with the requirements in IFRS 8 Operating Segments
1 January 2013
1 January 2013
1 January 2015
1 January 2014
1 January 2014
1 January 2014
1 January 2013
1 January 2013
1 January 2013
1 January 2014
1 January 2014
1 January 2013
1 January 2014
1 January 2013
New/Revised International Financial Reporting Interpretations Committee (IFRIC)
IFRIC 20
Stripping Costs in the Production Phase of a Surface Mine
– Clarifies the requirements for accounting for stripping costs associated with
surface mining
1 January 2013
Greencore Group plc Annual Report and Accounts 2013 68
Financial Statements
Group Statement of Accounting Policies
Year Ended 27 September 2013 (continued)
New Standards and Interpretations (continued)
The Directors anticipate that the adoption of the above standards and interpretations issued by the IASB and the IFRIC will not have a material
impact on the Group Financial Statements, with the exception of IAS 19 Employee Benefits (2011) which will result in an increased charge to the
Income Statement in respect of the Group’s defined benefit pension schemes as set out in Note 23.
Basis of Consolidation
The Group Financial Statements comprise the Financial Statements of the parent undertaking and its subsidiary undertakings, together with the
Group’s share of the results of associated undertakings.
Subsidiaries
Subsidiary undertakings are included in the Group Financial Statements from the date on which control over the operating and financial policies is
obtained, and cease to be consolidated from the date on which control is transferred out of the Group. Control exists when the Group has the power,
directly or indirectly, to govern the financial and operating policies of an entity so as to obtain economic benefits from its activities. The existence and
effect of potential voting rights that are currently exercisable or convertible are considered in determining the existence or otherwise of control. All
inter-group transactions, balances and unrealised gains on transactions between Group undertakings are eliminated on consolidation. Unrealised
losses are also eliminated except where they provide evidence of impairment.
Associates
An associate is an enterprise over which the Group is in a position to exercise significant influence through participation in the financial and operating
policy decisions of the investee, but which is not a subsidiary or a jointly controlled entity.
The Group’s share of the results, assets and liabilities of an associate are included in the Financial Statements using the equity method of accounting.
Under the equity method of accounting, the investment in the associate is carried in the Balance Sheet at cost plus post-acquisition changes in the
Group’s share of net assets of the associate, less distributions received, less any impairments in the value of the investment. The Group Income
Statement reflects the Group’s share of the results after tax of the associate. The Group Statement of Recognised Income and Expense reflects the
Group’s share of any income and expense recognised by the associate outside of profit or loss.
Revenue Recognition
Revenue represents the fair value of the sale of goods and rendering of services to external customers, net of trade discounts and value added tax
in the ordinary course of the Group’s activities. Revenue from the sale of goods is recognised when significant risks and rewards of ownership of the
goods are transferred to the buyer, it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured
reliably, which generally arises on delivery or in accordance with specific terms and conditions agreed with customers. Revenue from the rendering
of services is recognised in the period in which the services are rendered on the basis of services provided.
Property, Plant and Equipment
Property, plant and equipment is shown at cost less depreciation and any impairments. The cost of property, plant and equipment comprises its
purchase price and any directly attributable costs.
Depreciation is provided so as to write off the cost less residual value of each item of property, plant and equipment during its expected useful life
using the straight line method over the following periods:
Freehold and long leasehold buildings
Plant, machinery, equipment, fixtures and fittings
Freehold land is not depreciated
40 – 50 years
3 – 25 years
Useful lives and residual values are reassessed annually.
Subsequent costs incurred relating to specific assets are included in an asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. All other costs are charged to the Income Statement during the financial period in which they are incurred.
The carrying amounts of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the
carrying amounts may not be recoverable. When the carrying amount exceeds the estimated recoverable amount, the assets are written down to
their recoverable amount.
The recoverable amount of property, plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use,
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. Impairment losses are recognised in the Income Statement.
Greencore Group plc Annual Report and Accounts 2013
69
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer
exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only
if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that
is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that
would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in
the Income Statement. Following the recognition or reversal of an impairment loss, the depreciation charge applicable to the asset is adjusted
prospectively in order to systematically allocate the revised carrying amount, net of any residual value, over the remaining useful life.
Gains or losses on the disposal of property, plant and equipment represent the difference between the net proceeds and the carrying value at the
date of sale.
Assets Held Under Leases
Finance Leases
Leases of property, plant and equipment, where the Group obtains substantially all the risks and rewards of ownership are classified as finance
leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased item and the present value of the
minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant interest charge on
the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in interest-bearing loans and borrowings,
allocated between current and non-current as appropriate. The interest element of the finance cost is charged to the Income Statement over the
lease period. Assets held under finance leases are depreciated over the shorter of their expected useful lives or the lease term, taking into account
the time period over which benefits from the leased assets are expected to accrue to the Group.
Operating Leases
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made
under operating leases, net of incentives received from the lessor, are charged to the Income Statement on a straight-line basis over the period of the
lease. Income earned from operating leases is credited to the Income Statement when earned.
Business Combinations
Acquisitions on or After 26 September 2009
The purchase method of accounting is used in accounting for the acquisition of businesses. In accordance with IFRS 3 Business Combinations, the fair
value of the consideration for a business combination is measured as the aggregate of the fair values at the date of exchange of assets given and
liabilities incurred or assumed in exchange for control. The assets, liabilities and contingent liabilities of the acquired entity are measured at their fair
values at the date of acquisition. When the initial accounting for a business combination is determined provisionally, any adjustments to the
provisional values allocated are made within twelve months of the acquisition date and are effected from the date of acquisition.
Where a business combination agreement provides for an adjustment to the cost of a business acquired contingent on future events, the Group
accrues the fair value of the additional consideration payable as a liability at the acquisition date where this can be measured reliably. This amount is
reassessed at each subsequent balance sheet date with any adjustments to the liability recognised in the Income Statement.
To the extent that deferred purchase consideration and earn-out obligations are payable after one year from the date of acquisition, they are
discounted at an appropriate interest rate and, accordingly, are carried at net present value in the Group Balance Sheet. An appropriate interest
charge, at a constant interest rate on the carrying amount, adjusted to reflect material conditions, is reflected in the Income Statement over the
earn-out period, increasing the value of the provision so that the obligation will reflect its settlement value at the time of maturity.
Acquisitions on or Before 25 September 2009
Where a business combination occurred on or before 25 September 2009 and the business combination agreement provides for an adjustment to the
cost of a business acquired contingent on future events, the Group accrued the probable amount of any additional consideration payable in the cost
of the acquisition as a liability at the acquisition date where this could be measured reliably. This amount is reassessed at each subsequent balance
sheet date with any adjustments to the liability accounted for as adjustments to the cost of the acquisition and reflected in goodwill.
Goodwill
Acquisitions on or After 26 September 2009
Goodwill represents the difference between the fair value of the consideration given over the fair value of the Group’s share of the identifiable net
assets of the acquired subsidiary at the date of acquisition. Any excess of the fair value of the net assets acquired over the fair value of the
consideration given (i.e. discount on acquisition) is credited to the Income Statement in the period of acquisition.
Acquisitions on or Before 25 September 2009
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the identifiable net assets of the acquired
subsidiary at the date of acquisition. Any excess of the fair value of the net assets acquired over the cost of the acquisition (i.e. discount on
acquisition) is credited to the Income Statement in the period of acquisition. Transaction costs, other than those associated with the issue of debt or
equity securities, that the Group incurred in connection with business combinations were capitalised as part of the cost of acquisition.
Greencore Group plc Annual Report and Accounts 2013 70
Financial Statements
Group Statement of Accounting Policies
Year Ended 27 September 2013 (continued)
Goodwill (continued)
Subsequent Measurement
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. On acquisition, goodwill is allocated to
cash-generating units expected to benefit from the combination’s synergies. Goodwill is tested annually for impairment or more frequently if events
or changes in circumstances indicate that the carrying value may be impaired. Any impairment is recognised immediately in the Income Statement.
Goodwill arising on investments in associates is included in the carrying amount of the investment and any impairment of the goodwill is included
in income from associates.
Acquisition Related Intangible Assets
An intangible asset, which is an identifiable non-monetary asset without physical substance, is capitalised separately from goodwill as part of a business
combination to the extent that it is probable that the expected future economic benefits attributable to the asset will accrue to the Group and that its
fair value can be measured reliably. The asset is deemed to be identifiable when it is separable (i.e. capable of being divided from the entity and sold,
transferred, licensed, rented or exchanged, either individually or together with a related contract, asset or liability) or when it arises from contractual
or other legal rights, regardless of whether those rights are transferable or separable from the Group or from other rights and obligations.
Subsequent to initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.
The carrying amounts of definite-lived intangible assets are reviewed for indicators of impairment at each reporting date and are subject to
impairment testing when events or changes in circumstances indicate that the carrying values may not be recoverable. Any impairment charge is
taken to the Income Statement.
The amortisation of intangible assets is calculated to write off the book value of definite-lived intangible assets over their useful lives on a straight-
line basis on the assumption of zero residual value. Customer related intangible assets are amortised over periods ranging from one to ten years.
Non-customer related intangible assets, such as brands, are amortised over periods between three and ten years.
Computer Software
Costs incurred on the acquisition of computer software and software licences are capitalised. Other costs directly associated with developing and
maintaining computer software programmes are capitalised once the recognition criteria set out in IAS 38 Intangible Assets are met. Computer
software is amortised over five years.
Investment Property
Investment property is shown at cost less depreciation and any impairment. The cost of investment property comprises its purchase price and any
costs directly attributable to bringing it into working condition for its intended use. Investment property is depreciated so as to write off the cost, less
residual value, on a straight-line basis over the expected life of each property. Freehold buildings held as investment property are depreciated over
their expected useful life, normally assumed to be 40-50 years. Freehold land is not depreciated. Rental income arising on investment property is
accounted for on a straight-line basis over the lease term of the ongoing leases and is recognised within other income.
In relation to the recognition of income on the disposal of property, income is recognised when there is an unconditional exchange of contracts, or
when all necessary terms and conditions have been fulfilled.
Discontinued Operations and Non-Current Assets Held for Sale
A discontinued operation is a component of an entity that either has been disposed of, abandoned, or is classified as held for sale and:
– represents a separate major line of business or geographical area of operation; or
– is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operation; or
– is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs upon disposal, abandonment, or when the operations meet the criteria to be classified as held
for sale.
Non-current assets and disposal groups classified as held for sale are measured at the lower of the carrying amount and the fair value less costs to
sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered through a sale transaction
rather than continued use. This condition is regarded as satisfied only when the sale is highly probable and the asset or disposal group is available for
immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a
completed sale within one year of the date of classification. Property, plant and equipment and intangible assets once classified as held for sale are
not depreciated or amortised.
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is calculated based on first-in, first-out (FIFO) or weighted average as
appropriate. Cost includes raw materials, direct labour expenses and related production and other overheads. Net realisable value is the estimated
selling price, in the ordinary course of business, less costs to completion and appropriate selling and distribution expenses.
Greencore Group plc Annual Report and Accounts 2013 71
Trade and Other Receivables
Trade and other receivables are initially recognised at fair value and subsequently carried net of provision for impairment. A provision is made when
there is objective evidence that the Group will be unable to recover balances in full. Balances are written off when the probability of recovery is
assessed as being remote.
Any trade and other receivables included in non-current assets are carried at amortised cost (i.e. adjusted for the time value of money).
Cash and Cash Equivalents
Cash and cash equivalents are initially recognised at fair value and subsequently carried at amortised cost. Cash and cash equivalents include cash in
hand, deposits held on call with banks and other short-term highly liquid investments that are readily convertible to known amounts of cash, are
subject to insignificant risk of changes in value and have an original maturity of three months or less.
Trade and Other Payables
Trade and other payables are initially recorded at fair value and subsequently at the higher of cost or payment or settlement amounts. Where the
time value of money is material, payables are carried at amortised cost.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of
obligation as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of
obligation may be small.
Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the
reimbursement is virtually certain. The expense relating to any provision is presented in the Income Statement net of any reimbursement.
A contingent liability is disclosed where the existence of an obligation will only be confirmed by future events, or where the amount of the obligation
cannot be measured with reasonable reliability. Contingent assets are not recognised, but are disclosed where an inflow of economic benefits
is probable.
Borrowings
All loans and borrowings are initially recognised at cost, being the fair value of the proceeds net of issue costs associated with the borrowing. After
initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.
Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement. Gains and losses arising on the
settlement or cancellation of liabilities are recognised in finance income and finance costs as appropriate.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months
after the balance sheet date.
Finance Income and Expense
Finance income comprises interest income on funds invested, the expected return on defined benefit pension scheme assets and the unwind of
discount on assets. Interest income is recognised as it accrues in profit or loss, using the effective interest method.
Finance expense comprises interest expense on borrowings, unwind of discount on liabilities, interest on defined benefit pension scheme liabilities,
changes in fair value of hedging instruments and other derivatives that are recognised in profit or loss. All borrowing costs are recognised in profit or
loss using the effective interest method.
Derecognition of Financial Assets and Liabilities
Financial Assets
A financial asset is derecognised when the Group no longer controls the contractual rights that comprise the financial asset, which is normally the
case when the asset is sold or the rights to receive cash flows from the asset have expired, and the Group has not retained substantially all risks and
rewards of ownership and has transferred control of the asset.
Financial Liabilities
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability is
replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as a derecognition of the original liability, and the recognition of a new liability with the result that the difference
in the respective carrying amounts, together with any costs or fees incurred, is recognised in the Income Statement.
Greencore Group plc Annual Report and Accounts 2013 72
Financial Statements
Group Statement of Accounting Policies
Year Ended 27 September 2013 (continued)
Derivative Financial Instruments
The activities of the Group expose it to the financial risks of changes in foreign exchange rates and interest rates. The Group uses derivative financial
instruments such as forward foreign exchange contracts and interest rate swap agreements to hedge these exposures.
Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured at fair value.
Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Derivative instruments which are held
for trading and are not designated as effective hedging instruments are classified as a current asset or liability (as appropriate) regardless of maturity
if the Group expects that they may be settled within 12 months of the balance sheet date. All other derivative instruments that are not designated as
effective hedging instruments are classified by reference to their maturity date. The full fair value of a hedging derivative is classified as a non-current
asset or liability if the remaining maturity of the hedged item is more than 12 months and as a current asset or liability if the maturity of the hedged
item is less than 12 months.
The fair value of derivative instruments is determined by using valuation techniques. The Group uses its judgement to select the most appropriate
valuation methods and makes assumptions that are mainly based on observable market conditions existing at the balance sheet date.
For those derivatives designated as hedges and for which hedge accounting is desired, the hedging relationship is documented at its inception. This
documentation identifies the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how hedge effectiveness
will be measured throughout its duration. Such hedges are expected at inception to be highly effective in offsetting changes in fair values or cash
flows of hedged items.
For the purposes of hedge accounting, derivatives are classified as:
– fair value hedges, when hedging the exposure of changes in the fair value of a recognised asset or liability; or
– cash flow hedges, when hedging the exposure to variability in cash flows that are either attributable to a particular risk associated with a
recognised asset or liability, or a highly probable forecast transaction; or
– net investment hedges, when hedging the exposure to variability in foreign currency when translating investments in subsidiaries held in
currencies other than the presentation currency of the Group.
Any gains or losses arising from changes in the fair value of all other derivatives which are classified as held for trading are taken to the Income
Statement as finance costs. These may arise from derivatives for which hedge accounting is not applied because they are not designated as hedging
instruments. The Group does not use derivatives for trading or speculative purposes.
The treatment of gains and losses arising from remeasuring derivatives designated as hedging instruments depends on the nature of the hedging
relationship, as follows:
Fair Value Hedge
In the case of fair value hedges which are designated and qualify for hedge accounting, any gain or loss arising from the re-measurement of the
hedging instrument to fair value is reported in the Income Statement as finance costs. In addition, any fair value gain or loss attributable to the
hedged risk is adjusted against the carrying amount of the hedged item and reflected in the Income Statement as finance costs. If the hedge no
longer meets the criteria for hedge accounting, the adjustment to the carrying amount of the hedged item is amortised on an effective interest basis
to the Income Statement with the objective of achieving full amortisation by maturity of the hedged item.
Cash Flow Hedge
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable
forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised within equity in the hedging reserve,
with the ineffective portion being reported in the Income Statement as finance costs. When a highly probable forecast transaction results in the
recognition of a non-financial asset or liability, the cumulative gain or loss is removed from the hedging reserve in equity and included in the initial
measurement of the non-financial asset or liability. Otherwise, the associated gains and losses that had previously been recognised within equity in
the hedging reserve are transferred to the Income Statement as the cash flows of the hedged item impact the Income Statement.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised or no longer qualifies for hedge accounting.
At that point in time, any cumulative gain or loss on the hedging instrument recognised within equity in the hedging reserve is kept in the hedging
reserve until the forecast transaction occurs. If a hedged transaction is no longer anticipated to occur, the net cumulative gain or loss recognised
within equity in the hedging reserve is transferred immediately to the Income Statement as finance costs.
Net Investment Hedge
Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment in a foreign operation are
recognised directly in equity in the foreign currency translation reserve, to the extent that the hedge is effective. To the extent that the hedge is
ineffective, such differences are recognised in profit or loss. When the hedged part of a net investment is disposed of, the associated cumulative
amount in equity is transferred to profit or loss as an adjustment to the profit or loss on disposal.
Greencore Group plc Annual Report and Accounts 2013 73
Taxation
Current tax represents the expected tax payable on the taxable income for the year, using tax rates and tax laws enacted or substantively enacted at
the balance sheet date, along with any adjustment to tax payable in respect of previous years.
The Group provides in full for deferred tax assets and liabilities (using the liability method), arising from temporary differences between the tax base
of assets and liabilities and their carrying amounts in the Financial Statements except where they arise from the initial recognition of goodwill or from
the initial recognition of an asset or liability that at the date of initial recognition does not affect accounting or taxable profit or loss on a transaction
that is not a business combination. Such differences result in an obligation to pay more tax or a right to pay less tax in future periods. A deferred tax
asset is only recognised where it is probable that future taxable profits will be available against which the temporary differences giving rise to the
asset can be utilised.
Deferred tax assets and liabilities are not subject to discounting and are measured at the tax rates that are enacted or substantively enacted at the
balance sheet date.
Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of
the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
Employee Benefits
Wages, salaries, bonuses, social security contributions, paid annual leave and sick leave are accrued in the period in which the associated services are
rendered by the employees of the Group. Termination benefits are payable when employment is terminated by the Group before the normal
retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits
when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without the
possibility of withdrawal, or providing termination benefits as a result of an offer made to encourage voluntary redundancy.
Retirement Benefit Obligations
Defined Contribution Pension Plans
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate defined contribution scheme.
Obligations for contributions to defined contribution pension plans are recognised as an expense in the Income Statement as employee service is
received. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
Defined Benefit Pension Plans
The cost of providing benefits under the Group’s defined benefit plans is determined separately for each plan, using the projected unit credit method
by professionally qualified actuaries and arrived at using actuarial assumptions based on market expectations at the balance sheet date. These
valuations attribute entitlement benefits to the current period (to determine current service cost), and to the current and prior periods (to determine
the present value of defined benefit obligations). Past service costs are recognised in the Income Statement on a straight-line basis over the vesting
period, or immediately if the benefits have vested. When a settlement (eliminating all obligations for benefits already accrued) or a curtailment
(reducing future obligations as a result of a material reduction in the scheme membership or a reduction in future entitlement) occurs, the obligation
and related plan assets are remeasured using current actuarial assumptions and the resultant gain or loss is recognised in the Income Statement
during the period in which the settlement or curtailment occurs.
