Greencore Group Annual Report 2019

FY2019 Annual Report · Greencore Group

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Delivering
our vision
every day

Annual Report and
Financial Statements 2019

About us

Greencore is a leading
manufacturer of convenience
food in the UK

We supply grocery and other retailers
including all of the major UK supermarkets.

We serve our customers across a broad range of convenience
food categories including: sandwiches, salads, sushi, chilled snacking,
chilled ready meals, chilled soups and sauces, chilled quiche,
ambient sauces and pickles, and frozen Yorkshire Puddings.

2019 Highlights

Group Operations

Revenue

£1,446.1m

(Reported: -3.5%)

(Pro Forma: +2.6%)

Profit before taxation

£56.4m

(FY18: £17.8m)

Group Operating Profit

£99.8m

(FY18: £49.8m)

Basic Earnings per Share
(Basic ‘EPS’)

19.9p

(FY18: 4.8p)

Adjusted Operating Profit

Adjusted Profit Before Tax

£105.5m

(FY18: £104.6m)

£92.3m

(FY18: £79.6m)

The Group uses Alternative
Performance Measures
(‘APMs’) which are non-IFRS
measures to monitor the
performance of its operations
and of the Group as a whole.
These APMs along with their
definitions and reconciliations
to IFRS measures are provided
in the APMs section on pages
180 to 184.

Adjusted Earnings per Share
(Adjusted ‘EPS’)

Free Cash Flow

Return on Invested Capital
(‘ROIC’)

16.0p

(FY18: 15.1p)

£54.9m

(FY18: £92.4m)

14.4%

(FY18: 15.6%)

In this report

Strategic Report

At a Glance

Investment Case

Business Model

Market Trends

Chairman’s Statement

Chief Executive’s Review

Our Strategy

Key Performance Indicators

Sustainability Report

Operating and Financial Review

Risks and Risk Management

Directors’ Report

Board of Directors

Directors’ Report

Corporate Governance Report

Report on Directors’ Remuneration 62

Report of the Audit Committee

Report of the Nomination and
Governance Committee

Statement of Directors’
Responsibilities

100

Financial Statements

Independent Auditor’s Report

Group Income Statement

Group Statement of
Comprehensive Income

Group Statement of
Financial Position

Group Statement of Cash Flows

Group Statement of Changes
in Equity

102

111

112

113

114

115

117

173

174

175

180

IBC

Notes to the Group
Financial Statements

Company Statement of
Financial Position

Company Statement of
Changes in Equity

Notes to the
Company Financial Statements

Other Information

Alternative Performance
Measures

Shareholder and Other
Information

Annual Report and Financial Statements 2019

Certain statements made in this Annual Report are forward-looking. These represent expectations
for the Group’s business, and involve known and unknown risks and uncertainties, many of which
are beyond the Group’s control. The Group has based these forward-looking statements on current
expectations and projections about future events. These forward-looking statements may generally,
but not always, be identified by the use of words such as ‘will’, ‘aims’ ‘anticipates’, ‘continue’, ‘could’,
‘should’, ‘expects’, ‘is expected to’, ‘may’, ‘estimates’, ‘believes’, ‘intends’, ‘projects’, ‘targets’, or the
negative thereof, or similar expressions.

By their nature, forward-looking statements involve risk and uncertainty because they relate
to events and depend on circumstances that may or may not occur in the future and reflect the
Group’s current expectations and assumptions as to such future events and circumstances that may
not prove accurate. A number of material factors could cause actual results and developments to
differ materially from those expressed or implied by forward-looking statements. You should not
place undue reliance on any forward-looking statements. These forward-looking statements are
made as of the date of this Annual Report. The Group expressly disclaims any obligation to publicly
update or review these forward-looking statements other than as required by law.

Strategic ReportAt a Glance

Leading the
convenience
food market

We produce a wide range of fresh food
products including:

2,450

Total number of
Greencore products

717m

Sandwiches and other food
to go products every year

123m

Chilled prepared meals
every year

Sandwiches

Salads

Sushi

Chilled ready meals

Chilled soups and sauces

Chilled quiche

Greencore Group plc

We employ c.11,500
talented, committed
and experienced
people across our UK
and Irish operations.

Dublin –
Head Office

Barlborough –
Corporate Services

Production

Distribution

Irish ingredients

Chilled snacking

Dublin

Barlborough

Distribution
Greencore has built a strong
‘Direct to Store’ distribution
operation comprising
17 distribution centres,
6 picking depots and a
fleet of almost 400 vehicles
that make daily deliveries
to small format stores across
the UK.

Irish ingredients
2 distribution locations
• Edible oils
• Molasses

Food to go
13 production units across
9 locations
• 8 sandwich-focused units
• 3 salad-focused units
• 2 sushi-focused units

Other convenience
categories
8 production units across
7 locations in the UK
• 3 chilled ready meal units
• 2 chilled soups and

sauces units

• 1 chilled quiche unit
• 1 ambient cooking

sauces unit

• 1 frozen Yorkshire

Pudding unit

Ambient sauces
and pickles

Frozen Yorkshire
Puddings

Annual Report and Financial Statements 2019

Strategic Report
Investment Case

Strong platforms to
achieve our medium term
financial ambitions

Strong platforms

Deep customer relationships
with mandate to do more

Our business is about driving the strategies and growth of our
customers. Our relevance, through multiple personal relationships
across functions and levels, underpinned by a relentless focus on
customer service and food safety, makes us a trusted partner in the
food industry.

We are strategic partners, supporting customers throughout the supply
chain and utilising our capabilities in innovation and consumer insight
to drive growth and shared returns for both us and our customers.

Leadership positions in food
to go: the UK’s most attractive
food category

We lead in attractive and structurally-growing categories and
formats in convenience food, particularly in food to go. Growth is
driven by positive consumer and channel dynamics, underpinned
by the structural drivers of convenience, health and wellness, and
great value. The food to go category is also expanding to include
new products, a broader set of consumer occasions, as well as new
customer formats and delivery channels.

Network, capability and teams
set up for future growth

Track record of
outperformance with strong
margin and returns profile

Our well-invested, nationwide infrastructure of production facilities
and distribution network reinforces the business model and provides
us with capacity for growth. We invest carefully in industry-leading
expertise, all underpinned by our Greencore Excellence programmes
and increasing use of analytical and data technology solutions. Our
highly experienced leadership team has wide-ranging food sector
knowledge, and we prioritise people development and employee
engagement.

We have a strong track record of disciplined organic and inorganic
investment in the UK, delivering attractive returns while maintaining,
relatively low levels of financial risk.

Structural growth, strong operational execution and our customer
partnerships drive sustainable revenue and profit growth. Strong
inherent free cash flow is achievable given our well-invested network,
a clean organisational profile and careful cash flow management.

Greencore Group plc

96%

Of sandwich sales are from long term

Ranking in The Advantage Report1 of

customer contracts of 3+ years

chilled convenience suppliers to major

grocery retailers in the UK

Market share2 in:

• Grocery sandwiches

• Grocery sushi

• Italian chilled ready meals

Forecast Compound Annual Growth

Rate (CAGR) in food to go market 2019-

2024 (IGD, 2019)3

c.£300m

77%

Network spend over last five years

Employee engagement4 in the FY19

People at the Core survey

Revenue and Adjusted Operating Profit

1600

1400

1200

1000

800

600

400

110 14.4%

100

FY19 Group ROIC

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

Revenue, UK and Ireland (LHS, £m)

Adjusted Operating Proﬁt, UK and Ireland (RHS, £m)

Deep customer relationships

with mandate to do more

Our business is about driving the strategies and growth of our

customers. Our relevance, through multiple personal relationships

across functions and levels, underpinned by a relentless focus on

customer service and food safety, makes us a trusted partner in the

food industry.

We are strategic partners, supporting customers throughout the supply

chain and utilising our capabilities in innovation and consumer insight

to drive growth and shared returns for both us and our customers.

Leadership positions in food

to go: the UK’s most attractive

food category

We lead in attractive and structurally-growing categories and

formats in convenience food, particularly in food to go. Growth is

driven by positive consumer and channel dynamics, underpinned

by the structural drivers of convenience, health and wellness, and

great value. The food to go category is also expanding to include

new products, a broader set of consumer occasions, as well as new

customer formats and delivery channels.

Network, capability and teams

set up for future growth

Track record of

outperformance with strong

margin and returns profile

Our well-invested, nationwide infrastructure of production facilities

and distribution network reinforces the business model and provides

us with capacity for growth. We invest carefully in industry-leading

expertise, all underpinned by our Greencore Excellence programmes

and increasing use of analytical and data technology solutions. Our

highly experienced leadership team has wide-ranging food sector

knowledge, and we prioritise people development and employee

engagement.

We have a strong track record of disciplined organic and inorganic

investment in the UK, delivering attractive returns while maintaining,

relatively low levels of financial risk.

Structural growth, strong operational execution and our customer

partnerships drive sustainable revenue and profit growth. Strong

inherent free cash flow is achievable given our well-invested network,

a clean organisational profile and careful cash flow management.

96%

Of sandwich sales are from long term
customer contracts of 3+ years

Ranking in The Advantage Report1 of
chilled convenience suppliers to major
grocery retailers in the UK

Market share2 in:
• Grocery sandwiches
• Grocery sushi
• Italian chilled ready meals

Forecast Compound Annual Growth
Rate (CAGR) in food to go market 2019-
2024 (IGD, 2019)3

c.£300m

Network spend over last five years

77%

Employee engagement4 in the FY19
People at the Core survey

Revenue and Adjusted Operating Profit

1600

1400

1200

1000

800

600

400

110 14.4%

100

FY19 Group ROIC

Medium term financial ambitions

Mid single
digit organic
revenue growth

High single
digit Adjusted
EPS growth

Half of Adjusted
EBITDA converting
to Free Cash Flow

Mid teen ROIC

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

Revenue, UK and Ireland (LHS, £m)
Adjusted Operating Proﬁt, UK and Ireland (RHS, £m)

1 The Advantage Report™, part of a worldwide programme whereby retailers rate and rank all of their suppliers, both branded and own-label;

2 Source: Kantar, IRI (2019).
3

Institute of Grocery Distribution (‘IGD’) UK Food-to-Go 2019, Market landscape and future growth outlook – includes supermarkets &
hypermarkets, convenience & other retailers, coffee specialists and food to go specialists; excludes quick-service restaurants where
Greencore currently has no presence.

4 See Non-Financial KPIs on page 24.

Annual Report and Financial Statements 2019

Strategic ReportBusiness Model

O U R B U S I N E S S

P R I M A R I L Y O P E R A T E S

I N T H E A T T R A C T I V E

A N D G R O W I N G

C O N V E N I E N C E F O O D S

S E C T O R I N T H E U K .

Our primary business is manufacturing convenience food in categories
such as sandwiches, salads, sushi, chilled snacking, chilled ready meals,
chilled soups and sauces, chilled quiche, ambient sauces and pickles,
and frozen Yorkshire Puddings. Our products are manufactured for
grocery and other retailers, including all of the major UK supermarkets.

The very nature of the product categories in which Greencore operates
demands a high degree of operational and commercial flexibility to fulfil
our customers’ needs. The need to adapt and innovate flows through
our business model and is reflected in our culture.

Resources

Commercial and Operating Model

People
Approximately 11,500 talented,
committed and experienced people
across our UK and Irish operations.

Infrastructure
21 well-invested and highly efficient
production units across 16 locations,
and a nationwide distribution network.

Integrated supply chain
A comprehensive network of suppliers
from which we source different
ingredient and packaging materials.
Embedded and joint supply chains with
core customers across various channels
of the UK market.

Financial
A strong balance sheet and debt
profile, disciplined capital allocation,
and relatively low levels of financial risk.

How we work with customers

Create a compelling
food offer
• Assure excellent customer service
• Deliver impeccable food safety
• Commit to grow and innovate
• Propose attractive pricing

and partnership

Great
Food

People at
the Core

Sustainable
Business

Greencore
Excellence

Partner with customers
for long term
• Build multi-level,

multi-functional relationships
• Do more with customers across

the shared value chain

Work together
to beat the model
• Enhance buying and
manufacturing choices

• Improve our joint

supply chain

• Drive retail growth

Greencore Group plc

What differentiates us

Great Food
• Industry leadership in food integrity
• Innovation commitment to deliver customers’ taste,

nutrition and cost goals

People at the Core
• Effective workforce management
• Distinctive leadership team

Greencore Excellence
• Distinctive and repeatable way of working
• Step-change in our purchasing, manufacturing,

and commercial capabilities

Sustainable Business
• Commitments on how we run our business
• Contributions to industry sustainability

Outcomes

Shareholder returns
Our business model creates
sustainable value through disciplined
capital allocation.

 Read more:
Operating and Financial Review
on pages 34 to 37

Customer satisfaction
Our commercial model provides
best-in-class customer outcomes.

 Read more:
Relevance in Our Strategy on pages 18
and 19

Supplier partnerships
Our collaborative approach with
suppliers enables all parties to
achieve goals and drive growth.

 Read more:
Sustainability Report on pages 32 to 33

Consumer delight
Innovation and Great Food that directly
addresses key consumer demand drivers.

 Read more:
Market Trends on pages 8 and 9 

Employer of choice
Career opportunities that engage
and reward.

 Read more:
Sustainability Report on pages 27 to 29

Heart of local communities
Education, food donation and charitable
giving plans that enable community
engagement.

 Read more:
Sustainability Report on pages 27 to 29

Annual Report and Financial Statements 2019

Strategic ReportMarket Trends

S T R U C T U R A L D R I V E R S

O F C O N V E N I E N C E ,

H E A L T H A N D

W E L L N E S S , A N D

G R E A T V A L U E .

The three core consumer trends continue to be convenience, health and
wellness, and great value. Consumers demand products and services that
deliver quickly and make life easier. In addition they want to be able to
make healthier choices whilst at the same time getting great value in the
purchases they make.

Growth drivers of the next decade

Product
categories

Meal
occasions

Channels

Formats

Competitors

Greencore Group plc

Health continues to have
an impact on key consumer
trends in food. 35% of UK
consumers are consciously
following some form of
specialist diet (IGD), and
30% of UK consumers would
like to see more plant-based
options (IGD).

Meal times are fragmenting.
Our own consumer insight
teams track consumer
demand and behaviours
across various occasions.
Our research shows that
35% of all food to go
consumer occasions now
occur at lunch time.

IGD forecasts that the
traditional grocery channel
will grow at 1.5% per annum
to 2024. The convenience
channel will grow at 3.3%,
while the discounter and
online channels are forecast
to grow at much faster rates
(6.5% and 8.8% respectively).

Within each channel,
consumers demand
innovative and imaginative
formats. Food theatre and
the concept of food service
in retail are becoming
important elements of the
overall shopper mission.

While the concept of
freshness has always been
critical for consumers, it is
increasingly linked with local
produce and sourcing.

Sustainability is also now
impacting category demand.
75% of UK consumers have
become more aware of the
environmental impact of
plastic packaging than
previously (IGD). 57% of
consumers would pay more
for products in recyclable
packaging (IGD).

Furthermore, 35% of
such consumer occasions
occurring either at breakfast
or in the evening (Greencore
research), market demands
are driving more hot
food solutions.

The remaining 30%
of food to go consumer
occasions occur as
snacking (Greencore
research), transforming
the requirements
of our customers.

Existing grocery players
are actively exploring
how best to outperform
in their own channel while
also accessing growth
in alternative channels.

Consumers meanwhile are
widening their repertoire
of outlets from which they
shop. The average shopper
now uses 9.5 different
outlets per month,
compared to 7.5 only
eighteen months ago
(Greencore research).