The interest element of the defined benefit cost represents the change in present value of scheme obligations resulting from the passage of time,
and is determined by applying the discount rate to the opening present value of the benefit obligation taking into account material changes in the
obligation during the year. The expected return on plan assets is based on an assessment made at the beginning of the year of long-term market
returns on scheme assets, adjusted for the effect on the fair value of plan assets of contributions received and benefits paid during the year. The
expected return on plan assets and the interest cost is recognised in the Income Statement as finance income and cost, respectively.
Actuarial gains and losses are recognised, in full, in the Group Statement of Recognised Income and Expense in the period in which they occur.
The defined benefit pension asset or liability in the Balance Sheet comprises the total, for each plan, of the present value of the defined benefit
obligation (using a discount rate based on high quality corporate bonds), less any past service cost not yet recognised, less the fair value of plan
assets out of which the obligations are to be settled directly. Fair value is based on market price information, and in the case of quoted securities is
the published bid price. The value of a net pension benefit asset is the present value of any economic benefit the Group reasonably expects to recover
by way of refund of surplus from the plan at the end of the plan’s life or reduction in future contributions to the plan.
Employee Share-Based Payments
The Group grants equity settled share-based payments to employees (through Executive Share Option Schemes, Employee ShareSave Schemes,
a Deferred Bonus Plan and the Performance Share Plan). The fair value of these payments is determined at the date of grant and is expensed to the
Income Statement on a straight-line basis over the vesting period. The fair value is determined using a trinomial valuation model, as measured at the
date of grant, excluding the impact of any non-market conditions. Non-market vesting conditions are included in assumptions about the number of
options that are expected to vest. At each balance sheet date, the Group revises its estimates of the number of options or awards that are expected
to vest, recognising any adjustment in the Income Statement, with a corresponding adjustment to equity.
Greencore Group plc Annual Report and Accounts 2013 74
Financial Statements
Group Statement of Accounting Policies
Year Ended 27 September 2013 (continued)
Employee Share-Based Payments (continued)
To the extent that the Group receives a tax deduction relating to services paid for by means of share awards or options, deferred tax is provided on
the basis of the difference between the market price of the underlying equity as at the date of the Financial Statements and the exercise price of the
option. As a result, the deferred tax impact of share options will not directly correlate with the expense reported in the Income Statement. To the
extent that the deductible difference exceeds the cumulative charge to the Income Statement, it is recorded in the Statement of Recognised Income
and Expense.
Proceeds received from the exercise of options, net of any directly attributable transaction costs, are credited to the share capital and share
premium accounts.
Foreign Currency
Functional and Presentation Currency
The individual Financial Statements of each Group entity are measured in the currency of the primary economic environment in which the entity
operates (the functional currency). The Group Financial Statements are presented in sterling, which is the Company’s functional and
presentation currency.
Transactions and Balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions, and from the translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies, are recognised in the Income Statement, except when deferred in equity as qualifying net
investment hedges and qualifying cash flow hedges.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are
translated at the closing rate.
Group Companies
The Income Statement and Balance Sheet of Group companies that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
– assets and liabilities at each balance sheet date are translated at the closing rate at the date of the balance sheet;
– income and expenses in the Income Statement are translated at the rates at the date of the transaction, normally estimated using average
exchange rates; and
– all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations and on borrowings and other
currency instruments designated as hedges of such investments, are taken to equity. When a foreign operation is sold, exchange differences that
were recorded in equity are recognised in the Income Statement as part of the gain or loss on sale.
Government Grants
Government grants for the acquisition of assets are recognised at their fair value when there is reasonable assurance that the grant will be received
and any conditions attached to them have been fulfilled. The grant is held on the Balance Sheet as a deferred credit and released to the Income
Statement over the periods necessary to match the related depreciation charges, or other expenses of the asset, as they are incurred.
Research and Development
Expenditure on research and development is recognised as an expense in the period in which it is incurred. An asset is recognised only when all the
conditions set out in IAS 38 Intangible Assets are met.
Segmental Reporting
The Group reports segmental information by class of business and by geographical area. The Group’s primary reporting segment, for which more
detailed disclosures are made, is by class of business. The Group has identified two reportable segments: (i) Convenience Foods and (ii) Ingredients
& Property. Refer to Note 1 for further information.
Exceptional Items
Exceptional items are those that are separately disclosed by virtue of their nature or amount in order to highlight such items within the Group Income
Statement and results for the year. Examples of such items may include significant restructuring programmes, profits or losses on termination of
operations, litigation costs and settlements, significant impairments of assets, transaction and integration costs related to acquisition activity and
transaction costs related to disposal activity. Group management exercises judgement in assessing each particular item which, by virtue of its scale
or nature, should be highlighted and disclosed in the Group Income Statement and notes to the Group Financial Statements as exceptional items.
Exceptional items are included within the Income Statement caption to which they relate and are separately disclosed in the notes to the Group
Financial Statements.
Greencore Group plc Annual Report and Accounts 2013 75
Non-Controlling Interests
Non-controlling interests are stated at their proportion of the fair values of the identifiable assets and liabilities recognised. Subsequently, any losses
applicable to non-controlling interests continue to be recognised and attributed to non-controlling interests unless the parent has undertaken to
fund their losses.
Share Capital
Ordinary Shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are taken as a deduction within
equity, net of tax, from the proceeds.
Treasury Shares
Where the Company purchases its own equity share capital, the consideration paid is deducted from total shareholders’ equity and classified as
treasury shares until such shares are cancelled or reissued. Where such shares are subsequently sold or reissued, any consideration received is
included in total shareholders’ equity.
Dividends
Interim dividends payable are recognised as a liability of the Company when the Board of Directors resolves to pay the dividend and the shareholders
have been notified in accordance with the Company’s Articles of Association. Final dividends of the Company are recognised as a liability when they
have been approved by the Company’s shareholders.
Critical Accounting Estimates and Assumptions
Group management makes estimates and assumptions concerning the future in the preparation of the Group Financial Statements, which can
significantly impact the reported amounts of assets and liabilities. The significant estimates and assumptions used in the preparation of the Group’s
Financial Statements are outlined in the relevant notes.
Greencore Group plc Annual Report and Accounts 2013 76
Financial Statements
Group Income Statement
Year Ended 27 September 2013
Continuing operations
Revenue
Cost of sales
Gross profit
Operating costs, net
2013
2012
Pre-
exceptional
£’000
Exceptional
(Note 6)
£’000
Notes
Total
£’000
Pre-
exceptional
£’000
Exceptional
(Note 6)
£’000
Total
£’000
1 1,197,099
(838,145)
– 1,197,099
(838,145)
–
1,161,930
(812,195)
358,954
–
358,954
349,735
–
–
–
1,161,930
(812,195)
349,735
2
(282,500)
(8,942)
(291,442)
(279,039)
(13,950)
(292,989)
Group operating profit/(loss)
before acquisition related amortisation
76,454
(8,942)
67,512
70,696
(13,950)
56,746
Amortisation of acquisition related intangibles
12
(7,833)
–
(7,833)
(10,210)
–
(10,210)
Group operating profit/(loss)
68,621
(8,942)
59,679
60,486
(13,950)
46,536
Finance income
Finance costs
Share of profit of associates after tax
Profit/(loss) before taxation
Taxation
Profit/(loss) for the financial year
Attributable to:
Equity shareholders
Non-controlling interests
Basic earnings per share (pence)
Continuing operations
Diluted earnings per share (pence)
Continuing operations
7
7
8
9
3
25
10
10
17,499
(32,590)
648
–
–
–
17,499
(32,590)
648
17,905
(36,043)
464
–
–
–
17,905
(36,043)
464
54,178
(8,942)
45,236
42,812
(13,950)
28,862
(501)
27,004
26,503
(1,584)
8,345
6,761
53,677
18,062
71,739
41,228
(5,605)
35,623
52,610
1,067
18,062
–
53,677
18,062
70,672
1,067
71,739
40,280
948
41,228
(5,605)
–
34,675
948
(5,605)
35,623
18.0
17.6
9.0
8.9
PG Kennedy
Director
AR Williams
Director
Greencore Group plc Annual Report and Accounts 2013
Group Statement of Recognised Income and Expense
Year Ended 27 September 2013
77
Items of income and expense taken directly to equity
Items that will not be reclassified to profit or loss:
Actuarial loss on Group defined benefit pension schemes
Deferred tax on Group defined benefit pension schemes
Items that may subsequently be reclassified to profit or loss:
Currency translation adjustment
Current tax on currency translation adjustment
Hedge of net investment in foreign currency subsidiaries
Cash flow hedges:
fair value movement taken to equity
transfer to Income Statement for the period
Deferred tax on cash flow hedges
Net expense recognised directly within equity
Group result for the financial year
Total recognised income and expense for the financial year
Attributable to:
Equity shareholders
Non-controlling interests
Total recognised income and expense for the financial year
Notes
2013
£’000
2012
£’000
23
9
(8,958)
(1,613)
(23,771)
2,569
(10,571)
(21,202)
9
9
(988)
151
(13)
1,855
676
(582)
1,099
151
88
1,898
(2,924)
322
599
134
(9,472)
71,739
(21,068)
35,623
62,267
14,555
61,024
1,243
62,267
13,847
708
14,555
Greencore Group plc Annual Report and Accounts 2013 78
Financial Statements
Group Balance Sheet
At 27 September 2013
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Investment property
Investments in associates
Other receivables
Derivative financial instruments
Deferred tax assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Total current assets
Total assets
EQUITY
Capital and reserves attributable to equity holders of the Company
Share capital
Share premium
Reserves
Non-controlling interests
Total equity
LIABILITIES
Non-current liabilities
Borrowings
Derivative financial instruments
Retirement benefit obligations
Other payables
Provisions for liabilities
Deferred tax liabilities
Government grants
Total non-current liabilities
Current liabilities
Bank overdrafts
Borrowings
Derivative financial instruments
Trade and other payables
Consideration payable on acquisitions
Provisions for liabilities
Current taxes payable
Total current liabilities
Total liabilities
Total equity and liabilities
* As re-presented to reflect adjustments to provisional fair values previously recognised on business combinations as set out in Note 30.
PG Kennedy
Director
AR Williams
Director
Notes
2013
£’000
12
13
14
8
16
20
9
15
16
20
18
24
25
19
20
23
17
22
9
18
19
20
17
22
2012
As re-
presented*
£’000
503,831
226,283
31,961
548
2,817
11,888
61,164
499,924
229,246
28,870
826
1,033
8,235
66,586
834,720
838,492
53,144
115,720
966
6,310
54,474
107,039
170
18,763
176,140
180,446
1,010,860 1,018,938
4,013
177,330
67,236
248,579
3,468
120,920
171,469
(95,116)
197,273
3,246
252,047
200,519
199,665
2,246
137,545
2,239
10,968
21,288
57
288,647
9,017
141,841
3,089
12,479
28,833
70
374,008
483,976
4,554
44,094
346
303,141
918
6,928
24,824
–
–
–
283,155
4,181
8,597
38,510
384,805
334,443
758,813
818,419
1,010,860 1,018,938
Greencore Group plc Annual Report and Accounts 2013
Group Cash Flow Statement
Year Ended 27 September 2013
Profit before taxation
Finance income
Finance costs
Share of profit of associates (after tax)
Exceptional items
Operating profit (pre-exceptional)
Depreciation
Amortisation of intangible assets
Employee share based payment expense
Amortisation of government grants
Difference between pension charge and cash contributions
Working capital movement
Other movements
Net cash inflow from operating activities before exceptional items
Cash outflow related to exceptional items
Interest paid
Tax refunded
Net cash inflow from operating activities
Cash flow from investing activities
Dividends received from associates
Purchase of property, plant and equipment
Purchase of investment property
Purchase of intangible assets
Acquisition of undertakings
Disposal of undertakings
Interest received
Net cash outflow from investing activities
Cash flow from financing activities
Proceeds from issue of shares
Ordinary shares purchased – own shares
Drawdown of bank borrowings
Repayment of bank borrowings
Dividends paid to equity holders of the Company
Dividends paid to non-controlling interests
Net cash (outflow)/inflow from financing activities
Net decrease in cash and cash equivalents
Reconciliation of opening to closing cash and cash equivalents
Cash and cash equivalents at beginning of year
Translation adjustment
(Decrease) in cash and cash equivalents
Net cash and cash equivalents at end of year
79
Notes
26
6
8
21
21
25
18
21
21
18
2013
£’000
45,236
(17,499)
32,590
(648)
8,942
68,621
23,659
9,039
2,521
(13)
(13,695)
9,854
453
100,439
(20,019)
(15,093)
412
2012
£’000
28,862
(17,905)
36,043
(464)
13,950
60,486
21,470
11,576
1,914
(13)
(14,830)
23,409
1,143
105,155
(19,421)
(15,688)
2,013
65,739
72,059
370
(29,404)
(510)
(4,966)
(3,115)
10,394
181
498
(28,762)
(272)
(1,334)
(152,173)
181
45
(27,050)
(181,817)
369
(709)
–
(43,138)
(11,098)
(1,002)
457
–
76,368
(20,500)
(9,169)
(424)
(55,578)
46,732
(16,889)
(63,026)
18,763
(118)
(16,889)
81,564
225
(63,026)
1,756
18,763
Greencore Group plc Annual Report and Accounts 2013 80
Financial Statements
Group Statement of Changes in Equity
Year Ended 27 September 2013
Share
capital
£’000
Share
premium
£’000
Other
reserves
£’000
Retained
earnings
£’000
Non-
controlling
interests
£’000
Total
£’000
Total
equity
£’000
120,920
171,469
(11,758)
(83,358)
197,273
3,246
200,519
At 28 September 2012
Items of income and expense taken directly to equity
Currency translation adjustment
Current tax on currency translation adjustment
Net investment hedge
Actuarial loss on Group defined benefit pension schemes
Deferred tax on Group defined benefit pension schemes
Cash flow hedge taken to equity
Cash flow hedge transferred to Income Statement
Deferred tax on cash flow hedge
Profit for the financial period
Total recognised income and expense for the financial year
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,164)
–
(13)
–
–
1,855
676
(582)
–
–
151
–
(8,958)
(1,613)
–
–
–
70,672
(1,164)
151
(13)
(8,958)
(1,613)
1,855
676
(582)
70,672
772
60,252
61,024
Employee share based payments expense
Exercise, lapse or forfeit of share based payments
Cancellation of deferred shares
Redenomination and renominalisation of treasury shares (c)
Shares acquired by Employee Benefit Trust (a)
Shares granted to beneficiaries of the Employee Benefit Trust (b)
Disposal of non-controlling interest
Dividends
–
5
(114,899)
(2,078)
–
–
–
65
–
364
–
–
–
–
–
5,497
2,521
(678)
114,899
2,078
(766)
836
–
–
–
678
–
–
57
(836)
–
(17,461)
2,521
369
–
–
(709)
–
–
(11,899)
176
–
–
–
–
–
–
–
1,067
1,243
–
–
–
–
–
–
(19)
(1,002)
(988)
151
(13)
(8,958)
(1,613)
1,855
676
(582)
71,739
62,267
2,521
369
–
–
(709)
–
(19)
(12,901)
At 27 September 2013
4,013
177,330
107,904
(40,668)
248,579
3,468
252,047
Share
capital
£’000
Share
premium
£’000
Other
reserves
£’000
Retained
earnings
£’000
Non-
controlling
interests
£’000
Total
£’000
Total
equity
As re-
presented
£’000
117,004
171,010
(14,792)
(81,584)
191,638
2,962
194,600
At 30 September 2011
Items of income and expense taken directly to equity
Currency translation adjustment
Current tax on currency translation adjustment
Net investment hedge
Actuarial loss on Group defined benefit pension schemes
Deferred tax on Group defined benefit pension schemes
Cash flow hedge taken to equity
Cash flow hedge transferred to Income Statement
Deferred tax on cash flow hedge
Profit for the financial period
Total recognised income and expense for the financial year
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Employee share based payments expense
Exercise, lapse or forfeit of share based payments
Shares acquired by Employee Benefit Trust (a)
Shares granted to beneficiaries of the Employee Benefit Trust (b)
Issue of shares – redenomination
Costs associated with the issue of shares
Dividends
–
7
–
–
3,848
–
61
–
455
–
–
(3,848)
(5)
3,857
391
–
1,898
–
–
(2,924)
322
599
–
–
88
–
(23,771)
2,569
–
–
–
34,675
391
88
1,898
(23,771)
2,569
(2,924)
322
599
34,675
286
13,561
13,847
1,914
(683)
(58)
1,575
–
–
–
–
683
58
(1,575)
–
–
(14,501)
1,914
462
–
–
–
(5)
(10,583)
(240)
–
–
–
–
–
–
–
948
708
–
–
–
–
–
–
(424)
151
88
1,898
(23,771)
2,569
(2,924)
322
599
35,623
14,555
1,914
462
–
–
–
(5)
(11,007)
At 28 September 2012
120,920
171,469
(11,758)
(83,358)
197,273
3,246
200,519
Greencore Group plc Annual Report and Accounts 2013
81
Other Reserves
Share
based
payments
£’000
Own
shares
£’000
Capital
redemption
reserve
£’000
Capital
conversion
reserve
fund
£’000
Foreign
currency
translation
reserve
£’000
Hedging
reserve
£’000
Total
£’000
At 28 September 2012
Items of income and expense taken directly to equity
Currency translation adjustments
Net investment hedge
Cash flow hedge taken to equity
Cash flow hedge transferred to Income Statement
Deferred tax on cashflow hedge
Total recognised income and expense for the financial year
Currency translation adjustments
Employee share based payments expense
Exercise, lapse or forfeit of share based payments
Cancellation of deferred shares
Redenomination and renominalisation of treasury shares (c)
Shares acquired by Employee Benefit Trust (a)
Shares granted to beneficiaries of the Employee Benefit Trust (b)
4,218
(18,870)
–
–
–
–
–
–
189
2,521
(678)
–
–
–
–
–
–
–
–
–
–
–
–
–
(766)
836
–
–
–
–
–
–
–
–
–
–
114,899
2,078
–
–
804
(2,003)
4,093
(11,758)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,855
676
(582)
1,949
–
–
–
–
–
–
–
(1,164)
(13)
–
–
–
(1,177)
(189)
–
–
–
–
–
–
(1,164)
(13)
1,855
676
(582)
772
–
2,521
(678)
114,899
2,078
(766)
836
At 27 September 2013
6,250
(18,800)
116,977
804
(54)
2,727
107,904
Share
based
payments
£’000
Own
shares
£’000
Capital
redemption
reserve
£’000
Capital
conversion
reserve
fund
£’000
Foreign
currency
translation
reserve
£’000
Total
As re-
presented
£’000
Hedging
reserve
£’000
At 30 September 2011
Items of income and expense taken directly within equity
Currency translation adjustment
Net investment hedge
Cash flow hedge taken to equity
Cash flow hedge transferred to Income Statement
Deferred tax on cash flow hedge
Total recognised income and expense for the financial year
3,230
(20,387)
–
–
–
–
–
–
–
–
–
–
–
–
Currency translation adjustments
Employee share based payment expense
Exercise, lapse or forfeit of share based payment
Shares acquired by Employee Benefit Trust (a)
Shares granted to beneficiaries of the Employee Benefit Trust (b)
(243)
1,914
(683)
–
–
–
–
–
(58)
1,575
At 28 September 2012
4,218
(18,870)
–
–
–
–
–
–
–
–
–
–
–
–
–
804
–
1,561
(14,792)
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,924)
322
599
(2,003)
–
–
–
–
–
391
1,898
–
–
–
2,289
243
–
–
–
–
391
1,898
(2,924)
322
599
286
–
1,914
(683)
(58)
1,575
804
(2,003)
4,093
(11,758)
(a) The Employee Benefit Trust acquired 62,239 (2012: 111,742) shares in the Group with a combined value of £0.06 million (2012: £0.06 million) and a nominal value at the date of
purchase of £0.001 million (2012: £0.001 million) through the scrip dividend scheme and utilisation of dividend income.