Convenience remains a
core driver – the number
of carry-out meal occasions
are growing over twice
as fast as that of in-home
occasions in home food
consumption (Kantar, 2019).

While formats change, more
focus will be required to
deliver the right range in
the right place at the right
time – ensuring the three
core consumer drivers
are met.

As the key players in
the market re-evaluate
their propositions to meet
changing consumer demand,
distinctions between
what constitutes a supplier,
a competitor and a customer
are blurring in the
convenience food market.

Foodservice specialists
and new direct-to-consumer
service providers are
intensifying the competition
for consumers and often
for our customers. As they
succeed, however, they are
also prospective customers
in their own right.

There have been significant
structural changes amongst
Greencore’s competitive set,
across both food to go and
other chilled convenience
areas, leading to fewer and
more specialised players
in the market.

From

Sandwich

focused

From

All about

lunch

From

Focused

on grocery

From

Convenience

led format

growth

From

Competition

among food

manufacturers

Win across

food to go

 Read more:

Our Strategy on page 14 

Feed the

nation 24/7

 Read more:

Our Strategy on page 14 

Scale across a broad

range of channels

 Read more:

Our Strategy on page 14 

Provide more

opportunities to buy

 Read more:

Our Strategy on page 14 

Win against broader

food solution providers

 Read more:

Our Strategy page 14 

Product

Category

Destination

Redistribution for human consumption

Waste avoided

Animal feed

Total

Food waste

Co/Anaerobic digestion

Controlled combustion

Sewer

Total

30 Greencore Group plc

FY19

FY18

Tonnes % of production

950

4,454

5,404

24,978

1,650

8,280

34,908

0.3%

1.2%

1.5%

6.6%

0.4%

2.2%

9.2%

791

4,895

5,686

32,202

1,964

6,746

40,912

0.2%

1.3%

1.5%

8.3%

0.5%

1.7%

10.5%

Reducing packaging and plastics
Packaging and plastic have played a vital
role in safe food storage and distribution
for decades, but now our approach to
their use is changing. We work with our
customers to look for the best packaging
solutions for all our products, that take
into account the environmental impact,
while keeping our food fresher for
longer. We are committed to working
with our customers to reducing our use
of single-use plastics and partnering with
suppliers to find effective alternatives.

We support the UK Plastics Pact and
are committed to meeting its 2025
targets. We will monitor and reduce the
amount of plastics used to transport
and consume our products, and we aim
to develop a circular system whereby
plastic is used less and kept out of the
environment. Throughout FY19, we have
engaged with all key customers and
have plans to remove remaining ‘hard to
recycle’ packaging as soon as possible.

In FY19, we saved 18.7 tonnes of plastic
by replacing the black plastic trays in
a ready meal range with foil. Activities
targeting relatively small pieces of plastic
such as ‘windows’ on quiche boxes
have also led to significant reductions
in plastic use.

We have recycled 758 tonnes of plastic
from our manufacturing and distribution
activities in FY19 and have identified
opportunities for further improvements
in the future.

We measure and report our annual
scope 1 & 2 GHG emissions. As part
of our commitment to reduce our
Greenhouse Gas (‘GHG’) emissions,
we moved to a certified green tariff
renewable electricity supply contract for
our UK operations from the beginning
of the financial year.

The GHG emissions summary below
shows our gross emissions including
location-based scope 2 emissions, as well
as our net emissions accounting for the
market-based scope 2 reporting for our
certified green electricity tariff.

The reduction in emissions is driven by
continued progress in energy efficiency,
a reduction in emissions associated with
refrigerants as we continue to move
away from fluorinated gas refrigerants,
and the general reduction in UK grid
carbon factor as more renewables
make up a greater proportion of the
fuel mix.

Over the last six years, we have made
good progress in our water consumption
per tonne of product, reducing it by
15% over the period. There was also
a significant improvement in FY19, and
one of the contributing factors to the
improvement was the closure of the
Evercreech desserts facility which had
a higher water intensity than most sites
within the business.

Water consumption per tonne
of product – UK manufacturing
(m3 per tonne)

FY19

FY18

5.91

6.45

Primary energy consumption
per tonne of product – UK
manufacturing (kWhp per tonne)

FY19

FY18

1,235

1,299

Emissions are summarised below, all reported as CO2 equivalent (‘CO2e’)
Emissions from:

Combustion of fuel and operation of facilities (Scope 1)

Electricity, heat, steam and cooling purchased for own use (Scope 2)

Total gross emissions (Scope 1 and 2)

Green tariff

Total net emissions (Scope 1 and 2)

Ratio (KgCO2e per £1 sales revenue)

Emissions reported in tonnes CO2e*
FY19**

FY18**

FY18***

59,495

27,633

87,128

-27,603

59,525

0.060

66,336

32,389

98,725

0.066

75,600

67,754

143,354

0.056

* Our GHG emissions have been calculated using the GHG Protocol Corporate Accounting and Reporting Standard, and emissions factors from DEFRA’s

UK government GHG conversion factors for company reporting (where factors have not been provided directly by a supplier).

** UK & Ireland only – comparable with FY19 Group structure.
*** Full Group including US business.

Annual Report and Financial Statements 2019

Strategic ReportSustainability Report (continued)

Delivering for
our customers

G R E A T F O O D I S A T T H E H E A R T O F T H I S

P I L L A R . W E G O B E Y O N D F O O D I T S E L F T O

C O N S I D E R W I D E R I S S U E S A R O U N D S O U R C I N G

A N D S U P P L Y C H A I N , N U T R I T I O N A N D

S A F E T Y S T A N D A R D S .

Maintaining world-class food safety standards
We are proud to have the best food safety standards in
our industry. Maintaining this status sustains our reputation,
customer loyalty and consumer satisfaction. We have a total
commitment to creating Great Food which is at the heart
of this pillar. We go beyond our own operations, with our
suppliers absolutely committed to following our lead.

All Greencore manufacturing units are certified to the British
Retail Consortium (‘BRC’) Global Standard for food safety
through its unannounced audit programme. Fifteen units
achieved AA+ grade while the remaining six achieved A+.
This is a Group KPI. The BRC standard includes the requirement
for Hazard Analysis and Critical Control Points (‘HACCP’),
a preventative food safety system plan.

All our sites are subject to inspections from a number of
internal audits and audits from external organisations including
customers, hygiene services and assured standards. Teams
at our manufacturing facilities are responsible for the day to
day maintenance of our food safety standards and conducted
38,300 routine audits across all sites during the year. 236
audits were completed by external bodies throughout FY19.

32 Greencore Group plc

BRC Global Standard

Percentage of manufacturing
units with BRC AA+ or A+ grades

100%

RSPO Certification1

Mass balanced

100%

1. The mass balanced supply chain model
administratively monitors the trade of
RSPO certified palm oil and its derivatives
throughout the entire supply chain as a driver
for mainstream trade in sustainable palm oil.

Enhancing sustainable sourcing
We are committed to ensuring that the
raw materials we supply to our customers
are sourced sustainably and responsibly.
In practice this means encouraging
our suppliers to share our passion
for Great Food by aligning with our
leading standards and with sustainable
certification frameworks.

Throughout the year our team of
auditors carried out 154 supplier audits,
597 approvals and 61 matrix reviews of
agents and brokers. All suppliers must
be certified to recognised food safety
standards, including BRC certification for
agents and brokers. 91% of agents and
brokers have achieved this standard.

In particular, we have implemented
standards for certain raw materials
including the ‘British Lion’ (egg traceability).

Greencore has been a member of the
Roundtable on Sustainable Palm Oil
(‘RSPO’) since 2011 and has multi-site
RSPO supply chain certification. We are
currently 100% certified through mass
balanced and segregated palm oil and
our aim is to achieve 100% certified fully
segregated sustainable palm oil in our
products by 2021. We report progress
in the Annual Communication of Progress
Report to enable the RSPO to assess
our progress.

We hold Group Marine Stewardship
Council certification for the eight of
our manufacturing facilities that use fish.
All sites also receive annual compliance
audits as part of our internal governance
process with a sample selected for
surveillance by the certification body.

We also complete the annual Carbon
Disclosure Project forests questionnaire
on timber products and palm oil.

We continue to review and develop
our sourcing standards as we work
with our suppliers.

Leading on nutrition
There are many ways that we can
influence the nutritional value of food
sold by our customers. We create
innovative recipes, reducing the amount
of salt and fat in our food, and offer
plant-based alternatives to cater for
all dietary needs.

We align to nutrient targets set by
Public Health England. Over the year
we have carried out a calorie reduction
programme in one of our key prepared
meal ranges. This has resulted in
removal of 2,885 calories across
six products lines.

We work with the wider industry on
nutrition issues with representation on
IGD and Campden BRI nutrition groups.

Annual Report and Financial Statements 2019

Strategic ReportOperating and Financial Review1

A resilient outturn
for the refocused
business

Eoin Tonge

Operating Review
Convenience Foods UK & Ireland

I N A Y E A R O F C H A N G E

W E D E L I V E R E D M O D E S T

G R O W T H I N P R O F O R M A

R E V E N U E , P R O F I T S ,

A N D U N D E R L Y I N G C A S H

Revenue

Adjusted Operating Profit

Adjusted Operating Margin %

F L O W S , W H I L E S U S TA I N I N G

Group Operating Profit

S T R O N G R E T U R N S .

FY19
£m

FY18
£m

Change

(As reported)

Change
(Pro Forma basis)

1,446.1

1,498.5

105.5

7.3%

99.8

104.6

7.0%

49.8

-3.5%

+0.9%

+30 bps

+100.4%

+2.6%

Strategic developments
The Group refocused its strategic
direction during FY19 on its convenience
food business in the UK and Ireland.
It introduced a clear set of strategic
objectives, aimed at optimising
Greencore’s growth potential, namely:
• To drive growth in an expanding food
to go market by both broadening
the Group’s product proposition and
enabling consumers to buy more
in existing space and new channels
and formats;

• To deepen customer relevance by

driving shared returns, leveraging the
scale of its overall portfolio and doing
more with customers across the value
chain; and

• To adopt a distinctive and repeatable
Greencore Way of working, centred
on the Group’s four differentiated
capabilities: Great Food, People
at the Core, Greencore Excellence,
and Sustainable Business.

These objectives are underpinned by
an economic model of disciplined growth
and investment, driving shareholder value.

There were a number of highlights that
demonstrated this strategy in action
in FY19. The Group launched multiple
commercial projects with key customers
including product launches in salads,
sushi and chilled snacking and bespoke
café channel initiatives. In total during
FY19, 47% of the Group’s products in
the UK were new to market as it worked
with customers on product or packaging
development initiatives. The Group
also initiated exploratory work in other
areas, including hot food and event-
specific vending. In September 2019,
the Group acquired Freshtime, extending
Greencore’s presence in meal salads
and chilled snacking. The growth outlook
for Greencore in food to go categories
remains positive, driven by a combination
of an expanding underlying market
and the Group’s initiatives to broaden
its category and channel reach.

From a specific category perspective,
the Group completed the reset of its
ready meals product and facility footprint
at Warrington, Kiveton and Consett
in the first half of the year. This provides
a platform for the Group to drive growth
and improve returns in this category.

34 Greencore Group plc

The Group continued to strengthen its
position as a strategic supplier in key
growth categories. The Group extended
contracts with some core customers
in the period. Specifically, the Group
partnered with existing customers to
improve availability and merchandising
in store. More customers also worked
with the Group during the year on
‘earned recognition’, a process of self
auditing of food quality and safety.

In FY19, the Group made further progress
in developing and executing against
its Greencore Excellence efficiency
programmes. In its Greencore Purchasing
Excellence and Greencore Manufacturing
Excellence programmes, the Group is now
deploying analytical and data technology
solutions to support operating activities,
while the Group invested further in its
consumer insight capability as part of
the Greencore Commercial Excellence
initiative. The Group also began to step
up work on its automation programme
in the period. Furthermore, Greencore
up-weighted its sustainability agenda,
including making specific commitments
around the way in which the business is
run and the contributions that it makes to
industry sustainability. As part of that, the
Group agreed its new primary bank debt
agreement with embedded sustainability
targets, the first of its kind in Ireland.

Performance
As expected, reported revenue from
continuing operations declined by 3.5%
to £1,446.1m in FY19, primarily reflecting
the impact of site disposals and exits
(Hull, Evercreech and Kiveton longer life
ready meals). Pro Forma Revenue Growth
was 2.6%. Adjusted Operating Profit
rose by 0.9% to £105.5m and Adjusted
Operating Margin rose by 30bps to 7.3%.
The FY19 performance was delivered
against the backdrop of a subdued UK
trading environment, especially in the
second half of the year, with cautious
consumer demand particularly in the
context of uncertainty around Brexit.

FY19 revenue in the Group’s activities
in food to go categories (comprising
sandwiches, salads, sushi and chilled
snacking) totalled £962.5m and accounted
for approximately 66% of reported
revenue. Reported revenues grew by
3.6% in these categories. Excluding
the acquisition of Freshtime, Pro Forma
Revenue Growth was 3.3%, with the
contribution from underlying product
revenue growth modestly higher than that
of revenue from the distribution of third

party products. Pro forma revenue
growth was weighted towards the first
half of the year, with 7.0% in H1 19 and
0.3% growth in H2 19.

programmes and by working with
customers to optimise product mix
and supply chain costs.

Underlying product revenue growth
in food to go categories continued to
outperform the market during the year.
Market growth was below historical trends
due to a mix of the challenging market
conditions, unseasonal weather, a varied
trading performance across customers,
and a strong comparative period in the
second half of the year.

Revenue for the distribution of third party
products accounted for approximately
8% of sales in continuing operations with
strong growth in H1 19 benefitting from
the annualised impact of new business
won during FY18. Following the acquisition
of Freshtime in September 2019, revenue
from its products previously distributed
by Greencore is now classified as
underlying product revenue.

The Group’s other convenience categories
comprise activities in the chilled ready
meals, chilled soups and sauces, chilled
quiche, ambient sauces and pickles,
and frozen Yorkshire Pudding categories,
as well as Irish ingredients trading
businesses. Reported revenue across
these businesses declined by 15.0% to
£483.6m. Pro forma revenue increased by
1.2%, when excluding sites either disposed
of or that have ceased trading, the impact
on transition to IFRS 15 Revenue from
Contracts with Customers and foreign
exchange movements.

Pro Forma Revenue Growth was driven
by the ambient cooking sauce business,
with ready meals revenue broadly
unchanged. The performance in the
cooking sauce business was driven by
strong volume growth in the first quarter.
Revenue in the Group’s Irish ingredients
trading businesses also advanced on
higher volumes.

Inflation trends in the Group’s main
UK cost components were broadly
as anticipated. Raw material and
packaging costs rose by 0.4% in FY19
as certain commodity costs continued
to increase. Direct labour inflation in
the UK accelerated in the period, to
approximately 5%, primarily due to the
impact of increased National Living Wage
levels on the Group’s wage structure.
The Group mitigated the overall effects
of this increased inflation by stepping up
the delivery in its Greencore Excellence

Overall, Adjusted Operating Profit in
continuing operations grew modestly in
FY19, with an increase of £0.9m to £105.5m.
In its food to go categories, the Group
generated an improved performance in
the period, driven by volume growth and
a strong operational performance. In the
Group’s other convenience categories,
an improvement in the ready meals
business in H2 19 following the reset
of its product and facility footprint was
offset by a mixed performance in the
Group’s cooking sauce business.

Brexit
The Group has been engaged in
Brexit planning since the result of the
referendum was first announced and
monitors closely the potential implications
of Brexit on its business, particularly in
the areas of volume, material sourcing
and labour availability. A multi-functional
team meets on an ongoing basis to
assess Brexit-related risks, build mitigation
plans, test alternative scenarios and
support dialogue with our customers,
government, the wider industry and
other stakeholders.

The Group continues to believe that
the risks from Brexit are manageable in
the medium-term, while acknowledging
potential near-term challenges associated
with a disorderly exit.

The direct financial impact associated with
preparation for Brexit was modest in the
period. Some incremental working capital
outflows in H1 19 unwound as the financial
year progressed.

Discontinued operations
On 25 November 2018, the Group
completed the disposal of its US business
to Hearthside Food Solutions LLC. Results
for the US business are presented as
discontinued operations in the Group
Financial Statements. A profit on disposal
of £55.9m was reported in FY19 to
reflect this transaction. Details of FY19
performance of discontinued operations
and disposal of undertakings are
included in Note 33.

Annual Report and Financial Statements 2019

Strategic ReportOperating and Financial Review continued

Group cash flow and returns

Free Cash Flow

Net Debt

Net Debt:EBITDA as per financing agreements

ROIC

FY19
£m

54.9

288.5

1.8x

14.4%

FY18
£m

Change

(As reported)

-£37.5m

92.4

501.1

2.3x

15.6%

-120bps

cash pension financing charge of £2.5m
was £0.9m lower than the FY18 charge
of £3.4m.

The exceptional non-cash finance charges
are detailed below in Exceptional Items.

Profit before taxation –
continuing operations
The Group’s profit before taxation
increased from £17.8m in FY18 to £56.4m
in FY19, as higher Group Operating
Profit more than offset an increase
in net finance costs, which include an
exceptional finance charge. Adjusted
Profit Before Tax in the period was
£92.3m (FY18:£79.6m), primarily driven
by a reduction in the Group’s net bank
interest payable.

Taxation – continuing operations
The Group’s effective tax rate in FY19
(including the tax impact associated with
pension finance items) was 15% (FY18:
13%). The future rate is expected to
continue to reflect the blend of profits
within the Group, heavily influenced by
the UK statutory rate.

Exceptional items
The Group had a pre‐tax exceptional
credit of £25.7m in FY19, and an after tax
credit of £25.9m, comprised as follows:

Exceptional Items

Guaranteed Minimum Pension
(‘GMP’) equalisation

Transaction costs associated with
acquisition of Freshtime

Network optimisation and
rationalisation

£m

(3.0)

(1.8)

0.0

Debt restructuring post disposal of
Greencore’s US business

(25.4)

Profit on disposal of Greencore’s
US business

Exceptional items (before tax)

Tax credit on exceptional items

Exceptional items (after tax)

55.9

25.7

0.2

25.9

Freshtime acquisition completed in early
September 2019. As at 27 September
2019, the Group had committed facilities
of £506m with a weighted average
maturity of 4.0 years.

ROIC was 14.4% for the 12 months ended
27 September 2019, compared to 15.6%
for the 12 months ended 28 September
2018. The reduction was primarily driven
by increased investment, in particular
the timing of the acquisition of Freshtime
and was also impacted by an increased
tax rate.

Financial Review
The Group completed the disposal of
its US business on 25 November 2018.
The results of this business have been
included as discontinued operations in
the Group Financial Statements in FY19
and FY18.

Revenue and Operating Profit –
continuing operations
Reported revenue in the period was
£1,446.1m, a decrease of 3.5% compared
to FY18, primarily reflecting the impact
of site disposals and exits in the period.
Pro Forma Revenue Growth was 2.6%.

Group Operating Profit increased from
£49.8m to £99.8m as a result of a material
reduction in the level of exceptional
items in FY19. Adjusted Operating
Profit of £105.5m was 0.9% higher than
in FY18 with improved profits in food
to go categories in FY19 offsetting
a mixed performance in the Group’s
other convenience categories. Adjusted
Operating Margin was 7.3%, 30 basis
points higher than the prior year.

Net finance costs –
continuing operations
The Group’s net bank interest payable
was £14.2m in FY19, a decrease of £12.0m
versus FY18. The decrease was driven by
lower average Net Debt levels following
the disposal of the Group’s US business.
The Group’s non-cash finance charge,
before exceptional items, in FY19 was
£4.7m (FY18: £6.7m). The change in the
fair value of derivatives and related
debt adjustments was a £2.1m charge
in FY19 (FY18 charge: £3.3m). The non-

A cash outflow of £12.6m is included in
the debt restructuring charge to reflect
the net cash cost of terminating US dollar
related swaps. Cash items associated
with the disposal of Greencore’s US
business are detailed in Note 33.

Earnings per share
Basic earnings per share for total
operations was 19.9 pence (FY18:
4.8 pence). This was driven by a £72.2m
increase in earnings from total operations
as the movement in exceptional items,

Strategic developments
Following the disposal of its US business
on 25 November 2018, the Group
fully reset its capital structure. The
Group returned £509.0m of capital to
shareholders in the form of a tender
offer, with 261,025,641 Ordinary Shares
acquired and immediately cancelled
by the Group, executed on 31 January
2019. The Group also reshaped its debt
and associated derivative portfolio to
reflect the removal of US dollar assets
from the business and also refinanced its
primary sterling bank debt agreements.
An exceptional charge of £25.4m was
recognised in FY19 to reflect this reset.

The Group also defined its capital
allocation model following the strategic
reset of the business. Central to this is
the Group’s medium term target leverage
range of 1.5x to 2.0x Net Debt:EBITDA,
as measured under financing agreements.
This model facilitates a progressive
dividend policy, disciplined organic
and inorganic investment, and potential
incremental shareholder return over time.

Performance
Free Cash Flow was £54.9m in FY19
compared to £92.4m in FY18, the
decrease primarily reflecting the impact
of US cash flows. This represents a
conversion rate of 36% of Adjusted
EBITDA (FY18: 45%). Excluding the US
cash flows, Free Cash Flow Conversion
increased to 47% from 33% in FY18,
driven by improved EBITDA, lower
working capital outflows, lower interest
costs and lower exceptional cashflows.

Several other factors had a specific
impact on cash flow during FY19. These
included the effects of the disposal of
the US business and associated capital
restructuring, as well as the timing of
dividend payments.

Net Debt decreased to £288.5m from
£501.1m at the end of FY18. The Group’s
Net Debt:EBITDA leverage as measured
under financing agreements was 1.8x at
year end. This compared to 1.9x at the
end of March 2019 and 2.3x at the end
of September 2018. This outturn includes
the increased debt associated with the

36 Greencore Group plc

from a net charge of £51.7m in FY18 to
a net credit of £25.9m in FY19, more than
offset a reduction in profits due to the
disposal of the Group’s US business. Basic
earnings per share also benefitted from
a reduction of 261m in the number of
shares in issue as a result of the tender
offer which was executed in January 2019.
The weighted average number of shares
in issue in FY19 was 532.0m (FY18: 703.3m).

Adjusted earnings from total operations
were £84.9m in the period, £21.0m
behind prior year levels largely due to
the disposal of the Group’s US business.
Adjusted earnings per share for total
operations of 16.0 pence was 6.0% ahead
of FY18 which primarily reflects the impact
of a reduction in the number of shares
in issue as a result of the tender offer.

Illustratively, if the tender offer had been
executed at the beginning of FY19 and
the weighted average number of shares
in issue was equivalent to the total shares
in issue on 27 September 2019 (446.0m),
and if earnings from discontinued
operations were excluded, Adjusted
EPS would have been 17.0 pence.

Cash flow and net debt
Adjusted EBITDA from continuing
operations was £2.0m higher at
£142.0m. EBITDA relating to discontinued
operations was £9.1m. The Group incurred
a working capital outflow of £22.8m.
This included a £21.2m outflow associated
with the US business, offset in part by
an element of the net cash proceeds
from the disposal of the US business.
The working capital outflow in continuing
operations was £1.6m. Maintenance capital
expenditure of £30.6m was incurred
in the period (FY18: £36.7m). The cash
outflow in respect of exceptional charges
was £9.6m (FY18: £15.0m), of which £8.7m
related to prior year exceptional charges.

Interest paid in the period was £16.9m
(FY18: £26.7m) reflecting lower net debt
levels following the disposal of the US
business. Cash tax remained low as the
Group utilised historical tax losses. The
cash tax rate in the period was 4% (FY18:
1%). The cash tax rate for the Group
is expected to rise towards the Group’s
effective rate in the medium term as
a result of increased profitability and
a reduction in the degree to which UK
losses may be utilised in any one year.
The Group’s cash funding for defined
benefit pension schemes increased to
£16.0m (FY18: £15.1m), as the trustees of
one of the smaller legacy defined benefit
pension schemes in the UK agreed to the

purchase of an insurance policy over
the scheme liabilities in the period.
These movements resulted in Free Cash
Flow of £54.9m compared to £92.4m in
FY18, the reduction driven primarily by
the effects of the disposal of the Group’s
US business.

In FY19, the Group incurred strategic
capital expenditure of £13.6m (FY18:
£26.8m), including expenditure of £1.2m
incurred in discontinued operations.

The net cash outflow associated with
acquisitions totalled £56.2m, reflecting
the acquisition of Freshtime in September
2019. Net cash proceeds from disposals
totalled £811.9m, of which £810.9m related
to the disposal of the US business.
Following the disposal of the US business,
the Group also returned £509.0m of
capital to shareholders in the form of
a tender offer and used the remainder
of the net proceeds to reduce leverage,
£12.6m of which was used to repay swaps
as part of the reshaping of its debt and
derivative portfolio.

Equity dividend cash payments increased
significantly to £50.3m (FY18: £35.7m),
reflecting the change in the phasing of
dividend cash payments resulting from
the removal of the scrip dividend option
(both the interim and final dividend for
FY18 were paid during H1 19, and the
interim dividend for FY19 was paid
during H2 19).

The Group’s Net Debt at 27 September
2019, a seasonal low point, was
£288.5m, a decrease of £212.6m from
28 September 2018.

Financing
In FY19, the Group reshaped its debt
and associated derivative portfolio to
reflect the removal of US dollar assets
from the business as well as, in January
2019, refinancing its primary sterling bank
debt agreements. The Group remains
well financed with committed facilities
of £506m at 27 September 2019 and a
weighted average maturity of 4.0 years.
The Group had undrawn committed
facilities of £175.0m at 27 September 2019
(FY18: £188.3m).

Pensions
All legacy defined benefit pension
schemes are closed to future accrual.
The net pension deficit relating to
legacy defined pension schemes, before
related deferred tax, at 27 September
2019 was £92.0m, £2.7m higher than the
position at 28 September 2018. The net

pension deficit after related deferred
tax was £74.8m, an increase of £1.2m from
28 September 2018. The increase in net
pension deficit was driven principally
by an increase in UK scheme liabilities,
resulting in a £13.3m actuarial loss, as
relevant bond yield assumptions were
reduced. This includes an increase in
liabilities to meet GMP equalisation of
benefits for males and females in the
Group’s legacy defined benefit pension
scheme in the UK.

The valuations and funding obligations
of the Group’s legacy defined benefit
pension schemes are assessed on a
triennial basis with the relevant trustees.
Following the most recent reviews, the
Group’s annual cash funding requirement
for defined benefit pension schemes
is approximately £15m. The Group is
assessing opportunities to further
de-risk liabilities, that if implemented,
could modestly increase annual cash
funding requirements.

Dividends
The Board of Directors is recommending
a final dividend of 3.75 pence per share.
This will result in a total dividend for
the full year of 6.20 pence per share
(FY18: 5.57 pence per share). The total
dividend represents a pay-out amount of
approximately 36% of adjusted earnings.

Summary
Greencore has entered FY20 with a
clear set of strategic objectives. These
are to drive growth in an expanding food
to go market, to deepen its relevance
with customers, and to adopt a distinctive
and repeatable Greencore Way of
working. These are underpinned by an
economic model of disciplined growth
and investment. The Group anticipates
a year of profitable growth in FY20. The
Group’s medium term financial ambitions
are for mid single-digit organic revenue
growth, high single-digit Adjusted EPS
growth, the conversion of half of its
Adjusted EBITDA to Free Cash Flow
and for mid-teen ROIC. A strong balance
sheet and improved Free Cash Flow
conversion leaves the Group well placed
to deliver on these ambitions and to
consider further organic and inorganic
investment in line with its capital
allocation policy and strategic objectives.

Eoin Tonge
Chief Financial Officer
25 November 2019

Annual Report and Financial Statements 2019

Strategic ReportRisks and Risk Management

How we
manage risk

T H E E F F E C T I V E I N T E G R A T I O N

O F R I S K M A N A G E M E N T

U N D E R P I N S O U R O P E R A T I N G ,

F I N A N C I A L A N D G O V E R N A N C E

A C T I V I T I E S . A S A L E A D I N G

F O O D M A N U F A C T U R E R I N A

C O M P E T I T I V E E N V I R O N M E N T,

I T I S C R I T I C A L T H A T

G R E E N C O R E I D E N T I F I E S ,

A S S E S S E S A N D P R I O R I T I S E S

I T S R I S K S I N O R D E R T O H E L P

M A N A G E A N D M I T I G A T E T H E

P R O B A B I L I T Y A N D I M P A C T

O F T H E S E R I S K S .

38 Greencore Group plc

Our approach to risk management
Effective risk management is the
responsibility of the Board and is
fundamental to the ability of the Group
to deliver on its strategic objectives. The
Board understands the need for a robust
system of internal controls and a risk
management framework in accordance
with the 2018 UK Corporate Governance
Code. There is a clear link between
risk and risk management, and the
Company’s ability to continue as a viable
entity. This is set out in further detail on
page 49.

The Board establishes the culture of
effective risk management throughout
the business by identifying and
monitoring the material risks, setting
risk appetite and determining the risk
tolerance of the Group. The Board
is responsible for establishing and
maintaining appropriate systems and
controls to manage risk within the Group
and to ensure compliance with relevant
laws and regulations.

Under delegation from the Board,
the Audit Committee regularly monitors
the Group’s risk management systems.
Amongst its other responsibilities, the
Audit Committee is responsible
for overseeing the effectiveness of
the Group’s internal control environment.
Further information on the activities
of the Audit Committee for FY19 can
be found in the Report of the Audit
Committee set out on pages 92 to 96.

The Group seeks to continually test and
improve its internal control environment.
The Group has a well-established
internal audit function, known as the
Risk Management Group (‘RMG’) whose
role is to provide independent assurance
that the Group’s risk management,
governance and internal control
processes are regularly reviewed,
remain appropriate and continue to
operate effectively.

Identifying and monitoring
principal risks
Principal risks are identified through
a well established Group wide risk
assessment process, which is known as a
‘bottom up’ approach. This encompasses
the identification, management and
monitoring of risks in each area of the
business and ensures risk management
controls are embedded within the
operations of the business. This process
includes an assessment of the risks to
determine the likelihood of occurrence,
the potential impact and the adequacy
of the mitigation or control in place.

A full ‘top down’ review is then
undertaken by management, who
evaluate the material risks of the Group
with reference to its strategy and the
operating environment.

The Audit Committee monitors these
processes, reviews the risk register and
reports material risks and associated
controls to the Board. In addition, the
Board receives presentations on the
risk assurance process with a specific
emphasis on certain key risk areas.

The Group’s principal risks and
uncertainties are summarised in the
risk profile table as set out on pages
40 to 43.

Brexit
Since the UK referendum result on
membership of the EU in June 2016
we have been engaged, via a well-
established Brexit taskforce, in planning
for the UK’s exit from the EU. Our
Brexit taskforce brings together a
multi-functional team on an ongoing
basis to assess Brexit-related risks,
build mitigation plans, test alternative
scenarios and support dialogue with our
customers, the government, the wider
industry and other stakeholders.