Pursuant to the terms of the Employee Benefit Trust, 727,885 (2012: nil) shares were purchased during the financial year ended 27 September 2013 at a cost of £0.7 million
(2012: £nil). The nominal value of these shares, on which dividends have not been waived by the Employee Benefit Trust was £0.07 million (2012: £Nil) at the date of purchase.
(b) During the year, 1,402,077 (2012: 1,292,223) shares with a nominal value at the date of transfer of £0.014 million (2012: £0.013 million) were transferred to beneficiaries of the
Employee Benefit Trust.
(c) On 29 January 2013, the Group renominalised and redenominated 3,904,716 Treasury Shares of €0.63 each into Treasury Shares of £0.01 each and thereafter converted the
3,904,782 Treasury Shares into stock which were then converted into 3,904,782 Ordinary Shares of £0.01 each and were subsequently transferred to the Employee Benefit Trust
at nominal value.
Greencore Group plc Annual Report and Accounts 2013
82
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013
1. Segment Information
The Group is organised around different product portfolios. The Group’s reportable segments under IFRS 8 Operating Segments are as follows:
Convenience Foods – this reportable segment is the aggregation of two operating segments, Convenience Foods UK and Convenience Foods US.
This segment derives its revenue from the production and sale of convenience food.
Ingredients and Property – this segment represents the aggregation of ‘all other segments’ as allowed under IFRS 8 (IFRS 8 specifies that, where the
external revenue of reportable segments exceeds 75% of the total Group revenue, it is permissible to aggregate all other segments into one reportable
segment). The Ingredients & Property reportable segment derives its revenue from the distribution of edible oils and molasses and the management of
the Group’s surplus property assets.
The Chief Operating Decision Maker monitors the operating results of segments separately in order to allocate resources between segments and
to assess performance. Segment performance is predominantly evaluated based on operating profit before exceptional items and acquisition –
related amortisation. Exceptional items, net finance costs and income tax are managed on a centralised basis, therefore these items are not
allocated between operating segments for the purposes of the information presented to the Chief Operating Decision Maker and are accordingly
omitted from the segmental information below. Intersegment revenue is not material.
Revenue – continuing operations
1,129,200 1,091,148
67,899
70,782 1,197,099
1,161,930
Convenience Foods
Ingredients & Property
Total
2013
£’000
2012
£’000
2013
£’000
2012
£’000
2013
£’000
2012
£’000
Group operating profit before exceptional items and acquisition related
amortisation – continuing
Amortisation of acquisition related intangible assets
Exceptional items
Group operating profit
Finance income
Finance costs
Share of profit of associates after tax
Profit before taxation
Segment assets
Assets
Investments in associates
Total assets
Reconciliation to Total Assets as Reported in the Group Balance Sheet
Deferred tax assets
Cash and cash equivalents
Derivative financial instruments
Total assets as reported in the Group Balance Sheet
73,905
(7,833)
69,097
(10,210)
2,549
–
1,599
–
66,072
58,887
2,549
1,599
–
–
648
464
76,454
(7,833)
(8,942)
59,679
17,499
(32,590)
648
70,696
(10,210)
(13,950)
46,536
17,905
(36,043)
464
45,236
28,862
Convenience Foods
Ingredients & Property
Total
2012
As re-
presented*
£’000
2013
£’000
2013
£’000
2012
£’000
2013
£’000
2012
As re-
presented*
£’000
883,333
–
879,431
–
44,604
826
46,974
548
927,937
826
926,405
548
883,333
879,431
45,430
47,522
928,763
926,953
66,586
6,310
9,201
61,164
18,763
12,058
1,010,860 1,018,938
* As re-presented to reflect adjustments to provisional fair values previously recognised on business combinations as set out in Note 30.
Greencore Group plc Annual Report and Accounts 2013 83
Segment liabilities
Liabilities
Reconciliation to Total Liabilities as reported in the Group Balance Sheet
Bank overdrafts
Borrowings (current and non-current)
Derivative financial instruments (current and non-current)
Government grants
Declared interim dividend
Interest payable
Retirement benefit obligations
Income tax liabilities (current and deferred)
Total liabilities as reported in the Group Balance Sheet
Other Segment Information
Continuing operations
Capital expenditure
Depreciation
Amortisation of intangible assets
Convenience Foods
Ingredients & Property
Total
2012
As re-
presented*
£’000
2013
£’000
2013
£’000
2012
£’000
2013
£’000
2012
As re-
presented*
£’000
296,875
281,964
14,854
18,025
311,729
299,989
4,554
243,759
2,592
57
7,620
4,845
137,545
46,112
–
288,647
9,017
70
6,821
4,679
141,841
67,343
758,813
818,407
Convenience Foods
Ingredients & Property
Total
2013
£’000
2012
£’000
2013
£’000
2012
£’000
2013
£’000
2012
£’000
35,810
30,775
23,429
21,239
9,039
11,576
513
230
–
367
36,323
31,142
231
23,659
21,470
–
9,039
11,576
Geographical Analysis
The following is a geographical analysis of the segment information presented above.
Ireland
UK
Rest of World
Total Group
2013
£’000
2012
£’000
2013
£’000
2012
As re-
presented*
£’000
2012
As re-
presented*
£’000
2013
£’000
2012
As re-
presented*
£’000
2013
£’000
Revenue
68,745
71,347
999,294
1,011,172
129,060
79,411 1,197,099
1,161,930
Capital expenditure
513
358
32,128
29,321
3,682
1,463
36,323
31,142
Non-current assets (excluding derivative financial
instruments and deferred tax assets)
11,578
16,032
670,053
669,912
78,268
79,496
759,899
765,440
* As re-presented to reflect adjustments to provisional fair values previously recognised on business combinations as set out in Note 30.
Greencore Group plc Annual Report and Accounts 2013 84
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
2. Operating Costs, Net
Distribution costs
Administrative expenses
Research and development
Other operating costs
Other operating income
Total operating costs pre-exceptional, net
Exceptional charge (Note 6)
Total operating costs, net
*
As re-presented to show comparative on the same basis as the current year.
3. Result for the Financial Period
The result for the financial period has been arrived at after charging/(crediting) the following amounts:
Depreciation:
Owned assets
Assets held under finance lease
Amortisation of intangible assets
Operating lease rentals:
Premises, plant and equipment
Auditor’s remuneration
Fees paid to the lead audit firm:
Audit of the Group Financial Statements
Other assurance services
Tax advisory services
Other non-audit services
Fees paid to other firms in the lead audit firms network:
Other assurance services
Government grant amortised
Rental income from investment properties
Directors’ remuneration is shown in the Report on Directors’ Remuneration and in Note 31.
4. Employment
The average number of persons (including Executive Directors) employed by the Group during the year was:
Production
Distribution
Administration
2012
As re-
presented*
£’000
52,322
222,895
4,766
1,028
(1,972)
279,039
13,950
2013
£’000
52,299
226,756
5,159
361
(2,075)
282,500
8,942
291,442
292,989
2013
£’000
2012
£’000
23,614
45
23,659
21,470
–
21,470
9,039
11,576
14,240
11,813
534
60
16
–
610
9
9
619
550
64
32
–
646
185
185
831
(13)
(13)
(114)
(112)
2013
Number
2012
Number
8,189
627
990
9,806
7,799
683
1,244
9,726
Greencore Group plc Annual Report and Accounts 2013 85
2013
£’000
207,445
21,472
2,521
910
2,980
(4,368)
230,960
20,995
(17,243)
2012
£’000
200,197
20,764
1,914
–
3,251
–
226,126
22,226
(17,568)
234,712
230,784
2013
£’000
7,499
623
(17,080)
2012
£’000
37,115
(474)
(60,412)
(8,958)
(23,771)
The staff costs for the year for the above employees were:
Wages and salaries
Social welfare costs
Employee share based payment expense (Note 5)
Termination costs (Note 31)
Pension costs – defined contribution plans (Note 23)
Pension – curtailment gain (Note 23)
Defined benefit interest cost (Note 23)
Defined benefit expected return on plan assets (Note 23)
Actuarial loss on Group defined benefit schemes recognised in the Statement of Recognised Income and Expense:
Actual return less expected return on pension scheme assets (Note 23)
Effect of Paragraph 58(b) limit (Note 23)
Actuarial losses arising on the scheme liabilities (Note 23)
Total included in the Statement of Recognised Income and Expense
5. Share-Based Payments
Executive Share Option Scheme
The Group’s employee share options are equity-settled share based payments as defined in IFRS 2 Share-based Payments. IFRS 2 requires that
a recognised valuation methodology be employed to determine the fair value of share options granted. The charge recognised in the Income
Statement for the year was £0.56 million (2012: £nil). Grant date fair value was arrived at through applying a trinomial model, which is a lattice
option-pricing model. To the extent that any options vest, they will ordinarily remain exercisable at any time up to ten years from the date of
grant and are settled in equity through the issue of shares once exercised.
The general terms and conditions applicable to the share options granted by the Group are set out in the Report on Directors’ Remuneration.
All conditions are non-market based.
No options were granted under the scheme in the current year.
Options were granted over 575,000 ordinary shares on 6 December 2011. These awards will be exercisable, subject to the performance measurement
targets being attained between 6 December 2014 and 6 December 2021, at an exercise price of €0.64. The weighted average fair value of share
options granted during the year ended 28 September 2012 was €0.12.
The following table illustrates the number and weighted average exercise prices (expressed in euro) of, and movements in, share options during the
year under the plan:
At beginning of year
Granted
Expired
Forfeit
At end of year
Exercisable at end of year
2013
2012
Weighted
average
exercise
price
€
1.53
–
2.33
1.58
1.49
–
Number
outstanding
5,469,726
575,000
(377,656)
(635,758)
5,031,312
–
Weighted
average
exercise
price
€
1.65
0.64
2.28
1.32
1.53
–
Number
outstanding
5,031,312
–
(119,589)
(1,063,371)
3,848,352
–
Greencore Group plc Annual Report and Accounts 2013 86
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
5. Share-Based Payments (continued)
Executive Share Option Scheme (continued)
Range of Exercise Prices for the Share Option Plan (expressed in euro)
At 27 September 2013
€0.01–€1.00
€1.01–€2.00
€2.01–€3.00
€3.01–€4.00
At 28 September 2012
€0.01–€1.00
€1.01–€2.00
€2.01–€3.00
€3.01–€4.00
Weighted
average
contract
life
years
Weighted
average
exercise
price
€
Number
exercisable
6.36
6.35
2.17
3.85
5.39
4.97
8.29
4.45
4.84
6.27
0.64
1.06
2.69
3.88
1.49
0.61
1.07
2.67
3.88
1.53
–
–
–
–
–
–
–
–
–
–
Number
outstanding
1,343,246
1,453,967
642,014
409,125
3,848,352
1,859,021
1,724,616
786,780
660,895
5,031,312
ShareSave Schemes
The Group operates savings-related share option schemes in both Ireland and the UK. Options are granted at a discount of between 20% and 25% of the
market price at the date of invitation over three, five and seven year savings contracts and options are exercisable during the six month period following
completion of the savings contract. The credit recognised in the Income Statement in respect of these options was £0.27 million (2012 charge of: £0.089
million). Grant date fair value was arrived at through applying a trinomial model, which is a lattice option-pricing model.
During the year ended 27 September 2013, ShareSave Scheme options were granted over 22,611 shares (Ireland) and 946,940 shares (UK), which
will ordinarily be exercisable at an exercise price of €1.20 and £1.08 respectively per share, during the period 1 September 2016 to 28 February 2017.
The weighted average fair value of share options granted during the year ended 27 September 2013 was £0.20.
During the year ended 28 September 2012, ShareSave Scheme options were granted over 178,275 shares (Ireland) and 2,046,060 shares (UK), which
will ordinarily be exercisable at an exercise price of €0.69 and £0.60 respectively per share, during the period 1 September 2015 to 28 February 2016.
The weighted average fair value of share options granted during the year ended 28 September 2012 was £0.23.
The following table sets out the number and weighted average exercise prices (expressed in euro) of, and movements in, share options during the
year under the Irish ShareSave Scheme.
At beginning of year
Granted
Exercised
Forfeit
At end of year
Exercisable at end of year
2013
2012
Weighted
average
exercise
price
€
0.69
1.20
0.75
0.67
0.73
–
Number
outstanding
301,461
178,275
(192,295)
(5,507)
281,934
–
Weighted
average
exercise
price
€
0.69
0.69
0.70
0.75
0.69
–
Number
outstanding
281,934
22,611
(2,921)
(18,976)
282,648
–
Greencore Group plc Annual Report and Accounts 2013 87
Range of Exercise Prices for the Irish ShareSave Scheme (expressed in euro)
At 27 September 2013
€0.01–€1.00
€1.01–€2.00
At 28 September 2012
€0.01–€1.00
Weighted
average
contract
life
years
Weighted
average
exercise
price
€
Number
exercisable
Weighted
average
exercise
price
€
1.95
2.93
2.03
2.88
2.88
0.69
1.20
0.73
0.69
0.69
–
–
–
–
–
–
–
–
–
–
Number
outstanding
260,037
22,611
282,648
281,934
281,934
The following table sets out the number and weighted average exercise prices (expressed in sterling) of, and movements in, share options during the
year under the UK ShareSave Scheme.
2013
2012
At beginning of year
Granted
Exercised
Expired
Forfeit
At end of year
Exercisable at end of year
Range of Exercise Prices for the UK ShareSave Scheme (expressed in sterling)
At 27 September 2013
£0.01–£1.00
£1.01–£2.00
£2.01–£3.00
At 28 September 2012
£0.01–£1.00
£1.01–£2.00
£2.01–£3.00
Weighted
average
exercise
price
£
Number
outstanding
Weighted
average
exercise
price
£
Number
outstanding
4,362,120
946,940
(522,184)
(18,906)
(651,122)
0.66 3,451,360
1.08 2,046,060
(515,136)
0.70
–
2.12
(620,164)
0.65
4,116,848
0.75 4,362,120
124,834
0.92
326,219
0.72
0.60
0.69
0.76
0.66
0.78
Weighted
average
contract
life
years
Weighted
average
exercise
price
£
Number
exercisable
Weighted
average
exercise
price
£
1.97
2.84
1.29
2.18
2.15
1.73
0.88
2.14
0.63
1.11
2.39
0.75
0.64
1.74
2.39
0.66
95,912
22,716
–
118,628
308,903
4,995
12,321
326,219
0.71
1.77
–
0.92
0.69
1.57
2.39
0.78
Number
outstanding
3,129,285
982,275
5,288
4,116,848
4,297,592
46,919
17,609
4,362,120
Greencore Group plc Annual Report and Accounts 2013 88
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
5. Share-Based Payments (continued)
Deferred Bonus Plan
Senior Executives participate in the Deferred Bonus Plan as outlined in the Report on Directors’ Remuneration. In accordance with this plan, a portion
of the annual bonus earned by participating senior executives is deferred into Company shares, the number of which is calculated at market value on
the date of allocation, to be held by a trustee for the benefit of individual participants without any additional performance requirements or matching.
The shares vest after three years but are forfeit should an executive voluntarily leave the Group within the three-year time period, subject to normal
‘good leaver’ provisions. The charge recognised in the Income Statement was £1.48 million (2012: £1.8 million). The fair value of the award is equal to
the share price on the grant date.
On 1 December 2012, 2,527,955 awards were granted to senior executives of the Group under the Deferred Bonus Plan. A cumulative charge of
£1.14 million was recognised in the Income Statement in FY13. A charge amounting to £0.55 million was included in the Group Financial Statements
in FY12 in respect of the estimated 2012 charge related to these awards.
On 1 December 2011, 3,477,745 awards were granted to senior executives of the Group under the Deferred Bonus Plan. A cumulative charge of
£0.391 million was recognised in the Income Statement in FY12. A charge amounting to £0.262 million was included in the Group Financial
Statements in FY11 in respect of the estimated 2011 charge related to these awards.
The following table illustrates the number and weighted average exercise prices of, and movements in, share awards during the year under the plan:
2013
2012
At beginning of year
Granted
Exercised
Forfeit
At end of year
Exercisable at end of year
Weighted
average
exercise
price
€
Number
outstanding
Weighted
average
exercise
price
€
Number
outstanding
6,980,651
2,527,955
(1,351,807)
(312,282)
7,844,517
4,726,498
–
3,477,745
–
– (1,223,592)
–
–
– 6,980,651
–
–
–
–
–
–
–
–
–
Awards will be granted to senior executives of the Group under the Deferred Bonus Plan in respect of the year ended 27 September 2013. A charge
amounting to £0.244 million relating to Executive Directors and £0.17 million relating to other awards has been included in the Group Financial
Statements in respect of the estimated 2013 charge related to these awards. The total fair value of the awards will be taken as a charge to the
Income Statement over the vesting period of the awards.
Performance Share Plan
A new long-term incentive scheme, the Performance Share Plan, was introduced during the year as outlined in the Report on Directors’ Remuneration.
In accordance with this scheme, participants are awarded an allotment of shares which will vest over three years subject to vesting conditions for
profit, return on invested capital and earnings per share. The number of shares granted is calculated based on the market value on the date of
allocation. Shares are forfeit should an executive voluntarily leave the Group prior to the vesting date, subject to normal ‘good leaver’ provisions.
The fair value of the award is equal to the share price on the grant date. Further description of the scheme can be found in the Directors’
Remuneration Report on page 47.
On 1 March 2013, 4,298,604 shares were granted to executives of the Group under the Performance Share Plan. A charge amounting to £0.74 million
was included in the Group Financial Statements in FY13 related to these awards.
The following table illustrates the number and weighted average exercise prices of, and movements in, share options during the year under the plan:
At beginning of year
Granted
Forfeit
At end of year
Exercisable at end of year
2013
2012
Weighted
average
exercise
price
€
Number
outstanding
Weighted
average
exercise
price
€
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Number
outstanding
–
4,298,604
(429,249)
3,869,355
–
Greencore Group plc Annual Report and Accounts 2013 89
Range of Exercise Prices for the Share Option Plan
The following tables show the weighted average assumptions used to fair value the equity settled options granted in the Executive Share Option
Scheme, the ShareSave Scheme and the Deferred Bonus Plan. In FY13 the fair value of awards granted under the deferred bonus plan and the
performance share plan is equal to the share price on the grant date.
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Share price at grant (£)
Exercise price (£)
Fair value (£)
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Share price at grant (€)
Exercise price (€)
Fair value (€)
2013
ShareSave
3 year
4.46%
43%
0.22%
3.50
1.24
1.08
0.20
Deferred
bonus
plan
6.30%
52%
1.15%
4.25
0.54
–
0.54
Executive
share
option
scheme
2012
ShareSave
3 year
6.30%
38%
2.19%
10.00
0.65
0.64
0.22
4.91%
43%
0.18%
3.50
0.76
0.56
0.23
The average share price during the year was £1.15 (2012:£0.68).
The expected volatility is estimated based on the historic volatility of the Company’s share price over a period equivalent to the life of the relevant
option. The risk-free rate of return is the yield on a government bond of a term consistent with the life of the option.
The range of the Company’s share price during the year was £0.80–£1.54 (2012: £0.47–£0.84) .
6. Exceptional Items
Exceptional items are those that, in management’s judgement, should be disclosed by virtue of their nature or amount. Such items are included
within the Income Statement caption to which they relate and are separately disclosed in the notes to the Group Financial Statements.
The Group reports the following exceptional items:
Integration cost of UK acquisitions
Integration cost of US acquisitions
Pension curtailment gain
Property related charge
Transaction costs
One off costs relating to former activities
Tax on exceptional charges
Exceptional tax credit
Total exceptional credit/(expense)
Notes
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(g)
2013
£’000
(2,686)
(1,472)
4,368
(9,152)
–
–
(8,942)
293
26,711
2012
£’000
(7,566)
(3,074)
–
–
(2,210)
(1,100)
(13,950)
2,083
6,262
18,062
(5,605)
Greencore Group plc Annual Report and Accounts 2013 90
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
6. Exceptional Items (continued)
(a) Integration Cost of UK Acquisitions
During the year, the Group incurred an exceptional charge of £2.7 million in connection with (i) the completion of the integration of the Uniq business,
including the Chilled Desserts restructuring, and (ii) the completion of the integration of International Cuisine Limited (“ICL”) acquired in August 2012.