In recent months we have focused on
the areas that could have the most
direct impact on our ability to service
customers at the time the UK leaves
the EU. These areas include maintaining
effective customer service, efficient
movement of goods, managing the
impact of potential tariffs and quota
restrictions and ensuring compliance
with regulatory frameworks.

Longer term, we have identified three
primary areas of potential risk:

Volume
We are largely a ‘domestic UK’ business
from a production and commercial
standpoint, as the vast majority of the
consumer products we produce in the
UK are sold in the UK. We also believe,
based on our experience from the
last UK recession, that volumes in the
categories in which we operate would
be relatively resilient to any headwinds
to the UK economy following Brexit. We
therefore anticipate limited risk to our
volumes post Brexit.

Material sourcing
We estimate that we source
approximately 80% of our raw materials
from UK based suppliers. Even taking

account of raw materials which are in
turn sourced from outside the UK by our
suppliers, we estimate that less than one
third of our raw materials are imported
from EU-27 countries. For these materials,
we have made alternative sourcing
arrangements and have a well-developed
contingency plan, which includes forward
buying, qualification of alternative
suppliers, storage of raw materials,
and flexibility in recipes. We are also
confident in our ability to largely pass
through any associated cost increases,
given our track record of inflation
management with our customers, and
the heightened attention on continuity
of supply during any transition period.

Labour availability
We note the increased pressure on
the availability of lower skilled labour
in recent years and the reduction in
migration from EU-27 countries since the
Brexit referendum. While we anticipate
that these trends will continue, we
expect this to play out over a period
of years and are adapting our labour
model accordingly.

Consideration of these risks has been
incorporated into the Group’s principal
risks as appropriate.

Risk appetite
The Board considers and assesses
risks in five broad categories, namely;
strategic, commercial, operational,
people and financial. As a consumer
foods business, the Board has a low risk
appetite for risks which may impact the
Group’s reputation or brand in areas
such as product quality and safety,
health and safety and compliance with
laws and regulations. However, the
Board recognises that, in pursuit of
strategic growth objectives, there is a
trade-off between risk and reward in
making strategic investment decisions,
such as acquisitions, capital investments
or new category expansions. In these
cases, a higher level of risk may be
accepted. Through the risk management
framework, material strategic investment
decisions are approved by the Board.
These are supported by detailed
diligence information, documentation
and analysis, along with subject matter
experts and senior management input,
to ensure that the risks associated with
each decision, and the related execution
plan, are fully understood and accepted.

Risk assurance
The Group operates a ‘three lines of
defence’ model to provide assurance
that each risk has adequate control
and mitigation, as set out below.

Risk assurance

1st

Line of defence

2nd

Line of defence

3rd

Line of defence

Source
Operational management/business
operations

Source
Central governance oversight

Source
Third party and independent review

Nature of assurance
Direct assurance at the business level –
including direct monitoring, management
controls, policies and procedures,
performance indicators and self-
assessment.

Nature of assurance
Risk assurance – including corporate risk
assessment and management processes,
central technical, health and safety
and environmental resources. Central
governance processes including policies,
procedures and training.

Nature of assurance
Independent assurance – including
internal audit review by RMG, external
audits, customer reviews and audits, use
of professional advisors and insurance.

Annual Report and Financial Statements 2019

Strategic ReportPrincipal Risks

Risk area

Description of risk

Control

Movement

Strategic

Competitor
activity

Growth and
change

Commercial

Changes in
consumer
behaviour
and demand

Key customer
relationships
and grocery
industry
structure

The Group operates in highly competitive
markets. Significant product innovations,
technical advances and/or the
intensification of price competition by
competitors, both direct manufacturing
competitors or competitors of our
customers, could adversely affect
the Group’s results.

The Group is pursuing a strategy of
growth and expansion in the UK. Delivery
of our stated strategy will necessitate
organisational change and investment,
major capital investments and exploiting
corporate development opportunities.
Major capital investments and corporate
development opportunities are often high
cost and may involve significant change
including the addition of a material
number of new employees.

The Group develops long term strategic
partnerships with its customers that are based on
several factors including quality, service, innovation
and cost effectiveness. The Group invests in
research and development and continuous
improvement to ensure that the introduction of
both new products and improved production
processes competitively meet the Group’s
customer needs in its chosen markets. The Group
also continually works to streamline its cost base
to ensure it remains cost competitive.

The Board and senior management engage
in a robust, formal and thorough process for
identifying, measuring and deciding on the
suitability of such growth and change initiatives.
In the case of acquisitions, an integration team
reporting to senior management is established to
ensure successful integration. The Board receives
regular updates on integration. Resources are put
in place as deemed necessary to manage business
change. Post project reviews are carried out on all
major capital investment projects to monitor the
effectiveness of execution.

The risk
has stayed
the same.

In common with other food manufacturers,
changes in food consumption patterns
may impact the Group. These changes
may relate to consumer attitudes to health
and, more recently, sustainability. Demand
for a number of the Group’s products can
also be adversely affected by fluctuations
in the UK economy.

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.
The Group is working with customers to respond
to evolving consumer eating trends, including
consumer concerns surrounding plastic packaging.

Due to concerns
around Brexit
and an increased
focus on
sustainability,
the Group’s risk
has increased.

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 also continues to focus
on developing its business for a broad range of
customers across all formats.

The risk
has stayed
the same.

The Group benefits from close commercial
relationships with a number of key
customers. The loss of any of these key
customers, tightening of commercial
terms, or brand or reputational damage
associated with such supply could result
in a material impact on the Group’s
results. The Group is also exposed to
poor performance and execution by the
customers in the categories it supplies.
Changes to the grocery industry structure
may also adversely affect performance.

40 Greencore Group plc

STRATEGIC LINKS

RISK TREND

Growth

Relevance

Differentiation

Risk increased

Risk unchanged

Risk decreased

Risk area

Description of risk

Control

Movement

Commercial (continued)

Raw material
and input cost
inflation

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 also relies on
a concentrated number of key suppliers
for certain materials. A loss or interruption
of supply from a key supplier could cause
short term disruption to the operational
ability of the Group and adversely affect
its results.

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 now
has a number of cost transparency models with its
customers which also seek to mitigate the impact
of input cost fluctuations. The Group has mitigated
the impact of input cost inflation in FY19 through
this combined approach.

The gross risk
has increased,
due to the
continuing
uncertainty
associated
with Brexit.

Operational

Food
industry and
environmental
regulations

Product
contamination

As a producer of convenience food
and ingredients, Greencore is subject
to rigorous and constantly evolving
laws and regulations, particularly in the
areas of food safety and environmental
protection. Failure to comply with such
regulations may lead to serious financial,
reputational and/or legal risk.

The Group maintains a strong technical function
which sets high standards for food safety and
environmental controls striving 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 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 withdrawn or
recalled, or causing harm to customers.
As well as being a significant draw on
resources, product contamination could
result in a financial, reputational and/or
legal impact on the Group.

The risk
has stayed
the same.

The Group maintains industry leading food safety
and traceability processes and procedures.
Each facility 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. Each facility is subject to frequent
audits by internal teams, customers and
independent bodies auditing against recognised
global food safety standards. The Group also
operates stringent controls across its supply
chain including audits and strict approval of its
suppliers supported by rigorous quality checking
of all ingredients. In FY19, 38,300 internal audits
and 236 external audits were carried out at
our facilities and 154 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 invests significantly in high calibre site
teams with responsibility across engineering
and maintenance, supply chain, planning
and operational excellence. The Greencore
Manufacturing Excellence programme introduced
in FY17 has led to significant investment in this
area. The Group also maintains robust security
and comprehensive operational disaster recovery
plans. In addition, the Group undertakes regular
reviews of all facilities with external insurance and
risk management experts, the aim of which is to
improve the Group’s risk profile.

Disruption
to day to
day Group
operations

The Group is at risk of disruption to
its day-to-day operations from the
breakdown of key manufacturing
equipment or the loss of part or
all of a significant facility.

Annual Report and Financial Statements 2019

Strategic Report

Principal Risks continued

Risk area

Description of risk

Control

Movement

Operational (continued)

IT systems and
cyber risk

The Group relies heavily on information
technology and requires continuous
investment in systems to support our
business. In common with most large
companies, the Group is susceptible to
cyber security attacks with the threat
to the confidentiality, integrity and
availability of such systems. Losses
caused by accidental or malicious actions,
including those resulting from a cyber
security attack, could have a significant
impact on the Group.

Greencore maintains a programme of controls to
protect the confidentiality, integrity and availability
of information across the Group. The Group has
a detailed information security plan focused on
training, systems controls and systems architecture
improvements. In addition the Group has cyber
insurance to transfer part of the risk of any attack
to our insurer.

The risk
has stayed
the same.

People

Health and
safety

In addition to the obvious human cost,
a serious workplace injury or fatality
could inevitably carry serious financial,
reputational and/or legal risk.

The Group has in place strong processes and
procedures in health and safety, supported by
an established review programme across all sites.
We also have a culture of engagement throughout
the business from executive management through
to the factory floor.

The risk
has stayed
the same.

Labour
availability
and cost

Due to political and economic uncertainty
and change, there is a risk that labour
cost and availability may be affected and
this could have a detrimental impact on
the Group.

Ethical
compliance

The Group has identified ethical
compliance as a standalone principal
risk. Greencore is a large employer and
also sources ingredients from supply
chains which in certain cases can be
complex. Any failure to comply with
ethical standards for our workforce may
have a financial, reputational and/or legal
impact for the Group. Failure to ensure
that products are sourced responsibly
and sustainably across supply chains may
result in breaches of laws or regulations
and may have a financial, reputational
and/or legal impact for the Group.

The Group is continually reviewing and improving
its recruitment processes to reflect changing
market conditions, including rigorous compliance
checks. The Group also has a strong commitment
to excellent working conditions, on the job
training and specific programmes to enhance
communication and employee engagement.
The Group also maintains a strong commercial
focus on process and cost improvement to
manage and mitigate the increased cost of labour.

The Group continues to monitor and improve its
controls to further reduce the risk of unethical
practices taking place and has recently established
a cross functional ‘Group Ethics Committee’ to lead
the Group’s ethical agenda. The Group operates
under a number of policies and procedures, which
set out the standards expected throughout the
Group. All facilities are Stronger Together business
partners and the Group works with its suppliers
to build effective and transparent supply chains.
Supplier audit programmes are in place to monitor
human rights and the ethical treatment of workers.

The gross risk
has increased,
due to the
continuing
uncertainty
associated
with Brexit.

This is a new
risk. Elements
of ethical
compliance
were previously
embedded in
other principal
risks.

42 Greencore Group plc

STRATEGIC LINKS

RISK TREND

Growth

Relevance

Differentiation

Risk increased

Risk unchanged

Risk decreased

Risk area

Description of risk

Control

Movement

People continued

Recruitment
and retention
of key
personnel

The ongoing success of the Group
is dependent on attracting and retaining
high quality senior management
who can effectively implement the
Group’s strategy.

The Group mitigates the risk through robust
succession planning and strong recruitment
processes, offering competitive and attractive
remuneration and benefits packages. The
Nomination and Governance Committee reviews
succession planning at senior management level.

The risk
has stayed
the same.

Financial

Interest
rates, foreign
exchange
rates, liquidity
and credit

Employee
retirement
obligations

There are inherent risks associated with
fluctuations in both foreign exchange
rates and interest rates. In addition, the
Group’s credit rating and overall credit
profile impacts its ability to obtain funding
for future development and expansion.

These risks are actively managed by
the Group’s Treasury function. The function
operates within the framework of strict Board
approved policies and procedures which are
explained further in Note 24 to the Group Financial
Statements. The Group remains well financed with
committed facilities of £506m at 27 September
2019 and a weighted average maturity of
4.0 years.

The risk has
reduced
following the
disposal of the
US business and
reshaped capital
structure.

The Group’s defined benefit pension
schemes 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. Volatility in worldwide equity
and bond markets can impact the risk
of employee retirement obligations.

The Group has closed all defined benefit pension
schemes to future accrual. The risks are mitigated
by paying appropriate contributions into the
schemes and through balanced investment
strategies which are designed to avoid a material
deterioration of the current surplus or deficit in
each fund. Where relevant, the Group also uses
specific arrangements to improve the security
of scheme benefits while reducing contributions.

The risk
has stayed
the same.

Annual Report and Financial Statements 2019

Strategic ReportBoard of Directors

Gary Kennedy
BA, FCA

Patrick Coveney
B Comm, M Phil, D Phil

Eoin Tonge
B Eng

Peter Haden

Sly Bailey

Heather Ann McSharry

John Moloney

B Comm, MBS

B Ag Sc, MBA

Helen Rose

FCA

John Warren

BSc, FCA

Jolene Gacquin

B Corp Law, LLB,

Dip Corp Gov, FCG

Non-Executive Director
Group Chairman
(Aged 61)

Committee membership

Chief Executive Officer
(Aged 49)

Chief Financial Officer
(Aged 47)

Chief Operating Officer
(Aged 46)

Non-Executive Director
Senior Independent
Director (Aged 57)

Non-Executive Director

Group Company Secretary

(Aged 58)

(Aged 65)

(Aged 54)

(Aged 66)

(Aged 38)

Appointed as Non-
Executive Director on
20 November 2008
and Group Chairman
on 29 January 2013.

Appointed as Chief
Financial Officer on
05 September 2005 and
as Chief Executive Officer
on 31 March 2008.

Relevant skills and experience

Appointed on
03 October 2016.

Appointed on
21 May 2019.

Peter is a recent addition
to the Board having joined
in May 2019. In parallel, he
also took on the role of
Chief Operating Officer
where he has responsibility
for running the day to day
business, strengthening the
organisation and building
the Group’s capability.

Peter joined Greencore
in January 2015 as Chief
Development Officer and
was appointed UK Managing
Director in 2018.

His strategic mind-set and
operational expertise are
valued as Greencore drives
performance enhancements.

His experience as Partner
of McKinsey and brand
manager at Proctor &
Gamble allow him to bring
an in-depth strategic
perspective to the Board.

Gary has served on the
board of a number of listed
and private companies
including Green Reit plc, Elan
plc, Allied Irish Bank plc and
Friends First Holdings Ltd.
He also served on the Board
of the IDA Ireland and was
a Government appointed
director of IBRC.

Gary has a long executive
career in technology,
financial services and a
non-executive portfolio
spanning a variety of
sectors, including property,
financial services, foods,
biotechnology, technology
and logistics.

Gary places high importance
on regular, constructive
engagement with share-
holders and on building
relationships both with
fellow Board members
and colleagues around
the business. Gary
brings extensive financial
knowledge to the Board as
he is a Fellow of the Institute
of Chartered Accountants.
Gary is a council member
of the Institute of Directors.
He also is a founding chair
of the 30% Club Ireland, co-
chair of Balance for Better
Business and is dedicated to
driving the ethos of diversity
throughout the Group.

Patrick served as
Greencore’s Chief Financial
Officer until March 2008,
when he was appointed
Chief Executive Officer.
Before joining Greencore,
Patrick was Managing
Partner of McKinsey & Co.,
Ireland for seven years.

Patrick’s long term corporate
vision enables him to lead
the Group effectively. He
considers stakeholder
engagement crucial to
long term value creation
and spends considerable
time engaging with
stakeholders, including
customers, colleagues and
shareholders. In particular,
Patrick has been pivotal in
developing and maintaining
long term relationships with
Greencore’s customers
over the past eleven years.
He also maintains wider
relationships in the food
and grocery industry.

Patrick’s non-executive
appointments at Glanbia plc
and Core Media enable him
to bring valuable external
perspective to his role on
the Board.

Eoin joined the Group
in 2006. His career at
Greencore began with
responsibility for capital
markets and strategy,
working on a number of
corporate development
initiatives. Eoin also held
the position of Managing
Director of the Group’s
grocery business. Eoin
became Chief Financial
Officer in 2016 and is tasked
with overseeing the Group’s
accounting functions.

Eoin brings a high level
of integrity and a sharp
awareness of risks to the
Board. His comprehensive
understanding of the
financial position of the
Group is invaluable when
engaging with shareholders.

Eoin was pivotal in
developing the Group’s
original cultural framework
‘The Greencore Way’ in 2013
and is highly involved in the
sustainability agenda.

Eoin has a strong financial
and capital markets
background having held
a variety of roles with
Goldman Sachs before
joining Greencore.

Key current external appointments

Non-Executive Chairman of
Connect Group plc

Non-Executive Director
of Glanbia plc

44 Greencore Group plc

Appointed as Non-
Executive Director on
17 May 2013 and Senior
Independent Director
on 14 December 2017.

Sly is a highly experienced
business leader having
held the position of chief
executive officer of Trinity
Mirror plc for ten years,
as well as previously serving
as chief executive officer
of IPC Media.

Sly has held a number of
board roles serving as a
non-executive director on
the boards of Ladbrokes plc
and EMI plc, where she was
chair of the remuneration
committee and senior
independent director.
She has also served as
a non-executive director
and chair of the
remuneration committee
for the Press Association.

Sly currently serves on
the board of IPSX Group
Limited as non-executive
director and chair of the
remuneration committee.
With her executive
and non-executive roles
over a diverse range of
companies, Sly brings
a wealth of experience
and understanding of
different points of view
and business circumstances
which underpin her
appointment as Senior
Independent Director and
more recently, as Workforce
Engagement Director.

Appointed on

30 January 2013.

Appointed on

08 February 2013.

Appointed on

11 April 2018.

Appointed on

30 January 2013.

Appointed on

29 January 2019.

gained from senior finance

He has held the role of

more latterly Head of Legal

number of listed companies.

Deputy Group Secretary and

Relevant skills and experience

Heather Ann has extensive

John has top management

Helen is a Chartered

John is a Chartered

experience across a broad

and board level experience

Accountant having qualified

Accountant who brings

the Governor and Company

Glanbia plc. He was Group

Most recently Helen held the

John has served on the

position of Chief Operating

boards of a diverse range

of companies and has

range of industries at both

internationally and

executive and non-executive

domestically in the dairy,

director level.

She was previously

Managing Director for

Reckitt Benckiser and Boots

meat and nutritionals

sectors, covering

processing, marketing

and distribution.

Healthcare in Ireland having

John spent the majority

also served on the Board of

of his executive career at

at Coopers & Lybrand.

Helen brings substantial

operational, financial, risk

and UK retail experience

roles at Dixons, Forte,

Safeway and Lloyds

Banking Group.

of the Bank of Ireland.

Heather Ann is currently

serving as a non-executive

director on the boards of

three other publically listed

companies operating in the

healthcare, pharmaceuticals

and construction materials

sectors.

Through this diversity

of experience she brings

a highly knowledgeable

perspective to the Board

and Committees on which

she serves, including the

Managing Director from

2001 to 2013 and also

held a number of senior

management positions

within the organisation,

including the position

of Chief Executive of

Food Ingredients and

Agribusiness.

Officer at TSB Banking

Group plc, a subsidiary

of Sabadell where she

was tasked with leading

the bank’s development

to be a multi-channel,

challenger bank.

Helen has a probing focus

During his time at Glanbia,

on risk matters and internal

he successfully rationalised

controls which are key

the business and refocused

to the Board.

its strategy.

As well as extensive food

industry experience, John

Being a sponsor for gender

diversity during her time

at TSB, Helen understands

the importance of building

a sustainable female talent

businesses through periods

pipeline and brings strong

of significant change.

insight in this area to

the Board.

Remuneration Committee

brings deep experience

of which she is Chair.

of managing complex

extensive financial

experience gained from

senior financial roles at a

Having joined Greencore

in 2008, Jolene has held

a variety of legal and

company secretariat roles

within the Group, including

group financial director of

and Compliance. In addition

United Biscuits (Holdings) Plc

to her role as Group

and WH Smith PLC.

Company Secretary, Jolene

is responsible for legal and

regulatory matters for the

wider Group.

experience on other audit

Jolene served on the Board

committees. He has strong

of Galway Simon Community

from November 2015 until

September 2019 and is a

member of the Aon Bord

Bia Agri-Food Diversity &

Inclusion Advisory Group.

Jolene is a Fellow of the

Chartered Governance

Institute.

experience as an audit

committee chair, assisting

him to perform this role

effectively at Greencore,

where he encourages

careful scrutiny of the

Group’s controls.

John currently sits on

two listed companies as

non-executive director.

He is also a non-executive

director and chair of the

audit committee at Welsh

Water. Previously he served

as chairman of Uniq Plc and

as a non-executive director

of Bovis Homes Group PLC,

Spectris plc, The Rank Group

Plc, BPP Holdings plc, Aria

Foods UK plc, RAC Plc and

Rexam Plc.

Senior Independent Director

and Chair of Audit Committee

at Bloomsbury Publishing Plc

and 4imprint plc

Non-Executive Director of

Non-Executive Chairman

CRH plc, Jazz Pharmaceuticals

of DCC plc, Non-Executive

plc and Uniphar Group plc

Director of Smurfit Kappa plc

Board committees

Audit

Remuneration

Nomination and Governance

Committee Chair

Gary Kennedy

BA, FCA

Patrick Coveney

B Comm, M Phil, D Phil

Eoin Tonge

B Eng

Peter Haden

Sly Bailey

Heather Ann McSharry
B Comm, MBS

John Moloney
B Ag Sc, MBA

Helen Rose
FCA

John Warren
BSc, FCA

Jolene Gacquin
B Corp Law, LLB,
Dip Corp Gov, FCG

Non-Executive Director
(Aged 58)

Non-Executive Director
(Aged 65)

Non-Executive Director
(Aged 54)

Non-Executive Director
(Aged 66)

Group Company Secretary
(Aged 38)

Appointed on

03 October 2016.

Appointed on

21 May 2019.

Appointed on
30 January 2013.

Appointed on
08 February 2013.

Appointed on
11 April 2018.

Appointed on
30 January 2013.

Appointed on
29 January 2019.

Relevant skills and experience

Heather Ann has extensive
experience across a broad
range of industries at both
executive and non-executive
director level.

She was previously
Managing Director for
Reckitt Benckiser and Boots
Healthcare in Ireland having
also served on the Board of
the Governor and Company
of the Bank of Ireland.

Heather Ann is currently
serving as a non-executive
director on the boards of
three other publically listed
companies operating in the
healthcare, pharmaceuticals
and construction materials
sectors.

Through this diversity
of experience she brings
a highly knowledgeable
perspective to the Board
and Committees on which
she serves, including the
Remuneration Committee
of which she is Chair.

John has top management
and board level experience
internationally and
domestically in the dairy,
meat and nutritionals
sectors, covering
processing, marketing
and distribution.

John spent the majority
of his executive career at
Glanbia plc. He was Group
Managing Director from
2001 to 2013 and also
held a number of senior
management positions
within the organisation,
including the position
of Chief Executive of
Food Ingredients and
Agribusiness.

During his time at Glanbia,
he successfully rationalised
the business and refocused
its strategy.

As well as extensive food
industry experience, John
brings deep experience
of managing complex
businesses through periods
of significant change.

Helen is a Chartered
Accountant having qualified
at Coopers & Lybrand.
Helen brings substantial
operational, financial, risk
and UK retail experience
gained from senior finance
roles at Dixons, Forte,
Safeway and Lloyds
Banking Group.

Most recently Helen held the
position of Chief Operating
Officer at TSB Banking
Group plc, a subsidiary
of Sabadell where she
was tasked with leading
the bank’s development
to be a multi-channel,
challenger bank.

Helen has a probing focus
on risk matters and internal
controls which are key
to the Board.

Being a sponsor for gender
diversity during her time
at TSB, Helen understands
the importance of building
a sustainable female talent
pipeline and brings strong
insight in this area to
the Board.

Non-Executive Director of
CRH plc, Jazz Pharmaceuticals
plc and Uniphar Group plc

Non-Executive Chairman
of DCC plc, Non-Executive
Director of Smurfit Kappa plc

Having joined Greencore
in 2008, Jolene has held
a variety of legal and
company secretariat roles
within the Group, including
Deputy Group Secretary and
more latterly Head of Legal
and Compliance. In addition
to her role as Group
Company Secretary, Jolene
is responsible for legal and
regulatory matters for the
wider Group.

Jolene served on the Board
of Galway Simon Community
from November 2015 until
September 2019 and is a
member of the Aon Bord
Bia Agri-Food Diversity &
Inclusion Advisory Group.

Jolene is a Fellow of the
Chartered Governance
Institute.

John is a Chartered
Accountant who brings
extensive financial
experience gained from
senior financial roles at a
number of listed companies.
He has held the role of
group financial director of
United Biscuits (Holdings) Plc
and WH Smith PLC.

John has served on the
boards of a diverse range
of companies and has
experience on other audit
committees. He has strong
experience as an audit
committee chair, assisting
him to perform this role
effectively at Greencore,
where he encourages
careful scrutiny of the
Group’s controls.

John currently sits on
two listed companies as
non-executive director.
He is also a non-executive
director and chair of the
audit committee at Welsh
Water. Previously he served
as chairman of Uniq Plc and
as a non-executive director
of Bovis Homes Group PLC,
Spectris plc, The Rank Group
Plc, BPP Holdings plc, Aria
Foods UK plc, RAC Plc and
Rexam Plc.

Senior Independent Director
and Chair of Audit Committee
at Bloomsbury Publishing Plc
and 4imprint plc

Annual Report and Financial Statements 2019

Non-Executive Director

Chief Executive Officer

Chief Financial Officer

Chief Operating Officer

Non-Executive Director

(Aged 49)

(Aged 47)

(Aged 46)

Senior Independent

Director (Aged 57)

Group Chairman

(Aged 61)

Committee membership

a Government appointed

Ireland for seven years.

the position of Managing

organisation and building

Appointed as Non-

Executive Director on

20 November 2008

and Group Chairman

on 29 January 2013.

Appointed as Chief

Financial Officer on

05 September 2005 and

as Chief Executive Officer

on 31 March 2008.

Relevant skills and experience

Gary has served on the

Patrick served as

board of a number of listed

Greencore’s Chief Financial

and private companies

Officer until March 2008,

including Green Reit plc, Elan

when he was appointed

plc, Allied Irish Bank plc and

Chief Executive Officer.

Friends First Holdings Ltd.

Before joining Greencore,

He also served on the Board

Patrick was Managing

of the IDA Ireland and was

Partner of McKinsey & Co.,

Eoin joined the Group

in 2006. His career at

Greencore began with

responsibility for capital

markets and strategy,

working on a number of

corporate development

initiatives. Eoin also held

director of IBRC.

Patrick’s long term corporate

Gary has a long executive

vision enables him to lead

career in technology,

financial services and a

non-executive portfolio

spanning a variety of

the Group effectively. He

considers stakeholder

engagement crucial to

long term value creation

Director of the Group’s

grocery business. Eoin

became Chief Financial

Officer in 2016 and is tasked

with overseeing the Group’s

accounting functions.

sectors, including property,

and spends considerable

financial services, foods,

time engaging with

biotechnology, technology

stakeholders, including

Eoin brings a high level

of integrity and a sharp

awareness of risks to the

and logistics.

Gary places high importance

on regular, constructive

engagement with share-

holders and on building

relationships both with

fellow Board members

and colleagues around

the business. Gary

brings extensive financial

customers, colleagues and

Board. His comprehensive

shareholders. In particular,

Patrick has been pivotal in

understanding of the

financial position of the

developing and maintaining

Group is invaluable when

long term relationships with

engaging with shareholders.

Greencore’s customers

over the past eleven years.

He also maintains wider

relationships in the food

and grocery industry.

Eoin was pivotal in

developing the Group’s

original cultural framework

‘The Greencore Way’ in 2013

and is highly involved in the

knowledge to the Board as

Patrick’s non-executive

sustainability agenda.

he is a Fellow of the Institute

appointments at Glanbia plc

of Chartered Accountants.

and Core Media enable him

Gary is a council member

to bring valuable external

of the Institute of Directors.

perspective to his role on

He also is a founding chair

the Board.

Eoin has a strong financial

and capital markets

background having held

a variety of roles with

Goldman Sachs before

joining Greencore.

of the 30% Club Ireland, co-

chair of Balance for Better

Business and is dedicated to

driving the ethos of diversity

throughout the Group.

Key current external appointments

Non-Executive Chairman of

Non-Executive Director

Connect Group plc

of Glanbia plc

Appointed as Non-

Executive Director on

17 May 2013 and Senior

Independent Director

on 14 December 2017.

Peter is a recent addition

Sly is a highly experienced

to the Board having joined

business leader having

in May 2019. In parallel, he

held the position of chief

also took on the role of

Chief Operating Officer

executive officer of Trinity

Mirror plc for ten years,

where he has responsibility

as well as previously serving

for running the day to day

as chief executive officer

business, strengthening the

of IPC Media.

the Group’s capability.

Peter joined Greencore

in January 2015 as Chief

Sly has held a number of

board roles serving as a

non-executive director on

the boards of Ladbrokes plc

Development Officer and

and EMI plc, where she was

was appointed UK Managing

chair of the remuneration

Director in 2018.

His strategic mind-set and

operational expertise are

valued as Greencore drives

performance enhancements.

His experience as Partner

of McKinsey and brand

manager at Proctor &

Gamble allow him to bring

an in-depth strategic

perspective to the Board.

committee and senior

independent director.

She has also served as

a non-executive director

and chair of the

remuneration committee

for the Press Association.

Sly currently serves on

the board of IPSX Group

Limited as non-executive

director and chair of the

remuneration committee.

With her executive

and non-executive roles

over a diverse range of

companies, Sly brings

a wealth of experience

and understanding of

different points of view

and business circumstances

which underpin her

appointment as Senior

Independent Director and

more recently, as Workforce

Engagement Director.

Directors’ Report

T H E D I R E C T O R S P R E S E N T T H E I R R E P O R T A N D F I N A N C I A L

S T A T E M E N T S F O R T H E Y E A R E N D E D 2 7 S E P T E M B E R 2 0 1 9 .

T H E D I R E C T O R S ’ R E P O R T I S C O N T A I N E D O N P A G E S 4 4 T O 1 0 1 .

Principal activities
Greencore’s business primarily operates in the attractive convenience food sector in the UK. The Group supplies grocery and
other retailers including all of the major UK supermarkets. The Group serves customers across a broad range of convenience
food categories including sandwiches, salads, sushi, chilled snacking, chilled ready meals, chilled soups and sauces, chilled
quiche, ambient sauces and pickles, and frozen Yorkshire Puddings. Greencore operates from 16 world-class manufacturing
locations in the UK, with industry-leading technology and supply chain capabilities. The Group also operates two ingredients
trading businesses in Ireland. The Group employs approximately 11,500 people and is headquartered in Dublin, Ireland.
Greencore’s shares are listed on the London Stock Exchange and are included in the FTSE 250 Index.