In 2012, the Group incurred an exceptional charge of £7.5 million in connection with the integration of the Uniq business. A further charge of
£0.1 million was incurred relating to the integration of ICL.
(b) Integration Cost of US Acquisitions
During the year, the Group incurred an exceptional charge of £1.5 million in connection with the completion of integration of the MarketFare Foods LLC
(“MarketFare”) and H.C. Schau & Son Inc. (“Schau”) acquisitions.
In 2012, the Group completed the acquisition of MarketFare and Schau in the United States and a charge of £3.1 million was incurred in relation to the
integration of these businesses and the subsequent reorganisation of the product portfolio in the US.
(c) Pension Curtailment Gain
During the year, the Group recognised a curtailment gain of £4.4 million as the trustees of the Greencore Group pension scheme resolved to pass on
the cost of the Irish pensions levy to beneficiaries of the pension scheme in the form of a reduction in future pension payments. The cost of the levy
had previously been assumed to be borne by the scheme and had been treated as a reduction in assets of the scheme when paid and as an increase
in scheme liabilities for future amounts payable.
(d) Property Related Charge
During the year, the Group recognised a property related charge of £9.2 million arising on its Irish property portfolio which comprises a property
impairment charge together with a charge for remediation costs relating to the former sugar processing sites. The property impairment charge of
£4.3 million arose due to the re-zoning of a large proportion of the Group’s property assets in Ireland, together with the continued softening of
demand for land and the related impact on prices being achieved on sales. The Group also re-evaluated the expected costs to be incurred in meeting
the requirements of the Environmental Protection Agency regarding the remediation of the former sugar processing sites and an additional charge of
£4.8 million was recognised in this respect.
(e) Transaction Costs
In 2012, a charge of £2.2 million was incurred for transaction costs on the acquisitions of MarketFare, Schau and ICL.
(f) One-off Costs Relating to Former Activities
In 2012, the Group recognised a provision for costs amounting to £1.1 million relating to an onerous obligation in connection with a business which
was sold a number of years ago.
(g) Tax
During the year, and following the completion of the Uniq integration, the Group reassessed the prospects of recovery of deferred tax attributes acquired
as part of the Uniq transaction which to date had not been recognised. This resulted in the recognition of an additional tax credit of £18.9 million over and
above what would have been expected in the normal course of business. A further tax credit of £7.8 million arose as the Group resolved a number of tax
positions including the settlement of an overseas tax case. A tax credit of £0.3 million was recognised in respect of exceptional charges during the year.
In 2012, a tax credit of £6.3 million arose due to the resolution of an overseas tax case. A tax credit of £2.1 million was recognised in respect of
exceptional charges in the year.
Cash flow on Exceptional Items
The total cash outflow during the year in respect of exceptional charges was £20.0 million (2012: £19.4 million), of this amount £11.8 million
(2012: £16.5 million) was in respect of prior year exceptional charges.
Greencore Group plc Annual Report and Accounts 2013 7. Finance Costs and Finance Income
Finance Costs
Bank overdrafts and loans
Other borrowings
Interest on obligations under finance leases
Interest on defined benefit pension scheme liabilities
Unwind of discount on liabilities
Fair value movement on hedged financial liabilities (Note 21)
Fair value movement on fair value hedges (Note 21)
Fair value movement on interest rate swaps not designated as hedges
Fair value movement on forward foreign exchange contracts not designated as hedges
Foreign exchange on inter-company and external balances where hedge accounting is not applied
Finance Income
Interest income on bank deposits
Expected return on defined benefit pension scheme assets
Unwind of discount on assets
Net finance expense recognised in the Income Statement
Recognised Directly in Equity
Currency translation effects on foreign currency net investment
Currency translation effect on foreign currency borrowings designated as net investment hedges
Effective portion of changes in fair value of cash flow hedges
91
2013
£’000
2012
£’000
12,636
3,080
98
20,995
185
(3,481)
2,666
(3,962)
261
112
12,179
4,248
–
22,226
149
(3,590)
4,497
(3,001)
(599)
(66)
32,590
36,043
(256)
(17,243)
–
(45)
(17,568)
(292)
(17,499)
(17,905)
15,091
18,138
(988)
(13)
1,855
854
151
1,898
(2,924)
(875)
8. Associates
Share of Profit of Associates After Tax
The Group’s share of profit of associates after tax is equity accounted and is presented as a single line item in the Group Income Statement.
Group share of:
Revenue
Profit before finance costs
Finance costs (net)
Profit before taxation
Taxation
Profit after taxation
2013
£’000
2012
£’000
5,114
3,961
848
(1)
847
(199)
648
627
(3)
624
(160)
464
Greencore Group plc Annual Report and Accounts 2013 92
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
8. Associates (continued)
Investment in Associates
Share of associates’ balance sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Carrying amount of associates
At beginning of year
Share of profit after tax of associates
Dividends received
At end of year
Details of the Group’s principal associates, all of which are unlisted, are shown in Note 32.
9. Taxation
Continuing operations
Current tax
Corporation tax (credit)
Overseas tax (credit)/charge
Total current tax (pre-exceptional)
Deferred tax
Origination and reversal of temporary differences
Defined benefit pension obligations
Effect of tax rate change
Employee share based payments
Increase in asset recognised
Total deferred tax charge/(credit)
Income tax expense (pre-exceptional)
Tax on exceptional items
Current tax credit
Deferred tax credit
Exceptional tax credit
Total tax credit
Current tax relating to items credited to equity
Income tax relating to foreign exchange
Deferred tax relating to items charged/(credited) to equity
Actuarial loss on Group defined benefit pension schemes
Cash flow hedges transferred to Income Statement
Cash flow hedges fair value adjustments
2013
£’000
2012
£’000
1,202
95
(295)
(176)
826
548
648
(370)
826
1,373
116
(747)
(194)
548
582
464
(498)
548
2013
£’000
2012
£’000
(1,543)
(1,920)
(3,463)
(3)
8,115
8,112
12,084
865
(541)
(129)
(8,315)
3,964
501
(7,367)
1,115
(211)
(65)
–
(6,528)
1,584
(7,835)
(19,169)
(27,004)
(7,883)
(462)
(8,345)
(26,503)
(6,761)
(151)
(88)
1,613
155
427
2,195
(2,569)
74
(673)
(3,168)
Greencore Group plc Annual Report and Accounts 2013 Reconciliation of Total Tax Credit
The tax credit for the year can be reconciled to the profit per the Income Statement as follows:
Profit for the year
Total tax credit for the year
Less: Share of profit of associates after tax
Profit before tax
Tax expense at Irish corporation tax rate of 12.5%
Effects of:
Expenses not deductible for tax purposes
Differences in effective tax rates on overseas earnings
Creation/(utilisation) of tax losses
Net deferred tax assets utilised, including exceptional provision
Tax exempted earnings and earnings at reduced Irish rates
Effect of rate change on deferred tax balance
Exceptional items
Movement in provisions
Other
Total tax credit for the year
93
2013
£’000
71,739
(26,503)
(648)
2012
£’000
35,623
(6,761)
(464)
44,588
28,398
5,574
3,550
1,462
2,450
668
(24,525)
46
(541)
(7,835)
(4,269)
467
(26,503)
3,954
960
(20)
(7,845)
(94)
(211)
(6,262)
–
(793)
(6,761)
Factors That May Impact Future Tax Charges and Other Disclosures
The tax charge in future periods will be impacted by any changes to the corporation tax rate in force in the countries in which the Group operates.
In the UK, the Finance Bill 2012 included a reduction in the rate of corporate income tax to 23% effective 1 April 2013 that was substantively enacted
in July 2012. The Finance Bill 2013 included further reductions in the rate of corporate income tax to 21% effective 1 April 2014 and to 20% effective
1 April 2015 that were substantively enacted in July 2013. Deferred tax balances must be recognised at the future tax rate applicable when the
balance is expected to unwind. As such, the rate reduction to 20% is reflected in some of the closing deferred tax balances in respect of the UK.
During the year the Group recognised £27.3 million of previously unrecognised deferred tax assets, which arose on the acquisition of Uniq plc, based
on current year forecast utilisation of deferred tax assets.
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the Group’s provision for income
taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The
Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome
of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and tax provisions in the
period in which such determination is made.
Deferred Taxation
The Group’s deferred tax assets and liabilities are analysed as follows:
At beginning of year
Income Statement (charge)/credit
Tax charged to equity
Currency translation adjustment and other
Property,
plant and
equipment
£’000
Acquisition
related
intangibles
£’000
Retirement
benefit
obligations
£’000
Derivative
financial
instruments
£’000
7,637
(16,056)
–
9
(9,253)
3,239
–
(53)
25,982
(1,103)
(1,613)
–
599
–
(582)
–
Tax losses
£’000
5,499
29,459
–
–
At end of year
(8,410)
(6,067)
23,266
17
34,958
Deferred tax assets (deductible temporary
differences)
Deferred tax liabilities (taxable temporary
differences)
6,804
–
23,266
(15,214)
(6,067)
–
Net deferred tax asset/(liability)
(8,410)
(6,067)
23,266
17
–
17
34,958
–
34,958
Employee
share
options
£’000
268
129
–
–
397
397
–
397
Other
£’000
1,599
(463)
–
1
2013
Total
£’000
32,331
15,205
(2,195)
(43)
1,137
45,298
1,144
66,586
(7)
(21,288)
1,137
45,298
Greencore Group plc Annual Report and Accounts 2013 94
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
9. Taxation (continued)
Deferred Taxation (continued)
At beginning of year
Income Statement (charge)/credit
Tax credited to equity
Arising on acquisition
Currency translation adjustment and other
At end of year
Deferred tax assets (deductible temporary
differences)
Deferred tax liabilities (taxable temporary
differences)
Net deferred tax asset/(liability)
Property,
plant and
equipment
£’000
Acquisition
related
intangibles
£’000
Retirement
benefit
obligations
£’000
Derivative
financial
instruments
£’000
1,476
6,876
–
(744)
29
7,637
(11,365)
2,025
–
–
87
24,498
(1,085)
2,569
–
–
(9,253)
25,982
27,001
216
25,982
(19,364)
(9,469)
–
7,637
(9,253)
25,982
–
–
599
–
–
599
599
–
599
Employee
share
options
£’000
203
65
–
–
–
268
268
–
268
Tax losses
£’000
7,500
(2,001)
–
–
–
5,499
5,499
–
5,499
Other
£’000
489
1,110
–
–
–
2012
Total
£’000
22,801
6,990
3,168
(744)
116
1,599
32,331
1,599
61,164
–
(28,833)
1,599
32,331
The Group has not provided deferred tax in relation to temporary differences applicable to investments in subsidiaries on the basis that the Group can
control the timing and realisation of these temporary differences, and it is probable that the temporary difference will not reverse in the foreseeable
future. Given that participation exemptions and tax credits would be available in the context of the Group’s investments in subsidiaries and associates
in the majority of the jurisdictions in which the Group operates, the aggregate amount of temporary differences in respect of which deferred tax
liabilities have not been recognised would be immaterial (with materiality defined in the context of the FY13 Group Financial Statements). No provision
has been recognised in respect of deferred tax relating to unremitted earnings of subsidiaries as there is no commitment to remit earnings.
No deferred tax asset is recognised in respect of certain tax losses incurred by the Group on the grounds that there is insufficient evidence that the
assets will be recoverable. In the event that sufficient profits are generated in the relevant jurisdictions in the future, these assets may be recovered.
The unrecognised deferred tax asset at 27 September 2013 was £67.0 million (2012: £101.0 million).
No deferred tax asset is recognised in respect of certain capital losses incurred by the Group on the grounds that there is insufficient evidence that
the assets will be recoverable. The unrecognised deferred tax asset at 27 September 2013 was £11.2 million (2012: £11.6 million).
10. Earnings per Ordinary Share
Basic earnings per ordinary share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number
of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury shares and shares held in trust
in respect of the Deferred Bonus Awards Scheme and/or the Performance Share Plan. The adjusted figures for basic and diluted earnings per ordinary
share are after the elimination of exceptional items, the effect of foreign exchange (FX) on inter-company and certain external balances where hedge
accounting is not applied, the movement in the fair value of all derivative financial instruments and related debt adjustments, the amortisation of
acquisition related intangible assets and the effect of pension financing.
Profit attributable to equity holders of the Company
Exceptional items (net of tax)
Fair value of derivative financial instruments and related debt adjustments where hedge accounting is not applied
FX on inter-company and external balances where hedge accounting is not applied
Amortisation of acquisition related intangible assets (net of tax)
Pension financing (net of tax)
Numerator for adjusted earnings per share calculation
Denominator for Earnings per Share Calculation
Shares in issue at the beginning of the year
Effect of treasury shares
Effect of shares held by Employee Benefit Trust
Effect of shares issued during the year
Weighted average number of ordinary shares in issue during the year
2013
£’000
70,672
(18,062)
(4,516)
112
5,720
2,980
2012
£’000
34,675
5,605
(2,693)
(66)
7,942
3,749
56,906
49,212
2013
’000
394,356
(2,553)
(2,896)
4,693
2012
’000
387,312
(3,905)
(2,270)
3,873
393,600
385,010
Greencore Group plc Annual Report and Accounts 2013 95
2013
pence
18.0
2012
pence
9.0
14.5
12.8
Basic earnings per ordinary share
Adjusted basic earnings per ordinary share
Diluted Earnings per Ordinary Share
Diluted earnings per ordinary share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of
all dilutive potential ordinary shares. Employee share options, which are performance based, are treated as contingently issuable shares, because their
issue is contingent upon satisfaction of specified performance conditions in addition to the passage of time. These contingently issuable ordinary shares
are excluded from the computation of diluted earnings per ordinary share where the conditions governing exercisability have not been satisfied as at
the end of the reporting period. Options over 8,757,933 (2012: 10,295,973) shares were excluded from the diluted EPS calculation as they were either
antidilutive or contingently issuable ordinary shares which had not satisfied the performance conditions attaching at the end of the reporting period.
A reconciliation of the weighted average number of ordinary shares used for the purpose of calculating the diluted earnings per share amounts is
as follows:
Denominator for Diluted Earnings per Share Calculation
Weighted average number of ordinary shares in issue during the year
Dilutive effect of share options
Weighted average number of ordinary shares for diluted earnings per share
Diluted earnings per ordinary share
Adjusted diluted earnings per ordinary share
11. Dividends Paid and Proposed
Amounts recognised as distributions to equity holders in the year:
Equity dividends on ordinary shares:
Final dividend of 2.50 pence for the year ended 28 September 2012 (2011: 2.40 cent)
Interim dividend of 1.90 pence for the year ended 27 September 2013 (2012: 1.75 pence)
Total
Proposed for approval at AGM:
Equity dividends on ordinary shares:
2013
’000
2012
’000
393,600
8,621
385,010
5,141
402,221
390,151
2013
pence
17.6
2012
pence
8.9
14.1
12.6
2013
£’000
2012
£’000
9,841
7,620
7,680
6,821
17,461
14,501
Final dividend of 2.90 pence for the year ended 27 September 2013 (2012: 2.50 pence)
11,711
9,830
This proposed dividend is subject to approval by the shareholders at the annual general meeting and has not been included as a liability in the
Balance Sheet of the Group as at 27 September 2013, in accordance with IAS 10 Events After the Balance Sheet Date.
The proposed final dividend for the year ended 27 September 2013 will be payable on 2 April 2014 to shareholders on the Register of Members at
6 December 2013.
Greencore Group plc Annual Report and Accounts 2013 96
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
12. Goodwill and Intangible Assets
Year ended 27 September 2013
Opening net book amount, as previously reported
Adjustments to provisional fair values previously recognised on business
combinations (Note 30)
Opening net book amount, as represented
Additions
Disposals
Currency translation adjustment
Amortisation charge
Closing net book amount
At 27 September 2013
Cost
Accumulated amortisation
Net book amount
Year ended 28 September 2012, as previously reported
Opening net book amount
Acquisitions through business combinations
Additions
Currency translation adjustment
Amortisation charge
Closing net book amount
At 28 September 2012, as previously reported
Cost
Accumulated amortisation
Net book amount
Computer
software
and other
intangibles
£’000
Goodwill
£’000
Acquisition
related
intangible
assets –
Customer
related
£’000
Acquisition
related
intangible
assets –
Non-
customer
related#
£’000
Total
£’000
444,452
3,025
53,782
1,140
502,399
1,432
445,884
–
–
313
–
446,197
446,197
–
446,197
–
–
–
1,432
3,025
4,966
(33)
(35)
(1,206)
53,782
–
–
(79)
(7,552)
1,140
–
–
–
(281)
503,831
4,966
(33)
199
(9,039)
6,717
46,151
859
499,924
14,925
(8,208)
64,019
(17,868)
7,703
(6,844)
532,844
(32,920)
6,717
46,151
859
499,924
429,261
16,698
–
(1,507)
–
3,057
–
1,334
–
(1,366)
47,655
13,939
–
(554)
(7,258)
4,091
17
–
(16)
(2,952)
484,064
30,654
1,334
(2,077)
(11,576)
444,452
3,025
53,782
1,140
502,399
444,452
–
444,452
10,052
(7,027)
64,198
(10,416)
7,703
(6,563)
526,405
(24,006)
3,025
53,782
1,140
502,399
# Non-customer related acquisition related intangibles represents all other acquisition related intangible assets, primarily brands and contract related intangibles.
Goodwill acquired in business combinations is allocated, at acquisition, to the cash generating units (CGUs) that are expected to benefit from that
business combination. A summary of the allocation of the carrying value of goodwill by segment is as follows:
Convenience Foods UK
Convenience Foods US
Ingredients & Property
2013
£’000
401,579
42,640
1,978
Impairment Testing and Goodwill
Goodwill acquired through business combinations has been allocated to CGUs for the purposes of impairment testing based on the business unit into
which the business will be assimilated.
The recoverable amount of each CGU is based on a value in use computation. The cash flow forecasts employed for this computation are extracted
from the 2014 budget and four year plan formally approved by the Board of Directors, and specifically exclude incremental profits and other cash
flows stemming from any potential future acquisitions. A terminal value reflecting inflation of 2% (but no other growth) is applied to the year five
cash flows. A present value of the future cash flows is calculated using a discount rate of 8.1% (2012: 9%). Applying these techniques, no impairment
arose in either 2013 or 2012.
446,197
445,884
* As re-presented to reflect adjustments to provisional fair values previously recognised on business combinations as set out in Note 30.
2012
As re-
presented*
£’000
401,582
42,424
1,878
Greencore Group plc Annual Report and Accounts 2013 97
The key assumptions include management’s estimates of future profitability based on modest sales growth and inflation expectations, capital
expenditure requirements including continuing investment, most particularly in Food to Go, Hull and the US, and working capital movements.
The prior year assumptions were prepared on the same basis. The values applied to the key assumptions are derived from a combination of external
and internal factors based on historical experience and take into account management’s expectation of future trends affecting the industry and other
developments and initiatives in the business. Estimation of the carrying value of goodwill is a key judgmental estimate in the preparation of the Group
Financial Statements.
Sensitivity Analysis
If the estimated pre-tax discount rate applied to the discounted cash flows had been 10% higher than management’s estimates, there would have
been no requirement to recognise an impairment against goodwill.
If the estimated cash flow forecasts used in the value in use computations had been 10% lower than management’s estimates, again, there would
have been no requirement to recognise any impairment against goodwill.
13. Property, Plant and Equipment
Year ended 27 September 2013
Opening net book amount, as previously reported
Adjustments to provisional fair values previously recognised
on business combinations (Note 30)
Opening net book amount, as re-presented
Additions
Disposals
Reclassifications
Currency translation adjustment
Impairment
Depreciation charge
Closing net book amount
At 27 September 2013
Cost
Accumulated depreciation
Net book amount
Year ended 28 September 2012, as previously reported
Opening net book amount
Additions
Acquisitions through business combinations (Note 30)
Disposals
Reclassifications
Currency translation adjustment
Impairment
Depreciation charge
Land and
buildings
£’000
Plant and
machinery
£’000
Fixtures
and fittings
£’000
Capital
work in
progress
£’000
Total
£’000
102,947
105,297
5,966
12,798
227,008
(201)
(508)
(16)
–
(725)
102,746
1,024
(2,277)
7,821
233
(371)
(4,255)
104,789
14,091
(1,776)
11,506
(12)
–
(17,828)
5,950
1,667
(19)
256
(3)
–
(1,576)
12,798
14,065
–
(19,583)
–
–
–
226,283
30,847
(4,072)
–
218
(371)
(23,659)
104,921
110,770
6,275
7,280
229,246
139,703
(34,782)
272,451
(161,681)
17,120
(10,845)
7,280
–
436,554
(207,308)
104,921
110,770
6,275
7,280
229,246
98,088
1,357
6,158
(33)
1,705
(485)
(216)
(3,627)
102,811
11,503
3,933
(28)
4,687
(238)
(804)
(16,567)
4,473
2,418
184
–
172
(5)
–
(1,276)
5,052
14,258
–
–
(6,564)
52
–
–
210,424
29,536
10,275
(61)
–
(676)
(1,020)
(21,470)
Closing net book amount, as previously reported
102,947
105,297
5,966
12,798
227,008
At 28 September 2012, as previously reported
Cost
Accumulated depreciation
Net book amount
132,419
(29,472)
250,345
(145,048)
15,243
(9,277)
12,798
–
410,805
(183,797)
102,947
105,297
5,966
12,798
227,008
The impairment charge in the current year arose in the Ingredients and Property division. A charge of £0.37 million arose on the Group’s Irish property
portfolio due to the continued softening of demand for land and the related impact on prices being achieved on sales. This charge is included as an
exceptional item in operating costs in the Income Statement.
Greencore Group plc Annual Report and Accounts 2013
98
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
13. Property, Plant and Equipment (continued)
The impairment charge in the prior year of £1.02 million arose in the Convenience Foods US operating segment. A charge of £0.52 million arose on the
closure of a test facility during the year and was included in operating costs in the Income Statement. A charge of £0.5 million arose on the re-organisation
of the product portfolio in the US as part of the integration of MarketFare and Schau and was included as an exceptional item in operating costs in the
Income Statement.
Assets Held Under Finance Leases
The net book amount and the depreciation charge during the year in respect of assets held under finance leases and capitalised in property,plant and
machinery are as follows:
Cost
Depreciation charge
Net book amount
14. Investment Property
Opening net book amount
Additions
Disposals
Impairment
Currency translation adjustment
Closing net book amount
Analysed as:
Cost
Accumulated depreciation
Net book amount
£’000
1,047
(45)
1,002
2012
£’000
34,087
272
(1,601)
–
(797)
2013
£’000
31,961
510
(271)
(3,794)
464
28,870
31,961
28,870
–
28,870
31,961
–
31,961
The fair value of the Group’s investment properties at 27 September 2013 was £30.3 million (2012: £39.2 million). The valuation was carried out by the
Group Property Director and was arrived at by reference to location, market conditions and status of planning applications.
The impairment charge in the current year arose in the Ingredients and Property Segment. A charge of £3.79 million arose on the Group’s Irish property
portfolio due to the re-zoning of a large portion of the Group’s property assets in Ireland, together with the continued softening of demand for land and
the related impact of prices being achieved on sales. This charge is included as an exceptional item in operating costs in the Income Statement.
15. Inventories
Raw materials and consumables
Work in progress
Finished goods and goods for resale
2012
As re-
presented*
£’000
24,903
796
28,775
54,474
2013
£’000
24,392
951
27,801
53,144
None of the above carrying amounts have been pledged as security for liabilities entered into by the Group.
Inventory recognised within cost of sales (pre-exceptional)
733,906
630,472
* As re-presented to reflect adjustments to provisional fair values previously recognised on business combinations as set out in Note 30.
Greencore Group plc Annual Report and Accounts 2013
16. Trade and Other Receivables
Current
Trade receivables
Prepayments
VAT
Other receivables
Subtotal – current
Non-current
Other receivables
Total
99
2012
As re-
presented*
£’000
77,560
8,402
7,423
13,654
2013
£’000
85,484
8,959
7,330
13,947
115,720
107,039
1,033
2,817
116,753
109,856
The fair value of current receivables approximates book value due to their size and short-term nature.
Non-current receivables bear interest at market rates or are discounted to present value and accordingly approximate fair value.
The Group’s exposure to credit and currency risk and impairment losses related to trade and other receivables is set out in Note 20.
17. Trade and Other Payables
Current
Trade payables
Employment related taxes
Other payables and accrued expenses
VAT
Declared interim dividend
Subtotal – current
Non-current
Other payables
Total
The Group’s exposure to liquidity and currency risk is disclosed in Note 20.
18. Cash and Cash Equivalents
Cash at bank and in hand, being cash and cash equivalents
Bank overdrafts
Net cash and cash equivalents
2012
As re-
presented*
£’000
2013
£’000
198,071
5,569
91,881
–
7,620
178,490
4,020
93,778
46
6,821
303,141
283,155
2,239
3,089
305,380
286,244
2013
£’000
6,310
(4,554)
1,756
2012
£’000
18,763
–
18,763
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods, between one day
and one month, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. The fair
value of cash and cash equivalents equals the carrying amount. Note 21 includes details of the Group’s net debt at 27 September 2013.
* As re-presented to reflect adjustments to provisional fair values previously recognised on business combinations as set out in Note 30.
Greencore Group plc Annual Report and Accounts 2013 100
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
19. Borrowings
Non-current
Bank borrowings
Private Placement Notes
Finance leases
Subtotal – non-current
Current
Private Placement Notes
Subtotal – current
Total borrowings
The maturity of non-current borrowings is as follows:
Between 1 and 2 years
Between 2 and 5 years
Over 5 years
2013
£’000
2012
£’000
129,676
68,942
1,047
172,130
116,517
–
199,665
288,647
44,094
44,094
–
–
243,759
288,647
2013
£’000
–
148,618
51,047
2012
£’000
49,912
238,735
–
199,665
288,647
The exposure of the Group’s borrowings to interest rate changes and the contractual repricing dates at the balance sheet date are as follows:
6 months or less
1–5 years
Over 5 years
2013
£’000
173,770
68,942
1,047
2012
£’000
172,130
116,517
–
243,759
288,647
Bank Borrowings
The Group’s bank borrowings are denominated in sterling and US dollar and bear floating rate interest. Interest is set at commercial rates based on
a spread over sterling LIBOR and US dollar LIBOR for periods up to six months. At 27 September 2013, the Group’s bank borrowings comprised of
£50 million and $130 million (2012: £95 million and $127 million), the latest maturity being October 2018.
At 27 September 2013, the Group had available £199.5 million (2012: £161.4 million) of undrawn committed borrowing facilities in respect of which all
conditions precedent had been met. Uncommitted facilities undrawn at 27 September 2013 amounted to £43.7 million (2012: £30.9 million).
Private Placement Notes
The Group’s Private Placement Notes were issued in October 2003 and comprise fixed rate debt of $130 million (the US$ Notes) and £25 million (the
Stg£ Notes) respectively.
The US$ Notes comprise $30 million that matured at the end of October 2013 and $100 million not due to mature until October 2015. The fixed rates
on these notes range from 5.65% to 5.90%. These notes have been swapped (using cross-currency interest rate swaps designated as fair value
hedges under IAS 39 Financial Instruments: Recognition and Measurement) from fixed US dollar to floating sterling rates, repricing semi-annually
based on a spread over sterling LIBOR.
The Stg£ Note is a £25 million fixed rate note at 6.19% that matured at the end of October 2013.
In October 2013, the Group issued $65 million in US Notes maturing in October 2021 to replace the US$ and Stg£ Notes that matured at the end of
October 2013.
The average spread the Group paid on its bank borrowings and Private Placement Notes in the year ended 27 September 2013 was 1.78% (2012: 1.78%).
Guarantees
The Group’s bank borrowings and Private Placement Notes are secured by guarantees from Greencore Group plc and cross guarantees from various
companies within the Group. The Group treats these guarantees as insurance contracts and accounts for them as such.
Greencore Group plc Annual Report and Accounts 2013 101
20. Financial Risk Management and Financial Instruments
Financial Risk Management Objectives and Policies
The Group’s activities expose it to a variety of financial risks including interest rate risk, foreign currency risk, liquidity risk, credit risk and price risk. These
financial risks are actively managed by the Group’s treasury department under strict policies and guidelines approved by the Board of Directors. The
Group’s treasury department actively monitors market conditions with a view to minimising the exposure of the Group to changing market factors while
at the same time minimising the volatility of the funding costs of the Group. The Group uses derivative financial instruments such as foreign currency
contracts, cross currency swaps and interest rate swaps to manage the financial risks associated with the underlying business activities of the Group.
Financial Assets and Liabilities
Trade and other receivables
Net cash and cash equivalents
Derivative financial instruments
Bank borrowings
Private Placement Notes
Finance lease
Trade and other payables
Consideration payable
Provisions for liabilities
Loans and
receivables
£’000
FV through
income
statement
£’000
Cash flow
hedges
£’000
2013
Financial
liabilities at
amortised
cost
£’000
Financial
liabilities in
fair value
hedges
£’000
106,537
1,756
–
–
–
–
–
–
–
–
–
6,679
–
–
–
–
–
–
–
–
(70)
–
–
–
–
–
–
–
–
–
(129,676)
(25,000)
(1,047)
(302,208)
(918)
(5,747)
–
–
–
–
(88,036)
–
–
–
–
Carrying
value
£’000
106,537
1,756
6,609
(129,676)
(113,036)
(1,047)
(302,208)
(918)
(5,747)
Fair value
£’000
106,537
1,756
6,609
(132,050)
(113,952)
(1,625)
(302,208)
(918)
(5,747)
The fair value of the financial liabilities held at amortised cost and the financial liabilities in fair value hedges have been calculated by discounting the
expected future cash flows at prevailing interest rates and by applying period end exchange rates.
Trade and other receivables
Net cash and cash equivalents
Derivative financial instruments
Bank borrowings
Private Placement Notes
Trade and other payables
Consideration payable
Provisions for liabilities
Loans and
receivables
As re-
presented*
£’000
FV through
income
statement
£’000
99,410
18,763
–
–
–
–
–
–
–
–
5,643
–
–
–
–
–
2012
Financial
liabilities at
amortised
cost
As re-
presented*
£’000
–
–
–
(172,130)
(25,000)
(282,651)
(4,181)
(6,715)
Cash flow
hedges
£’000
–
–
(2,602)
–
–
–
–
–
Financial
liabilities in
fair value
hedges
£’000
Carrying
value
As re-
presented*
£’000
–
–
–
–
(91,517)
–
–
–
99,410
18,763
3,041
(172,130)
(116,517)
(282,651)
(4,181)
(6,715)
Fair value
As re-
presented*
£’000
99,410
18,763
3,064
(175,580)
(117,079)
(282,651)
(4,181)
(6,715)
The fair value of the financial liabilities held at amortised cost and the financial liabilities in fair value hedges have been calculated by discounting the
expected future cash flows at prevailing interest rates and by applying period end exchange rates.
Fair Value Hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities
Level 2:
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices)
Level 3:
Inputs for the asset or liability that are not observable market data (un-observable inputs)
* As re-presented to reflect adjustments to provisional fair values previously recognised on business combinations as set out in Note 30.
Greencore Group plc Annual Report and Accounts 2013 102
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
20. Financial Risk Management and Financial Instruments (continued)
Fair Value Hierarchy (continued)
Assets carried at fair value
Cross currency swaps – fair value hedges
Forward foreign exchange contracts – not designated as hedges
Liabilities carried at fair value
Interest rate swaps – cash flow hedges
Interest rate swaps – not designated as hedges
Forward foreign exchange contracts – not designated as hedges
2013
Level 2
£’000
9,201
–
9,201
2012
Level 2
£’000
11,867
191
12,058
(70)
(2,453)
(69)
(2,592)
(2,602)
(6,415)
–
(9,017)
During the year, there were no transfers between the different levels identified above.
Interest Rate Risk
The Group’s exposure to market risk for changes in interest rates arises from its floating rate borrowings, cash and cash equivalents and derivatives.
The Group’s policy is to optimise interest cost and reduce volatility in reported earnings. This is managed by reviewing the debt profile of the Group
regularly on a currency by currency basis and by selectively using interest rate swaps to limit the level of floating interest rate exposure.
Sensitivity Analysis for Floating Rate Debt
The full year impact of both an upward and downward movement in each applicable interest rate and interest rate curve by 100 basis points
(assuming all the other variables remain constant) is shown below.
Effect of a downward movement of 100 basis points (cost)
On Profit after tax
On Equity
2013
£’000
2012
£’000
2013
£’000
2012
£’000
(259)
(1,032)
(6,101)
(7,924)
Effect of an upward movement of 100 basis points (gain)
164
874
5,735
6,045
Foreign Currency Risk
The Group is exposed to currency risk as follows:
– Sales and purchases in certain businesses
– Financing
Sales and Purchases in Certain Businesses
The Group is exposed to currency risk on sales and purchases in certain businesses that are denominated in currencies other than the functional
currency of the entity concerned. The Group utilises foreign currency contracts to economically hedge foreign exchange exposures arising from these
transactions. In addition, a significant level of the Group’s head office costs in Dublin are denominated in euro. The Group’s policy is to economically
hedge these costs in order to reduce volatility in reported earnings through the use of foreign currency derivatives as appropriate.
The Group’s trading entity exposures to foreign currency risk for amounts not denominated in the functional currency of the relevant entity at the
balance sheet date were as follows (excluding derivative financial instruments):
Denominated in:
Trade receivables and other receivables
Trade payables and other payables
Net cash and cash equivalents
Gross balance sheet exposure
2013
Euro
£’000
US dollars
£’000
281
(1,303)
271
1,707
(2,046)
53
Sterling
£’000
1,356
(833)
(2,905)
(751)
(286)
(2,382)
2012
Euro
£’000
US dollars
£’000
Sterling
£’000
223
(1,695)
583
(889)
–
(96)
476
380
1,251
(986)
332
597
Greencore Group plc Annual Report and Accounts 2013 103
Financing
Although the Group is an Irish domiciled business and governed by Irish law, the majority of its activity is in the UK and therefore it has adopted
sterling as its functional and reporting currency. The Group finances its operations by obtaining funding at Group level through external borrowings
and, where appropriate, these borrowings are designated as net investment hedges. This enables gains and losses arising on retranslation of foreign
currency borrowings to be recognised in equity, providing a partial offset in equity against the gains and losses arising on translation of the net assets
of the associated operations. A foreign exchange gain of £0.013 million (2012: loss of £1.898 million) was recognised in equity during the period in
respect of borrowings designated as net investment hedges.
The Group has financed its investment in the UK by borrowing sterling. Although a portion of this funding is obtained by directly borrowing sterling,
a significant element of the funding is achieved through US dollar borrowings converted to sterling using cross currency swaps.
Sensitivity Analysis for Primary Foreign Currency Risk
A 10% strengthening of the sterling exchange rate against the euro or US dollar exchange rates in respect of the translation of amounts not
denominated in the functional currency of relevant entities into the functional currency would increase profit after tax and equity by the amount
shown below. This assumes that all other variables remain constant. A 10% weakening of the sterling exchange rate against the euro or US dollar
exchange rates would have an equal and opposite effect.
Impact of 10% strengthening of sterling vs euro gain
On Profit after tax
On Equity
2013
£’000
865
2012
£’000
858
2013
£’000
865
2012
£’000
858
Impact of 10% strengthening of sterling vs dollar gain/(loss)
(120)
(178)
6,864
6,964
The effect on equity of a movement between sterling and US dollar would be offset by the translation of the net assets of the subsidiaries against
which the US dollar borrowings are hedged. The above calculations do not include the variability in Group profitability which arises on the translation
of foreign currency subsidiaries’ financial statements to Group presentation currency.
Liquidity Risk
The Group’s policy on funding capacity is to ensure that it always has sufficient long-term funding and committed bank facilities in place to meet
foreseeable peak borrowing requirements with an appropriate level of additional headroom. A prudent approach to liquidity risk management is
taken by the Group by spreading the maturities of its debt using long-term financing. The Group’s treasury department actively monitors the current
and future funding requirements of the business on a daily basis. Excess funds are placed on short-term deposit for up to one month whilst ensuring
that sufficient cash is available on demand to meet expected operational requirements.
The following are the carrying amounts and contractual liabilities of financial liabilities (including interest payments):
27 September 2013
Non-Derivative Financial Instruments
Bank borrowings
Private Placement Notes
Finance leases
Trade and other payables
Consideration payable
Provisions for liabilities
Derivative Financial Instruments
Interest rate swaps – cashflow hedges
Inflow/(outflow)
Interest rate swaps – not designated as hedges
Inflow/(outflow)
Cross currency swaps – hedges
Inflow
Outflow
Foreign currency forward contracts
Inflow
Outflow
Carrying
amount
£’000
Contractual
amount
£’000
Period
1-6 months
£’000
Period
6-12 months
£’000
Period
1-5 years
£’000
Period
> 5 years
£’000
(129,676)
(113,036)
(1,047)
(302,208)
(918)
(5,747)
(144,439)
(114,445)
(2,080)
(302,208)
(918)
(5,961)
(1,450)
(46,715)
(96)
(302,208)
(918)
(1,711)
(1,601)
(1,828)
(96)
–
–
(2,036)
(91,362)
(65,902)
(768)
–
–
(2,214)
(50,026)
–
(1,120)
–
–
–
(70)
(2,453)
9,201
(69)
(677)
(758)
(518)
509
90
(2,220)
(563)
(502)
(1,155)
88,672
(81,158)
20,942
(18,758)
1,828
(748)
65,902
(61,652)
15,853
(15,932)
15,588
(15,663)
265
(269)
–
–
–
–
–
–
–
Greencore Group plc Annual Report and Accounts 2013 104
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
20. Financial Risk Management and Financial Instruments (continued)
Liquidity Risk (continued)
28 September 2012
Non-Derivative Financial Instruments
Bank borrowings
Private Placement Notes
Trade and other payables
Consideration payable
Provisions for liabilities
Derivative Financial Instruments
Interest rate swaps – cashflow hedges
Inflow/(outflow)
Interest rate swaps – not designated as hedges
Inflow/(outflow)
Cross currency swaps – fair value hedges
Inflow
Outflow
Foreign currency forward contracts
Inflow
Outflow
Carrying
amount
£’000
Contractual
amount
£’000
Period
1-6 months
£’000
Period
6-12 months
£’000
Period
1-5 years
£’000
Period
> 5 years
£’000
(172,130)
(116,517)
(283,107)
(3,701)
(6,715)
(188,348)
(119,440)
(283,107)
(3,701)
(6,937)
(2,124)
(3,123)
(282,620)
(2,095)
(662)
(2,060)
(3,123)
–
(1,071)
(2,687)
(184,164)
(113,194)
(487)
(535)
(3,588)
–
–
–
–
–
(2,602)
(6,415)
11,867
191
(3,180)
(312)
(346)
(2,285)
(237)
(6,527)
(2,126)
(2,154)
(2,247)
92,773
(64,205)
2,349
(799)
2,349
(711)
88,075
(62,695)
14,392
(14,243)
12,267
(12,168)
1,312
(1,279)
813
(796)
–
–
–
–
–
Credit Risk
Credit risk refers to the risk of financial loss to the Group if a counterparty defaults on its contractual obligations on financial assets held in the
Balance Sheet. Risk is monitored both centrally and locally. The Group derives a significant proportion of its revenue from sales to a limited number of
major customers. Sales to individual customers can be of significant value and the failure of any such customer to honour its debts could materially
impact the Group’s results. The Group derives significant benefit from trading with its large customers and manages the risk by regularly reviewing
the credit history and rating of all significant customers.