Results and review of activities
The Group’s performance and development activity is summarised in the Operating and Financial Review set out in pages 34
to 37. The principal subsidiary and associate undertakings are listed in Note 35 to the Group Financial Statements and form part
of this report.

The Group Income Statement, which is set out on page 111, details the Group’s results for the year. The Group reported Adjusted
Operating Profit for continuing operations for the year of £105.5m (FY18: £104.6m). Profit for the financial year after taxation was
£108.2m (FY18: £36.5m).

Dividends
An interim dividend of 2.45 pence (FY18: 2.20 pence) per share (totalling £10.9m) was paid on 3 July 2019. The Directors are
recommending a final ordinary dividend of 3.75 pence (FY18: 3.37 pence) per share. Subject to shareholder approval, this
dividend is to be paid on 28 February 2020 to shareholders who are on the register of members at 5.00pm on 3 January 2020.
If approved, the total final dividend will equal £16.7m based on the number of shares in issue as at 25 November 2019. This will
give a total dividend of 6.20 pence for the year and represents an increase of 11.3% on the prior year’s total dividend per share.

Return of capital
At the Extraordinary General Meeting (‘EGM’) held on 7 November 2018, shareholders approved the disposal of the US business
as well as a capital return to shareholders. To facilitate the proposed return of capital, shareholders approved a capital reduction
of £650,785,438.98 of share premium, to be converted into profits available for distribution. The capital reduction was confirmed
by the High Court on 28 November 2018. Whilst it was originally intended that the capital return would be transacted via the
payment of a special divided, following a consultation exercise with shareholders, and taking their views into account, alongside
the focus on an efficient return of capital, the Group decided to implement the capital return by way of a tender offer available
to all eligible shareholders for up to £509m. The tender offer was formally approved by shareholders at the Company’s
Annual General Meeting (the ‘AGM’) on 29 January 2019 and was fully subscribed. Following the completion of the tender offer,
261,025,641 Ordinary Shares were purchased and subsequently cancelled on 31 January 2019.

Share capital
As at 28 September 2018, there were 706,978,416 Ordinary Shares in issue. As set out above, on 31 January 2019, 261,025,641
Ordinary Shares were purchased as part of the tender offer and were subsequently cancelled. The Group Scrip Dividend Scheme
ceased fully during FY18 and therefore no Ordinary Shares were issued under the scheme during FY19 (FY18: 1,210,655). In FY19,
53,806 (FY18: 120,950) Ordinary Shares were issued under the Company’s ShareSave Schemes. Further details are set out in Note
27 to the Group Financial Statements.

As at 27 September 2019, Greencore’s issued ordinary share capital consisted of 446,006,581 Ordinary Shares with voting rights.

One Special Share of €1.26 exists in the share 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. Under the Articles of Association, the consent of the holder of the Special Share is required in the winding up of the
Company. Many of the rights attached to the Special Share were abolished in 2011.

At the AGM held on 29 January 2019, amongst other resolutions passed:

• 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;

• the shareholders gave the Directors authority to allot shares up to a maximum nominal amount equal to £2,333,028.77;
• shareholders gave authority to Directors to disapply pre-emption rights;
• shareholders gave authority to Directors to re-allot shares purchased by the Company and not cancelled as treasury shares; and
• shareholders approved the appointment of Deloitte Ireland LLP as external auditor.

46 Greencore Group plc

At the forthcoming AGM scheduled to take place on 28 January 2020 amongst other resolutions:

• Directors will seek authority to make market purchases or overseas market purchases of up to 10% of its own shares.
If approved, any purchases will be made only at price levels which the Directors consider to be in the best interests
of the shareholders generally, taking into consideration the Group’s overall financial position;

• Directors will seek approval to allot relevant shares up to an amount equal to approximately 33% of the aggregate nominal

value of the issued ordinary share capital of the Company;

• Directors will seek approval to disapply the strict statutory pre-emption provisions relating to the issue of new equity for cash
until the date of the AGM to be held in 2021, or 28 April 2021, whichever is earlier. If approved, the disapplication will be limited
to the allotment of equity securities in connection with any rights issue or any open offer to shareholders, 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; and

• Directors will seek authority to re-allot shares purchased by the Company and not cancelled as treasury shares. If the

resolution is passed, the authority will expire on the earlier date of the AGM in 2021 or 28 April 2021 and the minimum price
at which treasury shares may be re-allotted shall be set at the nominal value of the share where such a share is required to
satisfy an obligation under an employee share scheme or, in all other cases, an amount equal to 95% of the then market price
of such shares and the maximum price at which treasury shares may be re-allotted shall be set at 120% of the then market
price of such shares.

Future developments
Greencore enters FY20 with a clear set of strategic objectives. These are to drive growth in an expanding food to go market,
to deepen customer relevance, and to adopt a distinctive and repeatable Greencore Way of working. These objectives are
underpinned by an economic model of disciplined growth and investment, creating value for all stakeholders.

The Group anticipates a year of profitable growth in FY20. The Group’s medium term financial ambitions are for mid single-digit
organic revenue growth, high single-digit Adjusted EPS growth, the conversion of half of Adjusted EBITDA to Free Cash Flow,
and for mid-teen ROIC.

Directors for year ended 27 September 2019
The names of each of the Directors and a short biographical note on each Director appear on pages 44 and 45. Following the
disposal of Greencore’s US business, Non-Executive Directors Mr Thomas Sampson and Mr Kevin O’Malley retired from the Board
in January 2019. On 21 May 2019, Mr Peter Haden was appointed to the Board as Executive Director and in parallel he took on the
role of Chief Operating Officer. Having joined the Group in 2015, Mr Haden has held a number of roles within the Group including
Chief Development Officer and UK Managing Director.

In accordance with the Greencore Group plc Articles of Association and Provision B.7.1. of the 2016 UK Corporate Governance
Code (the ‘2016 Code’) each of the Directors individually retire at each AGM of the Company and where appropriate submit
themselves for re-election. No re-appointment is automatic and all Directors who intend to submit themselves for re-election
are subject to a full and rigorous evaluation. One of the main purposes of the evaluation is to assess each Director’s suitability
for re-election. If a Director is not deemed to be effective in carrying out his or her required duties, the Board will not
recommend that Director for re-election.

In line with the 2016 Code, in the year under review, each Director was subject to an internal evaluation. Details of the Board
evaluation can be found on pages 57 and 58. Following on from the review, the Chairman and Board are pleased to recommend
for re-election each of those Directors who intend to seek re-appointment at the forthcoming AGM as they continue to be
effective and remain committed to their role on the Board.

Memorandum and Articles of Association
The Company’s Memorandum and Articles of Association set out the objects and powers of the Company. The Articles of
Association detail the rights attaching to shares, the method by which the Company’s shares can be purchased or re-issued,
the provisions which apply to the holding of and voting at general meetings and the rules relating to the Directors, including
their appointment, retirement, re-election, duties and powers. The Company’s Articles of Association may be amended by
a special resolution passed by the shareholders at an AGM or EGM of the Company. A copy of the Memorandum and Articles
of Association can be obtained from the Company’s website, www.greencore.com.

Directors’ interests in the Ordinary Shares at 27 September 2019
The interests of 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.

Annual Report and Financial Statements 2019

Directors’ ReportDirectors’ Report continued

Significant shareholdings
At 27 September 2019, the Company has been advised of the following notifiable interests in its ordinary share capital:

Shareholder

Polaris Capital Management, LLC
FMR LLC
JP Morgan Asset Management Holdings Inc.
BlackRock, Inc.
Coltrane Asset Management

Notified
shareholding as at
27 September 2019

52,902,854
44,595,590
24,027,420
19,667,947
13,708,987

Percentage of total
Ordinary Shares

in issue

11.86%
9.99%
5.39%
4.41%
3.07%

At 25 November 2019, the Company has been advised of the following notifiable interests in its ordinary share capital:

Shareholder

Polaris Capital Management, LLC
FMR LLC
JP Morgan Asset Management Holdings Inc.
Coltrane Asset Management, L.P.
BlackRock, Inc.

Notified
shareholding as at
25 November 2019

52,902,854
44,595,590
24,581,065
20,402,000
17,543,241

Percentage of total
Ordinary Shares

in issue

11.86%
9.99%
5.51%
4.57%
3.93%

Other than these holdings, the Company has not been notified as at 25 November 2019 of any interest of 3% or more in its
ordinary share capital.

Corporate governance
Statements by the Directors relating to the Group’s application of corporate governance principles, compliance with the
provisions of the 2016 Code and the Irish Corporate Governance Annex (‘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 49, 52 to 61,
92 to 96 and 100 and 101.

Greencore Group plc believes that it is fully compliant with the 2016 version of the UK Corporate Governance Code, which
applied to the Company for the year ended 27 September 2019.

Greencore Group plc is registered in Ireland and as an Irish incorporated company it is not subject to the UK executive
remuneration requirements as set out in the Large and Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013. Nonetheless, in order to ensure transparency for all of our stakeholders, we have sought
to comply with these requirements on a voluntary basis, to the extent possible under Irish law. The Report on Directors’
Remuneration is contained on pages 62 to 91.

Principal risks and uncertainties
Pursuant to Section 327(1)(b) of the Companies Act 2014, Regulation 5(4)(c)(ii) of the Transparency (Directive 2004/109/EC)
Regulations 2007, the principal risks and uncertainties that could affect the Group’s business are set out on pages 38 to 43
and are deemed to be incorporated in this part of the Directors’ Report.

Principal subsidiaries
Details of the Company’s principal operating subsidiaries and joint ventures are set out on pages 171 and 172.

Research and development
The Group continued its research and development programme in relation to its principal activities during the year under review.
Further information is contained in Note 3 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 1997.

Political contributions
The Company made no political contributions which are required to be disclosed under the Electoral Act, 1997.

Accounting records
The Directors believe that they have complied with the requirements of Sections 281 to 286 of the Companies Act 2014 with
regard to accounting records by employing accounting personnel with appropriate expertise and by providing adequate
resources to the finance function. The accounting records of the Company are maintained at No. 2 Northwood Avenue,
Northwood Business Park, Santry, Dublin 9, D09 X5N9, Ireland.

48 Greencore Group plc

Directors’ compliance statement
The Directors acknowledge that they are responsible for securing compliance by the Company of its relevant obligations
as set out in the Companies Act 2014 (‘Relevant Obligations’). The Directors further confirm that there is a compliance policy
statement in place setting out the Company’s policies which, in the Directors’ opinion, are appropriate to ensure compliance
with the Company’s Relevant Obligations. The Directors also confirm that appropriate arrangements and structures are in place
which, in the Directors’ opinion, are designed to secure material compliance with the Company’s Relevant Obligations. For the
year ended 27 September 2019, the Directors, with the assistance of the Risk Management Group, conducted a review of the
arrangements and structures in place. In discharging their responsibilities under Section 225 of the Companies Act 2014, the
Directors relied on the advice of persons who the Directors believe have the requisite knowledge and experience to advise
the Company on compliance with its Relevant Obligations.

Audit Committee
The Company has an Audit Committee, the members of which are set out on page 92.

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. As part of these resources, the Group had undrawn
committed bank facilities of £175m at 27 September 2019. For this reason, the going concern basis continues to be adopted
in preparing the Financial Statements.

Viability statement
In line with the Provision C.2.2. of the 2016 Code, the Directors have carried out a rigorous review of the prospects of the current
business and its ability to meet its liabilities as they fall due over the medium term. In undertaking this review, the Directors have
concluded that a three year timeframe continues to be an appropriate period for this assessment given that this is the typical
period for visibility of commercial arrangements with the Group’s customers in the Group’s strategic planning process. The
objectives of the annual strategic planning process are to consider the key strategic choices facing the Group and to build a
consolidated financial model with various scenarios, taking into account the principal risks and uncertainties facing the Company,
including Brexit, which may threaten the Company’s solvency, liquidity, cash flow and business model.

Assumptions are built for the Group Income Statement, Balance Sheet and cash flow. These are rigorously tested by management
and the Directors. Sensitivity analysis has been applied to reflect the potential impact of some of the principal strategic and
commercial risks of the Company as described on pages 40 and 41. These risks could affect the level of sales and profitability
of the Company and the amount of capital required to deliver them. A model of financing requirements is also built for the same
time period taking into account the base plan and sensitivities against this, together with the likelihood of being able to refinance
maturing committed facilities. Based on the results of this analysis, the Directors have a reasonable expectation that the Company
will be able to continue in operation and meet its liabilities as they fall due over the three year period of their assessment.

Disclosure of information to the auditor
Each of the Directors individually confirm that:

• Insofar as they are aware, there is no relevant audit information of which the Company’s auditor is unaware; and
• That they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of

any relevant audit information and to establish that the Company’s auditor is aware of such information.

Auditor
At the 2019 AGM, shareholders formally approved the appointment of Deloitte Ireland LLP (‘Deloitte’) as external auditor. Deloitte
replaced KPMG as external auditor with effect from 29 January 2019. Under Irish legislation, the Company’s external auditor
is automatically re-appointed each year at the AGM unless the meeting passes a resolution to appoint a different auditor or
provides that the existing external auditor shall not be re-appointed or, alternatively, if the auditor expresses its unwillingness
to continue in office. At the forthcoming AGM, the Company will put an advisory resolution before shareholders in respect
of the continuation in office of Deloitte as external auditor.

As required under Section 381(1) (b) of the Companies Act 2014, a resolution authorising the Directors to determine the
remuneration of the external auditor will be proposed at the 2020 AGM.

Notice of Annual General Meeting and Special Business
The notice of the 2020 AGM, together with details of special business to be considered at the meeting, will be circulated
to shareholders during December 2019.

Annual Report and Financial Statements 2019

Directors’ ReportDirectors’ Report continued

Non-financial information statement
Pursuant to the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups)
Regulations 2017 as amended (the ‘Regulations’), the Company is required to report on certain non-financial and diversity
information to provide an understanding of its development, performance, position and the impact of its activities. The table
below provides details on the information required to be provided by the Regulations and highlights where the information
has been provided in this Annual Report and Financial Statements, where applicable.

Page

Ú 30 and 31

Ú 27 to 29,

Ú 27 to 29

N/A

Ú 54 and 99

Reporting requirement

Relevant policies*

Initiatives/location of information

Environmental matters

Environmental
Policy Statement

Communities

–

Social and
employee matters

Human rights

Code of Business
Practice and Ethical
Code and Employment
Standards Policy

Ethical Code
and Employment
Standards Policy

Anti-bribery & corruption

Anti-Bribery and
Corruption Policy

Diversity

Board Diversity Policy,
Group Diversity
and Inclusion Policy,
and Ethical Code
and Employment
Standards Policy

Sustainability Report

Sustainability Report, and
Corporate Governance Report

The Group’s approach to human rights is informed
by the International Labour Organisation’s
Declaration of Fundamental Principles and Rights
at Work and the ‘protect, respect and remedy’
framework provided by the United Nations Guiding
Principles on Business and Human Rights. See our
Sustainability Report.

Greencore is committed to the highest standards of
honesty and integrity. The Group does not, and will
not, tolerate any employee or representative being
involved in any level of bribery or corruption. During
FY19, we provided training on the revised internal
Anti-Bribery and Corruption Law Compliance
Manual which is also available on our online
training platform.

At Greencore we are committed to treating all
of our colleagues equally, fairly and with dignity
and respect. We are also committed to promoting
diversity and inclusion within Greencore.

In FY19, 40% of all colleagues were female. Females
made up 59% of our workforce in Ireland and
40% in the UK. At Board level, 33% of our Directors
were female. Average female representation
on our subsidiary company boards was 36%,
while 58% of senior managers were female.