The Group assessed the carrying value of other receivables based on management’s assessment and knowledge of the counterparty. The amounts
due were neither past due nor impaired at 27 September 2013.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet:
Trade receivables
Other receivables
Cash and cash equivalents
Derivative financial instruments
Carrying Amount
2012
As re-
presented*
£’000
77,560
14,427
18,763
12,058
2013
£’000
85,484
14,087
6,310
9,201
Trade Receivables
74% of revenue in the Convenience Foods segment are to the top six UK retailers. Revenue earned individually from four of these customers,
£180.1 million, £166.1 million, £146.1 million and £145.2 million respectively represents more than 10% of the Group’s revenue.
The Group also manages credit risk through the use of a receivables purchase arrangement. Under the terms of this agreement the Group has
transferred substantially all of the credit risk and control of the receivables, which are subject to this agreement, and accordingly £9.3 million
(2012: £nil) has been derecognised at year end.
* As re-presented to reflect adjustments to provisional fair values previously recognised on business combinations as set out in Note 30.
Greencore Group plc Annual Report and Accounts 2013 The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
Ireland
United Kingdom
Other Europe
Rest of World
105
Carrying Amount
2013
£’000
7,391
68,386
45
9,662
85,484
2012
£’000
6,503
65,105
64
5,888
77,560
Ageing of Trade Receivables
The aged analysis of trade receivables split between amounts that were neither past due nor impaired, amounts past due but not impaired and
amounts that are impaired at 27 September 2013 and 28 September 2012 were as follows:
Neither past due nor impaired:
Receivable within 3 months of the balance sheet date
Past due but not impaired:
Receivable between 1 and 6 months of the balance sheet date
Impaired
Not receivable
Total
2013
£’000
2012
£’000
75,154
68,274
10,330
9,286
–
–
85,484
77,560
Trade receivables are in general receivable within 90 days of the balance sheet date, are unsecured and are not interest bearing. The figures disclosed
above are stated net of provisions for impairment. The movements in the provision for impairment of receivables are as follows:
At beginning of year
Provided during year
Acquisition through business combinations
Written-off during year
Recovered during year
Translation adjustment
At end of year
2013
£’000
1,276
342
–
(1,074)
(51)
81
574
2012
£’000
2,486
1,260
121
(2,565)
(4)
(22)
1,276
Cash and Cash Equivalents
Exposure to credit risk on cash and derivative financial instruments is actively monitored by the Group’s treasury department. The maximum
exposure to credit risk for cash and cash equivalents by geographic location of financial institution was as follows:
Europe
UK
Ireland and other
Carrying Amount
2013
£’000
3,376
707
2,227
6,310
2012
£’000
6,387
12,319
57
18,763
Price Risk
The Group purchases a variety of commodities which can experience significant price volatility. The price risk on these commodities is managed
by the Group’s purchasing function. It is Group policy to minimise its exposure to volatility by adopting an appropriate forward purchase strategy.
Greencore Group plc Annual Report and Accounts 2013 106
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
20. Financial Risk Management and Financial Instruments (continued)
Derivative Financial Instruments
Derivative financial instruments recognised as assets and liabilities in the Group Balance Sheet are analysed as follows:
Current
Cross currency interest rate swaps – fair value hedges
Interest rate swaps – not designated as hedges
Forward foreign exchange contracts – not designated as cash flow hedges
Non-current
Cross currency interest rate swaps – fair value hedges
Interest rate swaps – not designated as hedges
Interest rate swaps – designated as hedges
Total
Current
Forward foreign exchange contracts – not designated as cash flow hedges
Non-current
Cross currency interest rate swaps – fair value hedges
Interest rate swaps – not designated as hedges
Interest rate swaps – designated as hedges
Forward foreign exchange contracts – not designated as cash flow hedges
Total
2013
Assets
£’000
Liabilities
£’000
Net
£’000
966
–
–
966
8,235
–
8,235
9,201
966
(277)
(69)
620
8,235
(2,176)
(70)
5,989
6,609
–
(277)
(69)
(346)
–
(2,176)
(70)
(2,246)
(2,592)
2012
Assets
£’000
Liabilities
£’000
Net As re-
presented
£’000
170
170
11,867
–
21
11,888
12,058
–
–
170
170
–
(6,415)
(2,602)
–
(9,017)
(9,017)
11,867
(6,415)
(2,602)
21
2,871
3,041
Derivative instruments which are held for trading and are not designated as effective hedging instruments are classified as a current asset or liability
(as appropriate) regardless of maturity if the Group expects that they may be settled within 12 months of the balance sheet date. Derivative instruments
that are designated as effective hedging instruments are classified as a current or non-current asset or liability by reference to the maturity of the
hedged item. All other derivative instruments are classified by reference to their maturity date.
Cross-Currency Interest Rate Swaps
The Group utilises cross-currency interest rate swaps to swap fixed rate US dollar denominated debt of $130 million into floating rate sterling debt
of £78 million. The floating rates are based on sterling LIBOR. These swaps are designated as fair value hedges under IAS 39 Financial Instruments:
Recognition and Measurement.
Interest Rate Swaps
The Group utilises interest rate swaps to convert floating rate sterling and US dollar debt into fixed rate debt liabilities. The principal amount of
the Group’s borrowings which are swapped at 27 September 2013 total £125 million and US$70 million (2012: £125 million and US$70 million).
In addition, the Group has entered into forward starting interest rate swaps of £50 million and US$30 million commencing in October 2013 that
replace similar sized maturing instruments at a lower fixed cost. The total value of interest rate swaps designated as cash flow hedges under IAS 39
Financial Instruments: Recognition and Measurement at 27 September 2013 was £100 million and US$70 million (inclusive of the forward starting
interest rate swaps). At 27 September 2013, the fixed interest rates varied from 0.93% to 5.70% (2012: 0.93% to 5.70%) with maturities ranging from
28 October 2013 to 28 October 2018 (2012: October 2013 to October 2018).
Forward Foreign Exchange Contracts
The notional principal amounts of outstanding forward foreign exchange contracts at 27 September 2013 total £15.9 million (2012: £14.4 million).
No outstanding forward foreign exchange contracts are designated as cashflow hedges as at the 27 September 2013.
Greencore Group plc Annual Report and Accounts 2013 107
Capital Risk Management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising return to stakeholders
through the optimisation of the debt and equity balance. Invested Capital is defined as the sum of all current and non current assets (including intangibles),
less current and non-current liabilities with the exception of debt items, derivatives and retirement benefit obligations. The Group’s return on invested capital
is calculated by dividing net operating profit after tax (‘NOPAT’) by average invested capital. NOPAT is calculated as operating profit (pre-exceptional charges
and amortisation of acquisition related intangibles) including share of associates less tax at the effective rate in the income statement. The average invested
capital is calculated by adding together the invested capital from the opening and closing balance sheet and dividing by two. The Group monitors the return
on invested capital of the Group as a key performance indicator. An adjustment was made to the FY12 calculation to the opening invested capital to exclude
the consideration payable to Uniq shareholders included on the September 2011 Balance Sheet.
Total assets
Total liabilities
Net debt (Note 21)
Derivatives not designated as fair value hedges (Note 20)
Retirement benefit obligation (net of deferred tax asset) (Note 23)
Consideration payable on acquisition of Uniq
Capital for ROIC calculation
2012
As re-
presented*
£’000
2013
£’000
2011
£’000
1,010,860 1,018,938
(818,419)
258,017
8,826
115,859
–
(758,813)
232,802
2,592
114,279
–
1,035,873
(841,273)
139,788
9,442
105,869
112,702
601,720
583,221
562,401
21. Analysis of Net Debt
Reconciliation of Opening to Closing Net Debt
Net debt is a non-IFRS measure which comprises current and non-current borrowings and the cross-currency interest rate swaps in fair value hedges
related to the Private Placement Notes less net cash and cash equivalents. It does not include other derivative financial instruments, but does include
the proportion of the fair value of the hedging adjustment on the Private Placement Notes which is included in their carrying value on the balance sheet.
The reconciliation of opening to closing net debt for the year ended 27 September 2013 is as follows:
Net cash and cash equivalents
Bank borrowings
Finance leases
Private Placement Notes
Cross-currency interest rate swaps – fair value hedges
Total
At 28
September
2012
£’000
18,763
(172,130)
–
(116,517)
11,867
(258,017)
Acquisitions
£’000
Cash flow
£’000
Hedge
adjustment
£’000
Translation
and
non-cash
adjustments
£’000
At 27
September
2013
£’000
1,756
(129,676)
(1,047)
(113,036)
9,201
–
–
–
–
–
–
(16,889)
43,138#
–
–
–
26,249
–
–
–
3,481
(2,666)
(118)
(684)
(1,047)
–
–
815
(1,849)
(232,802)
# During the year, the Group repaid bank borrowings of £5.0 million and repaid £38.2 million on its revolving credit facility.
Net cash and cash equivalents
Bank borrowings
Finance leases
Private Placement Notes
Cross-currency interest rate swaps – fair value hedges
Total
At 30
September
2011
£’000
81,564
(117,609)
–
(120,107)
16,364
Acquisitions
£’000
Cash flow
£’000
Translation
and
non-cash
adjustments
£’000
Hedge
adjustment
£’000
2,686
–
–
–
–
(65,712)
(55,868)#
–
–
–
–
–
–
3,590
(4,497)
225
1,347
–
–
–
At 28
September
2012
£’000
18,763
(172,130)
–
(116,517)
11,867
(139,788)
2,686
(121,580)
(907)
1,572
(258,017)
# During the year, the Group repaid bank borrowings of £20.5 million and drew down £76.4 million on its revolving credit facility.
* As re-presented to reflect adjustments to provisional fair values previously recognised on business combinations as set out in Note 30.
Greencore Group plc Annual Report and Accounts 2013
108
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
21. Analysis of Net Debt (continued)
Currency Profile
The currency profile of net debt and derivative financial instruments at 27 September 2013 was as follows:
Net cash and cash equivalents
Borrowings
Derivative financial instruments
US dollar
£’000
2,226
(79,676)
168
(77,282)
Euro
£’000
Sterling
£’000
Total
£’000
302
–
–
302
(772)
(164,083)
6,441
1,756
(243,759)
6,609
(158,414)
(235,394)
The currency profile of net debt and derivative financial instruments at 28 September 2012 was as follows:
Net cash and cash equivalents
Borrowings
Derivative financial instruments
Interest Rate Profile
The interest rate profile of net debt at 27 September 2013 was as follows:
EUR
STG
USD
The interest rate profile of net debt at 28 September 2012 was as follows:
EUR
STG
USD
22. Provisions for Liabilities
At beginning of year, as previously reported
Adjustments to provisional fair values previously recognised on business
combinations (Note 30)
At beginning of year, as restated
Provided in year
Utilised in year
Disposed of in the year
Unwind of discount to present value in the year
Currency translation adjustment
At end of year
US dollar
£’000
3,870
(78,228)
(1,073)
Euro
£’000
2,766
–
–
Sterling
£’000
Total
£’000
12,127
(210,419)
4,114
18,763
(288,647)
3,041
(75,431)
2,766
(194,178)
(266,843)
Floating
rate
net debt
£’000
302
(4,607)
(34,077)
Fixed rate
net debt
£’000
–
(151,047)
(43,373)
Total
£’000
302
(155,654)
(77,450)
(38,382)
(194,420)
(232,802)
Floating
rate
net debt
£’000
2,766
(37,524)
(31,060)
Fixed rate
net debt
£’000
–
(148,901)
(43,298)
Total
£’000
2,766
(186,425)
(74,358)
(65,818)
(192,199)
(258,017)
Deferred
contingent
consideration
£’000
Leases
£’000
Remediation
and closure
£’000
1,237
10,391
3,926
Other
£’000
5,155
Total
£’000
20,709
–
366
–
–
366
1,237
–
–
–
–
2
1,239
10,757
–
(1,353)
–
185
(5)
9,584
3,926
4,350
(4,955)
(760)
–
(99)
2,462
5,155
–
(563)
–
–
19
21,075
4,350
(6,871)
(760)
185
(83)
4,611
17,896
Greencore Group plc Annual Report and Accounts 2013 Analysed as:
Non-current liabilities
Current liabilities
109
2012
As re-
presented*
£'000
12,479
8,597
21,076
2013
£'000
10,968
6,928
17,896
* As re-presented to reflect adjustments to provisional fair values previously recognised on business combinations as set out in Note 30.
The estimation of provisions is a key judgement in the preparation of the financial statements.
Deferred Contingent Consideration
Deferred contingent consideration relates to the acquisition of Schau. Further information is set out in Note 30.
Leases
Lease provisions consist of (a) provisions for leasehold dilapidations in respect of certain leases, relating to the estimated cost of reinstating leasehold
premises to their original condition at the time of the inception of the lease as provided for in the lease agreement; and (b) provisions for onerous
contractual obligations for properties held under operating lease. It is anticipated that these will be payable within six years.
Remediation and Closure
Remediation and closure obligations were established to cover either a statutory, contractual or constructive obligation of the Group.
In the Ingredients & Property segment, remediation and closure obligations primarily relate to the closure of Irish Sugar and the exit from sugar
processing. A portion of the balance provided is not contracted and accordingly the timing of payments is subject to a degree of uncertainty.
In the prior year, remediation and closure obligations in the Convenience Foods segment relate to the exit from yoghurt production and the exit from
the loss-making everyday desserts business. The restructuring project completed in January 2013.
Other
Other provisions primarily consist of provisions for litigation, warranty and other claims arising from the sale and closure of businesses. It is
anticipated that these will be payable within five years.
23. Retirement Benefit Obligations
The Group operates defined contribution pension schemes in all of its main operating locations. The Group also has defined benefit schemes as set
out below. Scheme assets are held in separate trustee administered funds.
Defined Contribution Schemes
The total cost charged to income of £2.980 million (2012: £3.251 million) represents employer contributions payable to these schemes at rates
specified in the rules of the schemes. At year-end, £0.231 million (2012: £0.370 million) was included in other accruals in respect of defined
contribution pension accruals.
Defined Benefit Schemes
The Group operates four defined benefit schemes in the Republic of Ireland (the Irish schemes) and four defined benefit schemes and two benefit
commitments in the UK (the UK schemes). The Projected Unit Credit actuarial cost method has been employed in determining the present value of
the defined benefit obligation arising, the related current service cost and, where applicable, past service cost.
The Group’s cash contributions to its pension schemes are generally determined by reference to actuarial valuations undertaken by the schemes’ actuaries
at intervals not exceeding three years and not by the provisions of IAS 19. These funding valuations can differ materially from the requirements of IAS 19.
In particular the discount rate used to determine the value of liabilities under IAS 19 is determined by reference to the yield on high grade corporate bonds
of comparable duration to the liabilities. In contrast the discount rate used in the ongoing valuation is generally determined by reference to the yield on
the scheme’s current and projected future investment portfolio. Where a funding valuation reveals a deficit in a scheme, the Group will generally agree
a schedule of contributions with the Trustees designed to address the deficit over an agreed future time horizon. Based on current discussions with the
trustees of the scheme cash contributions are expected to amount to £15 million in FY14.
Certain comparatives have been restated to disclose scheme information by geographical location so as to provide users of the financial statements with
more information to evaluate the nature of the schemes and their financial effects.
All of the defined benefit schemes are closed to future accrual and there is an assumption applied in the valuation of the schemes that there will be
no discretionary increases in pensions in payment.
Actuarial gains and losses and the associated movement in the deferred tax asset are recognised in retained income via the Statement of Recognised
Income and Expense.
Greencore Group plc Annual Report and Accounts 2013 110
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
23. Retirement Benefit Obligations (continued)
Defined Benefit Schemes (continued)
Full actuarial valuations were carried out between 31 March 2010 and 5 April 2012. In general, actuarial valuations are not available for public
inspection, however, the results of valuations are advised to the members of the various schemes.
The size of the obligation is sensitive to judgmental actuarial assumptions. These include demographic assumptions covering mortality, economic
assumptions covering price inflation and benefit increases, together with the discount rate. The expected return on plan assets is also a key judgement.
The principal actuarial assumptions were as follows:
Rate of increase in pension payment
Discount rate
Inflation rate
Irish Schemes
UK Schemes
2013
2012
2013
0%‡
3.50%
1.90%
0%‡
4.00%
1.90%
3.20%
4.60%
3.30%
2012
2.60%
4.60%
2.70%
‡ The pension increase rate shown applies to the majority of the liability base. However certain categories of employees within the Group have an entitlement to pension indexation
and this is allowed for in the calculation.
The expected long-term rates of return on the assets of the schemes were as follows:
Irish Schemes
UK Schemes
2013
2012
2013
2012
Equities
Bonds
Property
Cash/Other
7.00%
6.60%
6.60%
2.60%–3.60% 2.10%–4.00% 3.90%–4.30% 3.70%–4.60%
6.60%
0.50%
6.00%
2.00%
5.60%
2.00%
7.40%
5.00%
7.40%
The expected long-term rate of return on scheme assets was calculated taking account of the current level of expected returns on least risk
investments (primarily government bonds), the historical level of the risk premium associated with other asset classes in which the portfolio is
invested and the expectations of the future returns for each asset class.