Country

Ireland

Total

No. of colleagues
Male
Female

41
17
24

11,498
6,929
4,569

11,539
6,946
4,593

In addition to internal policies, we undertook
various initiatives throughout the Group to promote
diversity, including: training colleagues in respect of
the importance of promoting diversity and inclusion;
acknowledging our female colleagues contribution
to the business on International Women’s Day;
delivering a series of presentations to industry
peers at the inaugural GroceryAid Diversity &
Inclusion event in March 2019; and celebrating
Pride in June 2019 with events held across a number
of sites to raise awareness and celebrate the
LGBT+ community.

50 Greencore Group plc

Reporting requirement

Relevant policies*

Initiatives/location of information

Whistleblowing

Prevention of
modern slavery

Ethical Code
and Employment
Standards Policy.
Many of our internal
policies also provide
information in relation
to the independent
whistleblowing
telephone hotline.

We publish an annual
Slavery and Human
Trafficking Transparency
Statement on our
website, in line with
the UK Modern Slavery
Act 2015.

The Group ensures that details of the whistleblowing
facility, as well as the whistleblowing telephone
hotline number are made visible at all sites and
available to all colleagues and third parties. The
hotline number is toll free and is available in
multiple languages. All concerns are confidential
and externally monitored. All concerns are fully
investigated by the appropriate team, with the
Head of Risk Management providing independent
oversight and supervision on all investigations,
reporting on whistleblowing activity to the Audit
Committee and ensuring appropriate actions are
taken where required. Further details are set out
in page 95 of the Report of the Audit Committee.

The Group has created a Group Ethics Committee
whose role includes driving progress in combatting
modern slavery. A comprehensive education
programme has been implemented, which includes
the development of procedures for managing
incidents of modern slavery and training on how
to spot the signs of slavery for key members of our
human resources team and for our agency colleague
providers. This initiative is supported by the UK’s
‘Gangmasters and Labour Abuse Authority’. Recently,
an internal video in relation to modern slavery was
released across the Group. Further details are set in
the Sustainability Report and Corporate Governance
report. The Group regularly reviews our eligibility
to work systems and has implemented a number
of new pre-employment checks.

Page

Ú 95

Ú 27 to 29,
and 59

Business model

Non-financial KPIs

Principal risks

–

Business Model

Key Performance Indicators

Risks and Risk Management Report

Ú 6 and 7

Ú 24 and 25

Ú 38 to 43

* Policies are all available on the Group website www.greencore.com

The referenced sections are deemed to be incorporated within this Directors’ Report.

On behalf of the Board

Gary Kennedy
Chairman
Dublin
25 November 2019

Eoin Tonge
Director

Annual Report and Financial Statements 2019

Directors’ Report
Corporate Governance Report

Corporate
Governance
Report

T H E B O A R D I S C O M M I T T E D T O E N S U R I N G T H A T T H E G R O U P ’ S

C O R P O R A T E G O V E R N A N C E A R R A N G E M E N T S A R E E F F E C T I V E

A N D C O N T I N U E T O E V O L V E W I T H B E S T P R A C T I C E .

Gary Kennedy

The benchmark used by the Group for measuring corporate governance for FY19 was the 2016 UK Corporate Governance Code
(the ‘2016 Code’). This statement explains how the Company has applied the principles and complied with the provisions set out
in the 2016 Code.

Whilst Greencore is not listed on Euronext Dublin, for increased transparency we have chosen to voluntarily adopt the provisions
of the Irish Corporate Governance Annex (the ‘Annex’).

The Board believes that the Group continued to fully comply with the 2016 Code and the relevant provisions of the Annex
throughout the financial year ended 27 September 2019 where the requirements are of a continuing nature. The full text of the
2016 Code can be found on the Financial Reporting Council’s website, www.frc.org.uk, whilst the Annex can be found on the
Euronext Dublin’s website, www.euronext.com.

The Board keeps corporate governance developments under continuous review in order to ensure that the Group’s governance
structures evolve as necessary and remain appropriate for a Group of our size and complexity. The Board welcomes the
introduction of the 2018 UK Corporate Governance Code (the ‘2018 Code’), which is applicable to accounting periods starting
on or after 1 January 2019. The Company will report on its compliance with the 2018 Code in the FY20 Annual Report and
Financial Statements.

Notwithstanding the fact that the 2018 Code applies to the Company for FY20, the 2018 Code was tabled and discussed at Board
and Committee level on numerous occasions throughout the year. Furthermore, during the year a number of initiatives were
undertaken to ensure compliance with the 2018 Code, including:

• The Board has appointed a Workforce Engagement Director with effect from FY20 to ensure that there is active engagement

between the workforce and the Board. Further information is set out on page 99;

• On the recommendation of the Nomination and Governance Committee, the Board has approved Terms of Reference for the

Senior Independent Director;

• The Board has undertaken a review of the Group’s key stakeholders and continues to ensure there is a process in place to

understand their views;

• The Group has refined its employee engagement strategy, including its People at the Core survey, a critical tool to understand

the culture of the business;

• The Board will continue to attend a number of offices and sites to witness first-hand the skill, professionalism and hard work of

our colleagues. Through more frequent engagement on colleague issues and initiatives, the Board will assess and monitor culture
throughout the business more effectively. From FY20 the Board has implemented a Site Visit Policy for Non-Executive Directors.
See page 55 for more details;

• The Board reviewed the Board Diversity Policy and the Group Diversity and Inclusion Policy (the ‘Policies’) to ensure that both

Policies and practices align with our commitment to promoting diversity at all levels across the Group;

52 Greencore Group plc

• The Remuneration Committee reviewed the Group’s approach to incentivising and rewarding both senior management

and the wider colleague base; and

• The Nomination and Governance Committee has continued to ensure that orderly succession plans are in place at both

Board and senior management level. Further details are set out on pages 97 to 99.

Priorities for FY20
The governance priorities for the coming year include continued Non-Executive Director refreshment and succession planning,
continuing our focus on our stakeholders’ views, monitoring Group culture, considering environmental, social and governance
issues, continued implementation of enhancements to governance practices, and ensuring a continuing focus on diversity.

Gary Kennedy
Chairman
25 November 2019

Board diversity as at 27 September 2019

By gender

By role

By tenure

Female
Male

Executive
Non-Executive

33%

67%

33%

67%

<1 year
1-2 years
3-5 years
5-10 years
>10 years

22%

11%

45%

Board leadership
The Board is collectively responsible for promoting the long term success of the Group. Its role is to lead and direct the Group
by setting the strategy, overseeing management and monitoring and assessing culture, with the aim of achieving the long term
sustainability of the business, for the benefit of employees, customers, suppliers, consumers, shareholders and local communities.

There is an agreed formal list of matters reserved for Board consideration and decision. The list of matters reserved for Board
decisions is available under the Corporate Governance section of the Group’s website, www.greencore.com, and is reviewed
annually by the Board and updated as appropriate. The matters reserved for Board consideration were last updated in April 2019.

 Read more on: Board activities (page 56) and stakeholders (page 59 and 60)

Board composition
The Board consists of three Executive Directors and six Non-Executive Directors. The biographical details of each of the
Directors, along with each of their individual dates of appointment, are set out on pages 44 and 45.

Both on an individual and collective basis, the Directors have the range of skills, understanding, experience and expertise
necessary to ensure the effective leadership of the Group and to ensure high corporate governance standards are maintained.

The Board is comprised of Directors from a diverse range of backgrounds, each of whom brings independent judgement to bear
on a number of key issues for the Group, including strategy, performance, culture, sustainability, health and safety, resourcing,
ethics and regulation, risk and IT. In accordance with Provision B.1.2. of the 2016 Code at least half of the Board, excluding the
Chairman, is independent. Where appropriate, it is Board policy to ensure that the independence of each Non-Executive Director
is determined prior to his or her appointment and is reviewed annually thereafter.

Annual Report and Financial Statements 2019

Directors’ ReportCorporate Governance Report continued

Changes to the Board
Following the disposal of Greencore’s US business, Non-Executive Directors Mr Thomas Sampson and Mr Kevin O’Malley
retired from the Board in January 2019.

On 21 May 2019, Mr Peter Haden was appointed to the Board as Executive Director. Having joined the Group in 2015,
Mr Haden has held a number of roles within the Group including Chief Development Officer and UK Managing Director.

Following the Group’s exit from the US market in November 2018, along with the reset of Group strategy and the consequent
need to simplify the management structure under the leadership of Mr Patrick Coveney as Chief Executive Officer (‘CEO’),
Mr Haden will step down from the Board on 31 December 2019. Peter Haden will remain with the Group until April 2020 to
enable the Group to transition seamlessly to the new structure. The Board appreciates the strong contribution that Peter Haden
has made to the development and performance of Greencore over the past five years and wishes him well for the future.

Independence and Non-Executive Board renewal
Following the retirement of Mr Sampson and Mr O’Malley, the Nomination and Governance Committee undertook a detailed
review of both the Board and Committee composition, following on from which it was determined that both the Board and
the Committees are of the correct size, structure and composition, with no one individual or small group having the ability
to dominate decision making. Furthermore, given the current composition of the Board, no undue reliance is placed on any
individual Non-Executive Director. The Board continues to ensure that each of the Non-Executive Directors, where possible,
remain impartial and independent. Following the FY19 Board evaluation, details of which are set out on page 57 and 58,
the Board is satisfied that it is sufficiently independent in order to meet the challenges of its role.

The Board acknowledges that Mr Gary Kennedy has been a Non-Executive Director for eleven years and FY19 was his sixth full
year as Chairman of the Company. The Board is highly cognisant that Mr Kennedy’s deep understanding of the Group, including
key stakeholders, and his commitment to overseeing the successful Non-Executive Director refreshment and succession planning
exercise, remains critical to the continuity of effective leadership of the Group. Further information in relation to Non-Executive
Director refreshment and succession planning, and the Chairman’s tenure, is contained in the Nomination and Governance
Committee Report on pages 97 to 99.

As part of the FY19 Board evaluation, the Board reviewed the independence of each of the Non-Executive Directors, including
the Chairman. The evaluation confirmed that each of the Non-Executive Directors are independent. In addition, no Non-Executive
Director has any material or other relationship with the Group.

Diversity
The Board recognises and places great emphasis on the principle of diversity, including gender diversity. The Board is committed
to ensuring that its composition is diverse and balanced. In accordance with the Board Diversity Policy, which was adopted in
FY18 and is reviewed annually, all appointments to the Board are made on merit against objective criteria, in the context of the
overall balance of skills and backgrounds that the Board needs to maintain in order to remain effective.

When carrying out its duty of reviewing the Board composition, including when considering new Board candidates, the
Nomination and Governance Committee gives due regard to diversity, including diversity of gender, backgrounds, and cognitive
and personal strengths. The Nomination and Governance Committee monitors progress on diversity and where appropriate,
reports in the Company’s Annual Report and Financial Statements on the process used in relation to any Board appointments.

54 Greencore Group plc

Time commitment
Each year, a schedule of regular meetings to be held in the following calendar year is agreed with each of the Directors. A list
of the Directors’ attendance at scheduled meetings throughout the year can be found on page 58. Additional Board meetings
are held on an ad hoc basis as required throughout the year. Both the Board and the Committees held additional unscheduled
meetings during FY19. Furthermore, the Nomination and Governance Committee increased the number of scheduled meetings
per annum to ensure that appropriate consideration is given to both succession planning and corporate governance matters.

Board meetings generally take place at the Group’s head office in Dublin as well as at the offices of the Group’s facilities wherein
tours of the local facilities are also incorporated into the Board agenda. In FY19, the Board held meetings in both Manton Wood
and Park Royal. In addition to the Board meeting, the Directors received management presentations, undertook facility tours and
met with colleagues working in each facility. The Board also held an off site strategy session in Ireland over the course of two
days. Board meetings are often preceded or followed by informal dinners to which local management teams are invited.

Board papers are circulated electronically to Directors in the week preceding the Board meetings. The Board papers include the
minutes of all previous Board meetings and, where appropriate, Committee meetings. In addition, the Chair of each Committee
provides a verbal update on the relevant Committee meeting’s proceedings at the following meeting of the Board.

If a Director is unable to attend a Board meeting, either in person or remotely, he or she is encouraged to communicate his or
her views on any particular topic to the Chairman, the Chief Executive Officer, the Senior Independent Director or the Group
Company Secretary in advance of the meeting. These views are then communicated at the Board meeting on behalf of the
absent Director.

Site visit policy
In addition to the above, a formal policy on Non-Executive Director visits to the Group’s sites has been devised (‘Site Visit Policy’).
Under the Site Visit Policy, Non-Executive Directors will undertake visits of certain sites outside of formal Board meetings in order
to gain a deeper understanding of both the relevant site, colleagues and culture.

In October 2019, certain Non-Executive Directors visited the Selby sites, after which a report on the visit and associated learnings
was fed back to the wider Board.

External appointment policy
During FY19, the Board approved a formalised policy for Directors on external appointments. The policy stipulates that in
advance of any new Board appointment, each potential new Non-Executive Director will be provided with information on the time
commitment expected of him or her for his or her role. The potential Non-Executive Director is required to provide a detailed
overview of all other directorships and other significant commitments together with a broad indication of the time commitment
associated with such other directorship(s) or significant commitment(s). The proposed appointee must also confirm that they
have sufficient time to dedicate to the role and meet their requirements as a potential Non-Executive Director of the Company.
In addition, all incumbent Directors must seek the prior written approval of the Board in advance of undertaking any additional
external appointments. Before approving any additional external appointment, the Board shall consider the time commitment
required for the role. Each proposed external appointment shall be reviewed independently.

In addition to the above, in accordance with the policy, Executive Directors shall not normally be permitted to take on more
than one non-executive directorship in a FTSE 100 company or other significant appointment, however, each proposed external
appointment shall be considered independently.

In the event that permission is granted for an incumbent Director to take on a significant external appointment, full details of the
rationale for permitting such an appointment shall be clearly explained in the Company’s Annual Report and Financial Statements.

Annual Report and Financial Statements 2019

Directors’ ReportCorporate Governance Report continued

Key Board activities during FY19

Board strategy and business plans

Operational and financial performance

• Considered the disposal of the US business and

associated return of capital of £509m to shareholders.

• Set the Group strategy.
• Considered the acquisition of Freshtime.
• Reviewed and constructively challenged reports from
the Chief Executive Officer, the Chief Financial Officer
and the Chief Operating Officer.

• Considered and approved capital proposals.
• Considered changes in senior management and

regulatory developments.

• Received reports from the Chief Executive Officer
and the Chief Financial Officer at every meeting
in respect of commercial, operational and financial
performance and outlook.

• Assessed the Group’s capital and financing

requirements, arising from the Group’s new strategy.
• Approved FY18 full year results, FY18 Annual Report
and Financial Statements, FY19 half year results and
the FY19 first and third quarter trading updates.

• Recommended the FY18 final dividend and approved

• Held a focused two day off site strategy session.

the FY19 interim dividend payment.

• Received Group monthly management accounts

and reports.

• Received regular updates from the Chair of the

Audit Committee on the Audit Committee’s oversight
of financial performance.

Governance

Risk

• Received regular updates from the Audit Committee
Chair on the Audit Committee’s oversight of internal
controls, risk and risk management.

• Received regular reports on IT strategy from the

Chief Information Officer.

• Received presentations on the risk assurance mapping
process with deep dives on areas such as food safety
and health and safety.

• Received regular updates on the work undertaken

by each Committee.

• Discussed new legislation and regulatory obligations
which will affect the Group, including the 2018 Code.
• Discussed and approved the Non-Executive Director

refreshment and succession plan.