Total return on plan assets for the year
2013
£’000
2012
£’000
24,570
54,683
Assumptions regarding future mortality experience are set based on information from published statistics and experience in all geographic regions
and are selected to reflect the characteristics and experience of the membership of the relevant plans. In relation to the UK, this has been done by
adjusting standard mortality tables to reflect recent research into mortality experience in the UK (S1N (YoB) MC tables combined with an underpin
for improvement factors). The average life expectancy, in years, of a pensioner retiring at 65 is as follows:
Male
Female
Sensitivity of Pension Liability to Judgmental Assumptions
Assumption
Discount rate
Rate of inflation
Rate of mortality
Irish Schemes
UK Schemes
2013
years
22
24–25
2012
years
22
24–25
2013
years
24
27
2012
years
24
27
Change in assumption
Impact on Scheme
Liabilities
Irish
Schemes
UK
Schemes
Increase/decrease by 0.5% / by 6.2% / by 9.2%
Increase/decrease by 0.5% / by 2.3% / by 8.3%
by 2.6% by 2.4%
Members assumed to live 1 year longer
Greencore Group plc Annual Report and Accounts 2013 111
Market Value of the Assets of the Schemes
Equities
Bonds
Property
Cash/Other
Total market value at end of year
Effect of Paragraph 58(b) limit
Present value of scheme liabilities
Deficit in schemes
Deferred tax asset (Note 9)
Net liability at end of year
Irish
Schemes
£’000
93,873
85,505
13,912
29,801
2013
UK Schemes
£’000
79,029
33,562
12,949
24,839
Total
£’000
172,902
119,067
26,861
54,640
Irish
Schemes
£’000
85,708
83,347
13,150
27,181
2012
UK Schemes
£’000
67,641
31,957
11,771
24,953
Total
£’000
153,349
115,304
24,921
52,134
223,091
–
(241,585)
150,379
(8)
(269,422)
373,470
(8)
(511,007)
209,386
–
(235,767)
136,322
(631)
(251,151)
345,708
(631)
(486,918)
(18,494)
–
(119,051)
23,266
(137,545)
23,266
(26,381)
–
(115,460)
25,982
(141,841)
25,982
(18,494)
(95,785)
(114,279)
(26,381)
(89,478)
(115,859)
Defined Benefit Pension Assets and Liabilities are Analysed in the Group Balance Sheet
Non-current liabilities
Expense Charged in the Group Income Statement in Respect of Defined Benefit Pension Schemes
Curtailment gain (Note 6)
Interest cost
Expected return on plan assets
Total included in finance costs
Actuarial Losses Recognised in the Statement of Recognised Income and Expense
Actual return less expected return on pension scheme assets
Effect of Paragraph 58(b) limit
Actuarial losses arising on the scheme liabilities
Total included in the Statement of Recognised Income and Expense
Cumulative Actuarial Loss Recognised in the Statement of Recognised Income and Expense
At beginning of year
Actuarial loss for the year
At end of year
Movement in the Fair Value of Plan Assets
At beginning of year
Expected return on plan assets
Actuarial gain/(loss)
Contributions by employers
Benefits and expenses paid
Currency translation adjustment
At end of year
2013
£’000
2012
£’000
(137,545)
(141,841)
2013
£’000
(4,368)
2012
£’000
–
2013
£’000
2012
£’000
20,995
(17,243)
22,226
(17,568)
3,752
4,658
2013
£’000
7,499
623
(17,080)
2012
£’000
37,115
(474)
(60,412)
(8,958)
(23,771)
2013
£’000
2012
£’000
(192,818)
(8,958)
(169,047)
(23,771)
(201,776)
(192,818)
2013
£’000
345,708
17,243
7,499
13,825
(21,952)
11,147
2012
£’000
314,692
17,568
37,115
14,830
(22,515)
(15,982)
373,470
345,708
Greencore Group plc Annual Report and Accounts 2013 112
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
23. Retirement Benefit Obligations (continued)
Movement in the Present Value of Defined Benefit Obligations
At beginning of year, as previously reported
Interest cost
Curtailment gain
Actuarial loss
Benefits and expenses paid
Currency translation adjustment
At end of year
History of Experience Adjustments
Present value of defined benefit obligations
Fair value of scheme assets
Effect of Paragraph 58(b) limit
Deficit in the schemes
2013
£’000
2012
£’000
486,918
20,995
(4,368)
17,080
(21,952)
12,334
444,902
22,226
–
60,412
(22,515)
(18,107)
511,007
486,918
2013
£’000
2012
£’000
2011
£’000
2010
£’000
2009
£’000
(511,007)
373,470
(8)
(486,918)
345,708
(631)
(444,902)
314,692
(157)
(423,539)
323,521
(456)
(408,249)
317,048
–
(137,545)
(141,841)
(130,367)
(100,474)
(91,201)
Difference between the expected and actual return on scheme assets (£’000)
As a percentage of scheme assets
2013
7,499
2.0%
2012
37,115
10.7%
(21,884)
7.0%
18,405
5.7%
2011
2010
2009
Actuarial (losses)/gains on scheme liabilities (£’000)
As a percentage of the present value of scheme liabilities
(17,080)
3.3%
(60,412)
12.4%
(15,537)
3.5%
(42,835)
10.1%
(33,129)
10.4%
(10,417)
2.6%
Total recognised in Statement of Recognised Income and Expenses (£’000)
As a percentage of the present value of the scheme liabilities
(8,958)
1.8%
(23,771)
4.9%
(36,942)
8.3%
(24,886)
5.9%
(43,546)
10.7%
Greencore Group Pension Scheme Contingent Asset
The Greencore Group Pension Scheme (“the Scheme”) has a mortgage and charge relating to certain property assets of the Group with a carrying
value of £5.1 million (2012: £8.7 million) for use as a contingent asset of the Scheme. Under the terms of the mortgage and charge, should a disposal
of these property assets occur that meets the terms of the mortgage and charge, the Scheme is entitled to a portion of the sale proceeds. The
maximum amount recoverable by the Trustees of the Scheme under the mortgage and charge is the amount required for the Scheme to meet the
minimum funding standard under the Pension Acts 1990-2009. During the year £0.6 million (2012: £0.4 million) was paid to the Scheme in accordance
with this arrangement.
Hazlewood Foods Retirement Benefits Scheme Pension Funding Partnership
The Group entered into arrangements with the Hazlewood Foods Retirement Benefits Scheme (“the Scheme”) to address £40.0 million of the
actuarial deficit in the Scheme. The substance of this arrangement is to reduce the cash funding which would otherwise be required based on the
latest actuarial valuation, whilst improving the security of the Scheme members’ benefits.
On 10 May 2013, the Group made a contribution to the Scheme of £32.8 million. On the same day, the Scheme’s trustees invested £32.8 million in
Greencore Convenience Foods Limited Partnership (“SLP”) as a limited partner. SLP was established by Greencore Prepared Meals Limited, a wholly
owned subsidiary of the Group, to hold properties of the Group and loan notes issued by Greencore Convenience Foods I Limited Liability Partnership
(“LLP”). LLP was established by SLP and holds certain trade receivables of the Group. As at 27 September 2013, the properties held by SLP had a
carrying value of £19.1 million and the trade receivables held by SLP had a carrying value of £36.0 million in the Group Financial Statements. The
properties are leased to other Group undertakings. As a partner in SLP, the Scheme is entitled to a semi-annual share of the profits of SLP until 2029.
These partnerships are controlled by the Group, and as such, they are fully consolidated as wholly owned subsidiaries in accordance with IAS 27
Consolidated and Separate Financial Statements and SIC 12 Consolidation – Special Purpose Entities. Under IAS 19 Employee Benefits, the investment
held by the Scheme in SLP does not represent a plan asset for the purposes of the Group’s consolidated accounts. Accordingly, the Scheme’s deficit
position presented in the Group Financial Statements does not reflect the investment in SLP held by the Scheme. Distributions from SLP to the Scheme
are treated as contributions by employers in the Group Financial Statements on a cash basis.
Adoption of ‘IAS 19 (Revised 2011): Employee Benefits’
From 1 October 2013 the Group will be applying ‘IAS 19 (Revised 2011): Employee Benefits’. Implementing this standard is expected to have the
following impact:
– the non-cash financing charge is expected to increase as a single liability discount rate will be used for the net of assets and liabilities rather than
a separate expected rate of return on assets and finance charge for liabilities; and
Greencore Group plc Annual Report and Accounts 2013 113
– scheme administration costs including the UK pension protection fund levy will be recognised as an operating cost through the Income
Statement. These costs had previously been taken directly to scheme liabilities as the schemes are all closed to future accrual.
The changes have no impact to the cash funding requirement for the schemes and no impact on the deficit for actuarial purposes. The table below
sets out the estimated impact of IAS 19 (revised 2011) if it had been adopted in FY13.
As currently disclosed
Separate recognition of scheme administration costs
Revised calculation of finance charges
Calculated in accordance with IAS 19 (Revised 2011)
24. Equity Share Capital
Authorised
500,000,000 ordinary shares of £0.01 each
500,000,000 deferred shares of €0.01 each
300,000,000 deferred shares of €0.62 each
1 special rights preference share of €1.26 (a)
Issued and fully paid
401,368,367 (2012: 390,451,541) ordinary shares of £0.01 each
Nil (2012: 384,815,847) deferred shares of €0.01 each (f)
Nil (2012: 209,131,215) deferred shares of €0.62 each (f)
Nil (2012: 66) ordinary shares of £0.01 each held as treasury shares (e)
Nil (2012: 3,904,716) ordinary shares of €0.63 each held as treasury shares (e)
1 special rights preference share of €1.26 (a)
Reconciliation of movements on Equity Share Capital
Share capital, at beginning of year
Exercise of share options (b)
Shares issued during the year – redenomination (d)
Scrip dividends (c)
Cancellation of deferred shares of €0.62 and €0.01 each (f)
Redenomination and renominalisation of treasury shares (e)
Group
operating
profit
£’000
59,679
(2,034)
–
Net
financing
costs
£’000
(15,091)
–
(1,713)
57,645
(16,804)
2013
Share of
profit of
associates
after tax
£’000
648
–
–
648
Profit
before
tax
£’000
45,236
(2,034)
(1,713)
Actuarial
gain/(loss)
£’000
Net
pension
Liability
£’000
(8,958)
–
1,713
(137,545)
–
–
41,489
(7,245)
(137,545)
2013
£’000
5,000
4,303
160,072
–
2012
£’000
5,000
4,303
160,072
–
169,375
169,375
2013
£’000
4,013
–
–
–
–
–
4,013
2013
£’000
120,920
5
–
65
(114,899)
(2,078)
2012
£’000
3,904
3,312
111,587
–
2,117
–
120,920
2012
£’000
117,004
7
3,848
61
–
–
4,013
120,920
(a) There is one Special Share of €1.26 in the capital of the Company. The Articles of Association provide that the Special Share may be held only by, or transferred only to, the Minister
for Agriculture, Food & the Marine or some other person appointed by the Minister. In 2011, many of the rights attaching to the Special Share were abolished. Under the Articles of
Association, the consent of the holder of the Special Share is required to wind up the Company.
(b) Details of share options granted under the Company’s Executive Share Option Scheme, savings-related share option schemes, the Deferred Bonus Plan and the Performance
Share Plan and the terms attaching thereto are provided in Note 5 to the Group Financial Statements and in the Report on Directors Remuneration.
(c) During the year 6,486,959 (2012: 6,336,618) shares were issued in respect of the scrip dividend scheme.
(d) The Company issued 384,815,847 new ordinary shares of £0.01 each as fully paid bonus shares to the equity holders of the Company on the basis of one share for every ordinary
share of €0.01 held. The ordinary shares of €0.01 each were then converted into deferred shares of €0.01 in the capital of the Company.
(e) During the year, 3,904,716 Treasury Shares of €0.63 each were redenominated and renominalised into Treasury Shares of £0.01 each. Thereafter, 3,904,782 Treasury Shares were
converted into stock and then converted into 3,904,782 Ordinary Shares of £0.01 each. These shares were subsequently transferred to the Employee Benefit Trust at nominal
value to be held for the purpose of satisfying vestings under the Company’s Employee Share Schemes.
(f) Pursuant to the Articles of Association, the Company has bought back for nil consideration and cancelled all deferred shares that were in issue.
The Company cancelled the deferred shares of €0.62 and €0.01 each that were created on the renominalisation of the Company’s share capital as
part of the rights issue in 2011 and on the redenomination of the Company’s share capital to sterling following the Company’s entry into the FTSE UK
Index Series in 2012 respectively. The deferred shares had no voting or dividend rights and no economic value. The Company acquired the deferred
shares for nil consideration and cancelled them pursuant to the Articles of Association of the Company.
Greencore Group plc Annual Report and Accounts 2013
114
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
25. Non-Controlling Interests
At beginning of year
Profit after tax
Dividends paid to non-controlling interests
Disposals
Currency translation adjustment
At end of year
26. Working Capital Movement
The following represents the Group’s working capital movement:
Inventories
Trade and other receivables
Trade and other payables
27. Commitments Under Operating and Finance Leases
Operating Leases
Future minimum rentals payable under non-cancellable operating leases at year end are as follows:
Within one year
After one year but not more than five years
More than five years
Operating lease commitments relate to property, plant and machinery and fixtures and fittings.
2013
£’000
3,246
1,067
(1,002)
(19)
176
3,468
2012
£’000
2,962
948
(424)
–
(240)
3,246
2013
£’000
(321)
(11,238)
21,413
9,854
2012
£’000
332
4,245
18,832
23,409
2013
£’000
10,527
26,289
24,034
60,850
2012
£’000
10,132
28,774
27,120
66,026
Greencore Group plc Annual Report and Accounts 2013 115
Finance Leases
The future minimum lease payments under finance leases at 27 September 2013, together with the present value of the net minimum lease
payments were as follows:
Within one year
After one year but not more than five years
More than five years
Total minimum lease payments
Less: Amounts allocated to future finance costs
Present value of minimum lease payments
28. Capital Expenditure Commitments
Capital expenditure that has been contracted but not been provided for
Capital expenditure that has been authorised by the Directors but not yet been contracted
2013
2012
Minimum
payments
£’000
Present
value of
payments
£’000
Minimum
payments
£’000
Present
value of
payments
£’000
192
768
1,120
2,080
(1,033)
1,047
35
182
830
1,047
–
1,047
–
–
–
–
–
–
–
–
–
–
–
–
2013
£’000
4,444
6,881
2012
£’000
3,054
7,061
11,325
10,115
29. Contingencies
The Company and certain subsidiaries have given guarantees in respect of borrowings and other obligations arising in the ordinary course of the
business of the Company and other Group undertakings. The Company and other Group undertakings consider these guarantees to be insurance
contracts and account for them as such. The Company treats these guarantee contracts as contingent liabilities until such time as it becomes
probable that a payment will be required under such guarantees.
Pursuant to the provisions of Section 17, Companies (Amendment) Act, 1986, the Company has guaranteed the liabilities of certain subsidiary
undertakings in the Republic of Ireland for the financial year ended 27 September 2013 and as a result, such subsidiary undertakings have been
exempted from the filing provisions of Section 7, Companies (Amendment) Act, 1986.
Various subsidiaries of the Group are subject to legal proceedings. Provisions for anticipated settlement costs and associated expenses arising from
legal and other disputes are made where a reliable estimate can be made of the probable outcome of the proceedings.
The Group provided a bank guarantee to Daiichi Sankyo Development Limited for an amount of £0.9 million to guarantee the performance of the
Group of its payment obligations in respect of a lease assignment agreement.
30. Acquisition and Disposal of Undertakings
Acquisitions in Prior Periods
On 17 April 2012, the Group acquired 100% of MarketFare which is a leading manufacturer of food to go products for convenience and small stores in
the US with facilities in Salt Lake City, Utah and Fredericksburg, Virginia. The acquisition builds additional scale with its key customer, 7-Eleven, and
provides new competencies to Greencore US.
On 21 June 2012, the Group acquired 100% of Schau, a fresh food manufacturer with facilities in Chicago, Illinois and Jacksonville, Florida. The
acquisition forms a critical part of the supply network for a significant new multi-regional contract gain with Starbucks in food to go category.
On 23 August 2012, the Group acquired 100% of ICL, a private label chilled ready meal business with a facility in Consett, Co. Durham. The acquisition
provides additional capacity for the Group in the ready meals category in the UK and complements our existing business.
Greencore Group plc Annual Report and Accounts 2013 116
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
30. Acquisition and Disposal of Undertakings (continued)
Acquisitions in Prior Periods (continued)
The fair value of the assets acquired, determined in accordance with IFRS, as previously reported at 28 September 2012 and subsequently adjusted to
reflect new information obtained about facts and circumstances that existed as of the acquisition date were as follows:
Assets
Intangible assets
Property, plant and equipment
Inventory
Trade and other receivables
Total assets
Liabilities
Trade and other payables
Provisions for liabilities
Deferred tax liabilities
Total liabilities
Net assets acquired
Goodwill
Total enterprise value
Satisfied by:
Cash payments
Cash acquired
Net cash outflow
Consideration payable
Total consideration
As
previously
reported
£’000
Adjustments
to provisional
values
£’000
As re-
presented
£’000
13,956
10,275
5,304
12,488
42,023
(13,814)
(223)
(744)
(14,781)
27,242
16,698
43,940
41,538
(2,686)
38,852
5,088
43,940
–
(725)
150
21
(554)
(32)
(366)
–
(398)
(952)
1,432
480
–
–
–
480
480
13,956
9,550
5,454
12,509
41,469
(13,846)
(589)
(744)
(15,179)
26,290
18,130
44,420
41,538
(2,686)
38,852
5,568
44,420
The fair values of the acquired net assets have been adjusted retrospectively. The Group balance sheet and associated notes are represented to
reflect the effect of these adjustments.
MarketFare
The principal factors contributing to the recognition of goodwill on the MarketFare acquisition is the expected realisation of cost savings and
operational synergies through the combination of the activities of MarketFare with the existing operations of the Group. The total amount of goodwill
recognised of £4.1 million is expected to be deductible for tax purposes.
The principal intangible assets acquired were customer related intangibles amounting to £12.9 million.
As part of the acquisition the Group acquired trade receivables with a fair value of £3.7 million. Management estimate that acquired trade receivables
will be collected in full.
Schau
The principal factors contributing to the recognition of goodwill on the acquisition of Schau is the expected realisation of cost savings and operational
synergies through the combination of the activities of Schau with the existing operations of the Group. The total amount of goodwill recognised of
£12.6 million is expected to be deductible for tax purposes.
The principal intangible assets acquired were customer related intangibles amounting to £0.9 million.
Deferred consideration of £1.78 million is due in respect of this acquisition. £0.5 million is fixed and is payable on 1 October 2013. £1.2 million is
contribution related and is contingent on the contribution performance of Schau.
As part of the acquisition the Group acquired trade receivables with a fair value of £1.3 million. Management estimate that acquired trade receivables
will be collected in full.
ICL
The principal factors contributing to the recognition of goodwill on the acquisition of ICL is the expected realisation of cost savings and operational
synergies through the combination of the activities of ICL with the existing operations of the Group. The total amount of goodwill recognised is
£1.4 million.
Greencore Group plc Annual Report and Accounts 2013 117
No intangible assets were acquired on the purchase of ICL.
Deferred consideration of £0.4 million relating to the acquisition was payable at 27 September 2013.
As part of the acquisition the Group acquired trade receivables with a fair value of £5.3 million. The gross contractual amount receivable was £5.5 million
and management’s estimate of the contractual cashflows not expected to be collected was £0.2 million.
Disposals in the Current Period
Minsterley Disposal
On 15 June 2012 the Group reached agreement to dispose of its Chilled Desserts facility in Minsterley to Müller Dairy UK group. This disposal
completed on 2 January 2013 following the transfer of certain product lines to the Group’s Evercreech facility. Under the terms of the agreement,
ownership of the facility transferred to Müller and the co-packing arrangement for Cadbury chilled desserts terminated. Cash consideration received
was £5.5 million.
The net assets of Minsterley at the date of disposal were as follows:
Assets
Property, plant and equipment
Inventory
Trade and other receivables
Total assets
Satisfied by:
Cash payments
Cash acquired
Net cash outflow
Consideration payable
Total consideration
At disposal
£’000
4,000
1,392
119
5,511
5,511
–
5,511
–
5,511
Disposals in Prior Periods
Deferred consideration of £4.9 million relating to the disposal of the bottled water and Dutch based businesses was received during the year.
These businesses were disposed of in FY10.
31. Related Party Disclosures
The principal related party relationships requiring disclosure in the Group Financial Statements under IAS 24 Related Party Disclosures pertain to the
existence of subsidiaries and associates and transactions with these entities entered into by the Group and the identification and compensation of
key management personnel as addressed in greater detail below.
Subsidiaries and Associates
The Group Financial Statements include the Financial Statements of the Company (Greencore Group plc, the ultimate parent) and its subsidiaries and
associates. A listing of the principal subsidiaries and associates is provided in Note 32 of the Group Financial Statements.
Sales to and purchases from, together with outstanding payables and receivables to and from, subsidiaries, are eliminated in the preparation of the
Group Financial Statements in accordance with IAS 27 Consolidated and Separate Financial Statements. Amounts receivable from and payable to
associates as at the balance sheet date are included as separate line items in the notes to the Group Financial Statements.
Terms and Conditions of Transactions with Associates
In general, sales to and purchases from associates are on terms equivalent to those that prevail in arm’s length transactions. The outstanding
balances included in receivables and payables at the balance sheet date in respect of transactions with associates are unsecured, interest free and
settlement arises in cash. No guarantees have been either requested or provided in relation to the associate company receivables and payables.
Key Management Personnel
For the purposes of the disclosure requirements of IAS 24 Related Party Disclosures, the term ‘key management personnel’ (i.e. those persons having
the authority and responsibility for planning, directing and controlling the activities of the Company), comprises the Board of Directors which manages
the business and affairs of the Company. As identified in the Report on Directors’ Remuneration, the Directors who served during the year, other than
the Non-Executive Directors, serve as executive officers of the Group.
Greencore Group plc Annual Report and Accounts 2013 118
Financial Statements
Notes to the Group Financial Statements
Year Ended 27 September 2013 (continued)
31. Related Party Disclosures (continued)
Key Management Personnel (continued)
Key management personnel compensation was as follows:
Salaries and other short-term employee benefits
Post-employment benefits
Share based payments
Termination
32. Principal Subsidiaries and Associated Undertakings
Percentage share
Name of undertaking
Nature of business
Greencore Advances Limited
Finance Company
Greencore Beechwood Limited*
Holding Company
Greencore Convenience Foods Limited
Pension Funding
Partnership*
Greencore Convenience Foods I Limited
Pension Funding
Liability Partnership*
Greencore Developments Limited
Property Company
Greencore Finance Limited
Finance Company
Greencore Foods Limited*
Holding Company
100
100
100
100
100
100
100
Greencore Food to Go Limited* (formerly
Food Processors
100
Uniq Prepared Foods Limited)
Greencore Funding Limited**
Finance Company
Greencore Grocery Limited* (formerly
Food Processors
Hazlewood Grocery Limited)
100
100
2013
£’000
2,560
439
1,551
910
5,460
2012
£’000
3,218
427
1,063
–
4,708
Registered office
No. 2 Northwood Avenue
Northwood Business Park, Santry
Dublin 9
Greencore Group
UK Centre
Midland Way
Barlborough Links Business Park
Barlborough
Chesterfield S43 4XA
c/o Eversheds LLP
3-5 Melville Street
Edinburgh EH3 7PE
Greencore Group
UK Centre
Midland Way
Barlborough Links Business Park
Barlborough
Chesterfield S43 4XA
No. 2 Northwood Avenue
Northwood Business Park, Santry
Dublin 9
No. 2 Northwood Avenue
Northwood Business Park, Santry
Dublin 9
Greencore Group
UK Centre
Midland Way
Barlborough Links Business Park
Barlborough
Chesterfield S43 4XA
Greencore Group
UK Centre
Midland Way
Barlborough Links Business Park
Barlborough
Chesterfield S43 4XA
P.O. Box 87, 22 Grenville Street
St. Helier, Jersey JE4 8PX
Greencore Group
UK Centre
Midland Way
Barlborough Links Business Park
Barlborough
Chesterfield S43 4XA
Greencore Group plc Annual Report and Accounts 2013 119
Percentage share
Registered office
Name of undertaking
Greencore Prepared Meals Limited*
(formerly Hazlewood Convenience
Group 1 Limited)
Nature of business
Food Processors
100
Greencore USA, Inc***
Food Processors
100
Greencore UK Holdings Limited*
Holding Company
100
Hazlewood (Blackditch) Limited*
Property Company
100
Hazlewood Foods Limited*
Holding Company
100
Irish Sugar Limited
General Trading
Company
Ministry of Cake Limited*
Food Processors
100
100
Premier Molasses Company Limited
Molasses Trading
50
Trilby Trading Limited
Food Industry Suppliers
100
United Molasses (Ireland) Limited*
Molasses Trading
50
Greencore Group
UK Centre
Midland Way
Barlborough Links Business Park
Barlborough
Chesterfield S43 4XA
The Corporation Service Company
1209 Orange Street
City of Willmington
County of Newcastle
Delaware
USA
Greencore Group
UK Centre
Midland Way
Barlborough Links Business Park
Barlborough
Chesterfield S43 4XA
Greencore Group
UK Centre
Midland Way
Barlborough Links Business Park
Barlborough
Chesterfield S43 4XA
Greencore Group
UK Centre
Midland Way
Barlborough Links Business Park
Barlborough
Chesterfield S43 4XA
No. 2 Northwood Avenue
Northwood Business Park, Santry
Dublin 9
Greencore Group
UK Centre
Midland Way
Barlborough Links Business Park
Barlborough
Chesterfield S43 4XA
Harbour Road
Foynes, Co. Limerick
No. 2 Northwood Avenue
Northwood Business Park, Santry
Dublin 9
Duncrue Street
Belfast BT3 9AQ
All the above entities are registered in the Republic of Ireland except those marked with * which are registered within the United Kingdom, that
marked with ** which is registered in Jersey, and that marked with *** which is registered in the U.S.
33. Subsequent Events
Subsequent to the year end the Group refinanced US$65 million of maturing US private placement rates with a new eight year facility. There were no
further significant subsequent events after the balance sheet date.
34. Board Approval
The Group Financial Statements, together with the Company Financial Statements, for the year ended 27 September 2013 were approved by the
Board of Directors and authorised for issue on 25 November 2013.
Greencore Group plc Annual Report and Accounts 2013 120
Financial Statements
Company Statement of Accounting Policies
Year Ended 27 September 2013
Basis of Preparation
The Company Financial Statements have been prepared in sterling, in accordance with generally accepted accounting principles under the historic
cost convention and Irish statute, comprising the Companies Acts, 1963 to 2012, and with the financial reporting standards of the Accounting
Standards Board, as promulgated by the Institute of Chartered Accountants in Ireland.
Profit and Loss
The loss attributable to equity shareholders dealt with in the Financial Statements of the Company was £7.625 million (2012: Profit of £3.861 million).
In accordance with section 148(8) of the Companies Act 1963 and section 7(1A) of the Companies (Amendment) Act 1986, the Company is availing of
the exemption from presenting its individual Profit and Loss Account to the Annual General Meeting and from filing it with the Registrar of Companies.
Foreign Currencies
Transactions in foreign currencies are recorded at the rate ruling at the date of the transactions. The resulting monetary assets and liabilities are
translated at the balance sheet rate. The resulting profits or losses are dealt with in the profit and loss account.
Financial Assets
Investments in subsidiaries and associated undertakings are held at cost. The Company assesses investments for impairment whenever events
or changes in circumstances indicate that the carrying value of an investment may not be recoverable. If any such indication of impairment exists,
the Company makes an estimate of its recoverable amount. When the carrying amount of an investment exceeds its recoverable amount, the
investment is considered impaired and is written down to its recoverable amount.
Depreciation
Depreciation is calculated so as to write off the cost or valuation, less estimated residual value, of each fixed asset during its expected useful life
using the straight line or reducing balance methods over the following periods:
Plant, machinery, fixtures and fittings
No depreciation is provided on freehold land.
3–25 years
Employee Share Options
The Company grants equity settled share based payments and share awards to employees (through Executive Share Option and Share Award
Schemes and employee ShareSave Schemes). In the case of these options, the fair value is determined using a trinomial valuation model, as
measured at the date of grant. The fair value is expensed to the Profit and Loss Account on a straight-line basis over the vesting period, based on an
estimate of the number of shares that will eventually vest.
The proceeds received when options are exercised, net of any directly attributable transaction costs are credited to share capital and share premium.
Taxation
Current tax represents the expected tax payable on the taxable income for the year, using tax rates and tax laws enacted or substantively enacted, at
the balance sheet date along with any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of all timing differences which have originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future, or a right to pay less tax in the future have occurred at the balance sheet date.
Timing differences are temporary differences between profit as computed for taxation purposes and profit as stated in the Financial Statements
which arise because certain items of income and expenditure in the Financial Statements are dealt with in different periods for taxation purposes.
Deferred tax assets are recognised to the extent which they are regarded as recoverable. Recoverability is assessed on the basis that more likely than
not there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
Retirement Benefits
Defined Contribution Pension Plans
A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate defined contribution scheme.
Obligations for contributions to defined contribution pension plans are recognised as an expense in the Profit and Loss Account as due. Any difference
between the amounts charged to the Profit and Loss Account and contributions paid to the pension scheme are included in debtors or creditors in the
Balance Sheet.
Greencore Group plc Annual Report and Accounts 2013
121
Defined Benefit Pension Plan
Pension benefits are funded over the employees’ years of service by way of contributions to a defined benefit scheme operated by the Company.
Pursuant to paragraph 9 (b) of FRS 17, as the Directors of the Company are unable to determine the portion of the pension scheme assets and
liabilities which relate to the employees of the Company, the Company has accounted for the contributions as if the scheme were a defined
contribution scheme. Contributions to the plan are charged to the Profit and Loss Account as due. Any difference between the amounts charged
to the Profit and Loss Account and contributions paid to the pension scheme are included in debtors or creditors in the Balance Sheet.
Share Capital
Ordinary Shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are taken as a deduction,
within equity net of tax, from the proceeds.
Treasury Shares
Where the Company purchases the Company’s equity share capital, the consideration paid is deducted from the total shareholders’ equity and
classified as treasury shares until they are cancelled. Where such shares are subsequently sold or reissued, any consideration received is included in
total shareholders’ equity.
Dividends
Interim dividends payable are recognised as a liability of the Company when the Board of Directors’ resolves to pay the dividend and the shareholders
have been notified in accordance with the Company’s Articles of Association. Final dividends of the Company are recognised as a liability when they
have been approved by the Company’s shareholders.
Cash Flow
The Company has taken advantage of the exemption available to it under FRS 1 Cash Flow Statements not to prepare a statement of cash flows.
Greencore Group plc Annual Report and Accounts 2013 122
Financial Statements
Company Balance Sheet
At 27 September 2013
Fixed assets
Tangible assets
Financial assets
Current assets
Debtors
Cash at bank and in hand
Creditors (amounts due within one year)
Creditors
Net current assets
Net assets
Capital and reserves
Share capital
Share premium account
Capital conversion reserve fund
Other reserves
Profit and loss account
Shareholders’ funds
PG Kennedy
Director
AR Williams
Director
Notes
2013
£’000
2012
£’000
1
2
3
938
88,453
89,391
1,018
88,453
89,471
872,091
54
841,974
25
872,145
841,999
4
516,924
469,515
516,924
469,515
355,221
372,484
444,612
461,955
5
6
6
6
6
4,013
177,330
804
104,427
158,038
120,920
171,469
804
(14,652)
183,414
444,612
461,955
Greencore Group plc Annual Report and Accounts 2013
Notes to the Company Balance Sheet
Year Ended 27 September 2013
1. Tangible Assets
Cost
At 28 September 2012
Additions
At 27 September 2013
Depreciation
At 28 September 2012
Charge for the year
At 27 September 2013
Net book value
At 27 September 2013
At 28 September 2012
2. Financial Assets
Interest in subsidiary undertakings
At beginning of year
Movement in year
At end of year
The principal trading subsidiary and associated undertakings are set out in Note 32 to the Group Financial Statements.
3. Debtors
Amounts falling due within one year
Amounts owed by subsidiary undertakings*
Other debtors
Prepayments and accrued income
* Amounts owed by subsidiary undertakings are classified as current, as all inter-company receivables and payables are repayable on demand.
4. Creditors
Amounts falling due within one year
Bank overdrafts
Amounts owed to subsidiary undertakings*
Declared interim dividend
Trade and other creditors
Accruals
* Amounts owed to subsidiary undertakings are classified as current, as all inter-company receivables and payables are repayable on demand.
5. Share Capital
Details in respect of called-up share capital are presented in Note 24 of the Group Financial Statements.
Computer
software
£’000
Fixtures
and fittings
£’000
1,276
–
1,276
262
79
341
6
–
6
2
1
3
3
4
123
Total
£’000
1,282
–
1,282
264
80
344
935
1,014
938
1,018
2013
£'000
2012
£'000
88,453
–
88,453
84,074
4,379
88,453
2013
£’000
2012
£’000
871,635
153
303
841,427
270
277
872,091
841,974
2013
£’000
2012
£’000
131
503,155
7,620
3,250
2,768
–
455,837
6,821
2,571
4,286
516,924
469,515
Greencore Group plc Annual Report and Accounts 2013 124
Financial Statements
Notes to the Company Balance Sheet
Year Ended 27 September 2013 (continued)
6. Equity Reserves
At beginning of year
Currency translation adjustment
Loss for the financial year attributable to equity holders
of the Company
Employee share based payment expense
Exercise, forfeit or lapse of share based payments
Shares acquired by Employee Benefit Trust (a)
Shares granted to beneficiaries of the Employee Benefit Trust (b)
Cancellation of deferred shares
Redenomination and renominalisation of treasury shares (c)
Dividends
Share
capital
£’000
120,920
–
–
–
5
–
–
(114,899)
(2,078)
65
Share
premium
£’000
171,469
–
–
–
364
–
–
–
–
5,497
Capital
conversion
reserve
fund
£’000
2013
Share
based
payment
reserve
£’000
Own
shares
reserve
£’000
Capital
redemption
reserve
£’000
Profit
and loss
account
£’000
804
–
4,218
189
(18,870)
–
–
–
183,414
(189)
–
–
–
–
–
–
–
–
–
2,521
(678)
–
–
–
–
–
–
–
–
(766)
836
–
–
–
–
–
–
–
–
114,899
2,078
–
(7,625)
–
678
57
(836)
–
–
(17,461)
At end of year
4,013
177,330
804
6,250
(18,800)
116,977
158,038
(a) The Employee Benefit Trust acquired 62,239 (2012: 111,742) shares in the Group with a combined value of £0.06 million (2012: £0.06 million) and a nominal value at the date of
purchase of £0.001 million (2012: £0.001 million) through the scrip dividend scheme and utilisation of dividend income.
Pursuant to the terms of the Employee Benefit Trust, 727,885 (2012: nil) shares were purchased during the financial year ended 27 September 2013 at a cost of £0.7 million (2012:
£nil). The nominal value of these shares, on which dividends have not been waived by the Employee Benefit Trust was £0.07 million (2012: £0.02 million) at the date of purchase.
(b) During the year, 1,402,077 (2012: 1,292,223) shares with a nominal value at the date of transfer of £0.014 million (2012: £0.013 million) were transferred to beneficiaries of the
Employee Benefit Trust.
(c) On 29 January 2013, the Group renominalised and redenominated 3,904,716 Treasury Shares of €0.63 each into Treasury Shares of £0.01 each and thereafter converted 3,904,782
Treasury Shares into stock which were then converted into 3,904,782 Ordinary Shares of £0.01 each and were subsequently transferred to the Employee Benefit Trust at nominal value.
7. Retirement Benefits
The Company operates a defined benefit pension scheme and a defined contribution scheme, with assets held in separate trustee administered funds.
Some employees of the Company are members of a multi-employer defined benefit pension scheme, which is operated in conjunction with other
Group companies. The defined benefit scheme is accounted for as if it were a defined contribution scheme on the grounds that the Company is
unable to identify its share of the underlying assets and liabilities in the scheme on a consistent and reasonable basis. The defined benefit scheme
of which some employees are members is not included on the Balance Sheet of the Company as it is not possible to determine the proportion of the
assets and liabilities of the scheme that relates to the Company on a reasonable and consistent basis. A substantial number of deferred beneficiaries
of the scheme were employees of entities that either no longer trade or are no longer owned by the Group.
Total pension costs for the year amounted to £3.153 million (2012: £3.04 million) in respect of defined benefit schemes and £0.549 million (2012:
£0.483 million) in respect of defined contribution schemes. At year end, £nil (2012: £0.099 million) was included in other creditors in respect of
amounts owed to the scheme.
Disclosures in relation to this and all other Group defined benefit pension schemes are given in Note 23 to the Group Financial Statements.
8. Share-Based Payments
The Company grants share options under various share option plans as detailed in the Report of the Directors. A charge of £2.152 million (2012: £1.228
million) was recognised in the Profit and Loss Account of the Company in respect of the employees of the Company. All disclosures relating to the plans
are given in Note 5 to the Group Financial Statements.
9. Financial Guarantee Contracts
Pursuant to the provisions of Section 17, Companies (Amendment) Act, 1986, the Company has guaranteed the liabilities of certain subsidiary
undertakings in the Republic of Ireland for the financial year ended 27 September 2013. Where the Company has entered into financial guarantee
contracts to guarantee the indebtedness of such subsidiaries, the Company considers these to be insurance contracts and accounts for them as such.
The Company is party to cross guarantees on Group borrowings. These are treated as insurance contracts and accounted for as such.
Greencore Group plc Annual Report and Accounts 2013
125
10. Statutory Information
During the period the average number of persons employed by the Company (excluding Non-Executive Directors) was 27 (2012: 32).
Directors’ remuneration is disclosed in the Report on Directors’ Remuneration and in Note 31 to the Group Financial Statements.
Auditor’s remuneration for the year was as follows:
Audit of the Company Financial Statements
2013
£’000
26
2012
£’000
26
The Company has annual commitments under operating leases expiring between two and five years of £0.469 million and after five years of
£0.201 million.
Greencore Group plc Annual Report and Accounts 2013 126
Financial Statements
Notes
Greencore Group plc Annual Report and Accounts 2013 Notes
127
Greencore Group plc Annual Report and Accounts 2013 128
Financial Statements
Notes
Greencore Group plc Annual Report and Accounts 2013 Greencore Group plc is a leading
convenience food business with
an annual turnover of approximately
£1.2 billion.
Our two markets are the United Kingdom
and the United States where we provide
a wide range of food to go products
supplemented by other chilled, frozen
and ambient foods to major retail and
food service customers.
We have 16 convenience foods facilities
in the UK and six in the US and we employ
over 10,000 people across the UK, the US
and Ireland.
Shareholder and Other Information
Greencore Group plc is an Irish registered company. Its ordinary shares are quoted on the London Stock Exchange. Greencore has a Level 1
American Depositary Receipts (ADR) programme for which BNY Mellon acts as depositary (Symbol: GNCGY). Each ADR share represents four
Greencore ordinary shares.
Shareholding Statistics as at 21 November 2013
Total holders
Units
5,095
3,982
833
569
253
70
42
105
1,834,913
9,425,201
5,811,534
8,592,773
11,546,304
10,432,488
14,251,881
341,923,421
% of
Issued
Capital
0.46
2.33
1.44
2.13
2.86
2.58
3.53
84.67
10,949
403,818,515
100.00
Stockbrokers
Goodbody Stockbrokers
Ballsbridge Business Park
Ballsbridge
Dublin 4
Investec Securities
2 Gresham Street
London EC2V 7QP
UK
American Depositary Receipts
BNY Mellon
101 Barclay Street
22nd Floor – West
New York NY 10286
USA
Website
www.greencore.com
Follow Greencore on Twitter
@GreencoreGroup
Range of units
0 - 1,001
1,001 - 5,000
5,001 - 10,000
10,001 - 25,000
25,001 - 100,000
100,001 - 250,000
250,001 - 500,000
Over 500,001
Total
Financial Calendar
Record date for 2013 final dividend
Annual General Meeting and
Interim Management Statement
Payment date for 2013 final dividend
Half yearly financial report
Interim Management Statement
Financial year end
Interim Dividend Payment
Announcement of Results
6 December 2013
28 January 2014
2 April 2014
20 May 2014
29 July 2014
26 September 2014
October 2014
25 November 2014
Advisors and Registered Office
Company Secretary
Conor O’Leary ACIS
Registered Office
No.2 Northwood Avenue
Northwood Business Park
Santry
Dublin 9
Auditor
KPMG
1 Stokes Place
St Stephen’s Green
Dublin 2
Registrar and Transfer Office
Computershare Investor
Services (Ireland) Limited
Heron House, Corrig Road
Sandyford Industrial Estate
Dublin 18
Solicitors
Arthur Cox
Earlsfort Centre
Earlsfort Terrace
Dublin 2
Eversheds
Bridgewater Place
Water Lane
Leeds LS11 5DR
UK
Slaughter and May
One Bunhill Row
London EC1Y 8YY
UK
You can also view this report online at
http://ar2013.greencore.com/
Greencore Group plc Annual Report and Accounts 2013
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Greencore Group plc
No. 2 Northwood Avenue
Northwood Business Park
Santry
Dublin 9
Tel: +353 1 605 1000
Fax: +353 1 605 1099
(1,500kg of material have been carbon neutralised).