• Approved the appointment of Ms Jolene Gacquin

as Group Company Secretary.

• Approved the appointment of Mr Peter Haden

as Executive Director.

• Undertook an internal evaluation of the Board’s

and individual Director’s effectiveness.

• Led by the Senior Independent Director, undertook

an evaluation of the Chairman.

• Approved the viability and going concern statements.
• Approved Terms of Reference for Committees,

Senior Independent Director and Chairman.
• Approved all circulars and listing particulars.
• Approved and implemented new Board policies

including a new Site Visit Policy, External Appointments
Policy and Conflicts of Interest Policy.

Remuneration

Stakeholder engagement

• Received regular updates from the Remuneration Chair
on the activities of the Remuneration Committee during
FY19 including:
– Proposed changes to the remuneration policy;
– Feedback from shareholder consultation on the

proposed 2020 Remuneration Policy;

– A review of senior management remuneration

matters; and

– Remuneration framework in the context of the

wider colleague base.

• Received updates on each of the key stakeholders

and considered insights.

• Reviewed the results of the FY19 People at the Core
and reviewed wider colleague engagement initiatives.

• Considered role and objectives of newly formed

Workforce Engagement Director.

56 Greencore Group plc

Division of responsibilities
The Directors acknowledge that they are responsible for the proper stewardship of the Group’s affairs, both on an individual
and collective basis, and it is the Board alone which has the authority and responsibility for planning, directing and controlling
the activities of the Group.

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. In addition, the Directors are indemnified for any legal action taken against
them in respect of matters pertaining to their duties as Directors, subject always to the limitations under Irish company law.

Chairman and Chief Executive Officer
The roles of the Chairman and CEO are separate and distinct and there is a clear division of responsibilities between the
two roles. The overall responsibility for the management of the Group has been delegated to the CEO who is accountable
to the Board. It is the role of the Chairman to lead the Board and ensure its overall effectiveness in directing the Company,
whilst demonstrating objective judgement and promoting a culture of openness and debate.

Non-Executive Directors
The role of a Non-Executive Director includes providing entrepreneurial leadership, setting the Group’s strategy, acting
as a conduit between shareholders and management, reviewing management performance and challenging management
proposals as appropriate in a clear and constructive manner. Non-Executive Directors must also utilise their skills, expertise
and experience to contribute to the development of the Group as a whole. Information on the time commitment expected
from each Non-Executive Director is set out on page 55.

Company Secretary
The Group Company Secretary, whose appointment and removal is a matter for the Board as a whole, is responsible for ensuring
that Board procedures are followed. The Group Company Secretary is available to each of the Directors for any advice or
additional services they may require.

Senior Independent Director
In accordance with best practice and the 2016 Code, the Board acknowledges the importance of having a recognised senior
member of the Board, referred to as the ‘Senior Independent Director’. It is the role of the Senior Independent Director to
act as a confidential sounding board for the Chairman and to serve as an intermediary for the other Directors when necessary.
The Senior Independent Director is available to shareholders, and other stakeholders, if they have concerns which they have
been unable to resolve through the normal channels of Chairman or Executive Directors, or indeed where such contact through
the aforementioned channels is deemed inappropriate. Terms of Reference for the Senior Independent Director were approved
by the Board in FY19 and are available on the Company’s website.

Board evaluation
The Board understands the importance of an effective evaluation process and the Board undertakes various phases of evaluation
to ensure the Board remains robust, independent and effective. Each year, the Board undertakes an annual internal evaluation,
which is led by the Chairman, as well as a triennial external evaluation. During FY19, performance evaluations of the Board
and individual Directors were internally facilitated and led by the Chairman, having been last externally facilitated during FY18
by the ICSA: The Governance Institute, in accordance with Provision B.6.2. of the 2016 Code.

The FY19 Board evaluation process, which commenced in July and concluded in September, involved the following:

• Completion by each Director of a detailed questionnaire covering key aspects of Board effectiveness, including the

composition of the Board, the interaction between Board members, content and conduct of Board and Committee meetings,
and the performance of the Board as a whole in the year under review;

• Following a review of each of the responses to the questionnaires, the Chairman met with each Director individually
to consider the Board evaluation process, the results of the questionnaire and the performance and effectiveness
of both the Board and the individual Director during FY19; and

• In September 2019, the results of the FY19 Board evaluation were presented to the Board and actions for further

improvement were agreed.

In addition to the above, the Senior Independent Director led the annual evaluation of the Chairman, which also included
completion of a detailed questionnaire by each Director on the Chairman’s performance, effectiveness and independence.
The Senior Independent Director also discussed the responses to the questionnaires with each of the Directors individually
and, following a discussion with the Chairman, presented the findings of the evaluation, as well as proposed areas for further
development, to the Board.

Annual Report and Financial Statements 2019

Directors’ Report
Corporate Governance Report continued

In September 2019, each Committee undertook a review of its own effectiveness for FY19, the results of which were presented
to the Board. Each Committee also carried out an annual review of its Terms of Reference and recommended any changes
it considered necessary to the Board for approval.

In addition to the above, following the conclusion of the main business of the Board meetings, the Non-Executive Directors
convene separately. Furthermore, at least annually, the Chairman meets with the Non-Executive Directors off site without the
Executive Directors present to discuss, amongst other matters, the Executive Directors, the Board as a whole, the Committees
and the interaction between the Executive and Non-Executive Directors.

Board Committees
In order to ensure that it discharges its role appropriately, the Board has established an effective Committee structure in order
to assist the Board in the fulfilment of its responsibilities. Details of the various Committee memberships, together with the
relevant biographies are set out on pages 44 and 45 of this report. Further details on the role of the Committees and the work
undertaken by each Committee in the year under review can be found on pages 62 to 99.

Average number of Executive Directors
Average number of Non-Executive Directors

FY19

3
6

FY18

2
8

Attendance at scheduled Board and Committee meetings
Attendance at scheduled Board and Committee meetings during the financial year under review was as follows:

Gary Kennedy
Patrick Coveney
Eoin Tonge
Peter Haden2
Sly Bailey
Heather Ann McSharry
John Moloney3
Kevin O’Malley4
Helen Rose
Thomas Sampson4
John Warren

Board1

Audit
Committee1

Nomination and
Governance
Committee1

Remuneration
Committee 1

7/7
7/7
7/7
2/2
7/7
7/7
6/7
2/2
7/7
2/2
7/7

–
–
–
–
3/3
3/3
–
–
3/3
–
3/3

3/3
–
–
–
3/3
–
3/3
–
–
–
–

4/4
–
–
–
–
4/4
4/4
–
–
–
–

1 The Board and each Committee held additional meetings throughout the year. Further detail of these meetings is set out in the respective

Committee reports.

2 Mr Peter Haden joined the Board on 21 May 2019.
3 Mr John Moloney was unable to attend one scheduled Board meeting due to an unavoidable personal commitment. Mr Moloney received the meeting

materials and discussed the business of the meetings with the Chairman.

4 Mr Kevin O’Malley and Mr Thomas Sampson retired from the Board on 29 January 2019.

Where appropriate, the Board also establishes sub-committees on an ad hoc basis in order to deal with any additional items
of business which arise throughout the year. The membership of the sub-committees will depend upon the purpose for which
it was established and will take into account the skills and expertise necessary.

58 Greencore Group plc

STRATEGIC LINKS

Growth

Relevance

Differentiation

Our stakeholders
The Board is aware that our actions and decisions impact all of our stakeholders. We seek to deliver value for all our
stakeholders and the Group is committed to maintaining strong relationships with our key stakeholders, through effective
engagement, ensuring a long term sustainable business model.

Stakeholder and link
to strategic priorities

Shareholders

Our engagement

The Board recognises the importance of engaging with all shareholders and values its regular dialogue
with shareholders. The Group prioritises effective dialogue with shareholders to ensure that we capture and
embrace feedback relating to areas of interest and areas of concern, and to ensure that our obligations are
met. In turn, shareholders welcome detailed communication on the growth outlook for the Group and how
the Group is resourced to achieve this, including a demonstration of how it manages effective and disciplined
capital allocation. The investment community is also increasingly interested and engaged in environmental,
social and governance (‘ESG’) themes and how the Group is positioned to address these.

The Group welcomes queries via telephone, post or email and up to date contact details are available on
the Group’s website, www.greencore.com. The website also provides a library of all relevant shareholder
communications, financial results and updates, and a history of the Company’s share price.

Attendance of, and questions from, shareholders at the Company’s general meetings are welcomed by the
Board. The Board also encourages shareholders to make use of their votes at all general meetings. The full
Board attended the Annual General Meeting (‘AGM’) in January 2019. Following the disposal of the US business
in November 2018, shareholders were consulted in relation to the capital return. Separately, from July 2019
to October 2019, the Remuneration Committee undertook an extensive shareholder engagement in relation
to the proposed 2020 Remuneration Policy. Further details are set out on pages 63 and 64.

Shareholder presentations are made at the time of issue of the Group’s half year and full year results, following
which the Chief Financial Officer provides the Board with an update on feedback received. The Board receives
regular updates on shareholder, analyst and share price developments from the Head of Investor Relations.
The Group runs an active investor relations programme that includes all financial announcements, presentations
and regular ongoing dialogue with the investment community, apart from when the Group is in close period.

On 26 September 2019, the Group hosted a Capital Markets Day in London for institutional investors
and analysts, with presentations from the CEO and other members of the senior management team.

Customers

The Group interacts with our customers on a daily basis at multiple levels. These discussions cover multiple
areas such as strategic discussions, new product development, technical and supply chain, sustainability
and ethics. The Board also meets with senior customer representatives from time to time.

Our customers tell us they need support to help them grow their businesses profitability and sustainably.
They seek support from us in particular to differentiate their offering and help them win in the marketplace.
More recently, our customers are looking for support from us in the area of sustainability, including initiatives
to reduce plastic packaging and food waste. The Group has also been working with our customers to
effectively plan for different Brexit scenarios.

Our stated strategy is to deepen our relevance within our customers by driving returns through a shared
value chain, increasing value through our portfolio and by doing more for them.

Suppliers

 Read more on: Relevance in Our Strategy and Sustainability Report (page 18 and 19, 26 to 33)

The Group interacts with our suppliers on a daily basis given the level of ingredients and packaging
purchases we make. In particular, the Group identifies key suppliers with whom we have more strategic
relationships. From time to time, we hold detailed workshops with these key suppliers to drive strategies
for mutual benefit. The Board reviews our strategic supplier strategy.

Like us, our suppliers are looking at ways to grow their businesses profitably. The Group works with our
suppliers on reducing cost and participating in growth opportunities with us. There is an increasing focus
on sustainability with our suppliers, particularly in the areas of sustainable sourcing and working sustainably
with our suppliers is a critical part of our strategy. The ethical treatment of workers in the supply chain is also
an increasing area of focus.

Planning for Brexit has been a key area of focus with our suppliers this year. Additionally we have launched
our Greencore Purchasing Excellence programme which, amongst other things, seeks to continually improve
our partnership approach with top suppliers.

 Read more on: Relevance in Our Strategy and Sustainability Report (page 18 and 19, 26 to 33)

Annual Report and Financial Statements 2019

Directors’ Report

Corporate Governance Report continued

Stakeholder and link
to strategic priorities

Our engagement

Consumers

Employees

To support our customers’ plans, the Group carries out a significant amount of analysis on the different food
categories in which we operate, focusing on how the category is performing and the major trends in that
category from a consumer and marketplace perspective. To supplement these analyses we carry out specific
direct consumer research from time to time. The Board reviews the output of these analyses and research,
particularly at its annual offsite strategy session.

 Read more on: Market Trends (page 8 and 9)

The Group undertakes a significant number of activities throughout the year whereby we listen to our
employees. The Group carries out a People at the Core survey which takes feedback on many areas of the
employee experience. We also carry out many listening groups across the business. In addition, managers
are encouraged to solicit feedback formally and informally. Recently the Board appointed a Workforce
Engagement Director and has instituted a formalised policy on site visits for Non-Executive Directors in addition
to holding scheduled meetings at sites.

The feedback we get from our employees is detailed and is focused on the areas of management effectiveness
and overall communication. Responding to all of this feedback is embedded into the Group’s People at the Core
plan which focuses on learning and development, talent management and regular communication.

 Read more on: Non-Financial KPIs and Sustainability Report (page 24, 25 and 26 to 33)

Local
communities

The Group’s facilities are generally significant operations in the context of the local communities in which they
are located. Colleague representatives from each site have regular dialogue with local representatives and local
business groups on relevant matters. The Group also seeks to support local communities through supporting
local education, food donations and charitable giving.

The Board reviews our local communities plan as part of our overall sustainability strategy. See pages 27 to 29.

Shareholders’ meetings
The Company operates under the Companies Act 2014 (the ‘Act’). The Act provides for two types of shareholder meetings:
the AGM with all other general meetings being called an Extraordinary General Meeting (‘EGM’).

The Company must hold a general meeting 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. EGMs can also be convened at the request
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.

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.

Under the Act, ordinary resolutions may be passed by a majority of votes cast in favour, while special resolutions require a 75%
majority of votes cast in favour. 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.
All resolutions are determined by a poll.

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 a general meeting. Matters reserved to shareholders in general meetings
include the election of Directors, the declaration of final 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 Sections 1099 to 1110 of the Companies Act 2014
is available on the Group’s website.

Risk management and internal control
The Board is responsible for the Group’s system of internal control and risk management. The Board reviews the effectiveness
of the system and ensures that there is a process in place for identifying, evaluating and managing the significant risks to
the achievement of the Group’s strategic objectives. The key risks facing the Group include strategic risks, commercial risks,
operational risks, people risks and financial risks. Under Irish company law (Section 327(1) (b) of the Companies Act 2014 and
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. The principal risks and uncertainties identified are set out on
pages 38 to 43 and form part of this report.

60 Greencore Group plc

Whilst the Board as a whole is responsible for the Group’s system of internal control, each of the individual business unit and
functional management teams drive the process through which principal risks and uncertainties are identified. The Board
understands that the individual business unit and functional management teams are in the best position to identify the principal
significant and emerging risks and uncertainties associated with their respective areas of business. Risks identified and associated
mitigating controls are subject to review by the Board and the Audit Committee on a regular basis.

The process for identifying, evaluating and managing the significant risks has been in place throughout the financial year. Up to
the date of the approval of the Annual Report and Financial Statements it accords with the Financial Reporting Council (‘FRC’)
Guidance on Risk Management, Internal Control and Related Financial and Business Reporting and is regularly reviewed by
the Board. On a regular basis, the risks faced by the Group are reviewed with management and also the Audit Committee.
This system of internal control is designed to manage, rather than eliminate, the risk of failure to achieve business objectives.
The internal control systems can only provide reasonable assurance, rather than absolute assurance, against material
misstatement or loss.

The process involves the Board reviewing and analysing the following:

• The nature and extent of the risks, including principal risks, facing the Group;
• The extent and categories of risks it regards as desirable or acceptable for the Group to bear;
• The likelihood of the risk concerned materialising and the impact of associated risks materialising as a consequence;
• The Group’s ability to reduce the incidence and impact on its business of risks that do materialise;
• The operation of the relevant controls and control processes;
• The costs of operating particular controls relative to the benefits in managing related risks; and
• The Group’s risk culture.

The Audit Committee’s Terms of Reference (which are available under the Corporate Governance section of the Group’s website,
www.greencore.com) stipulate that it must conduct an annual risk and internal control assessment, following on from which it must
present a report to the Board on: (a) the nature and extent of the principal risks facing the Group; (b) the design, operation and
monitoring by management of internal control systems; (c) the accuracy and frequency of reports from management to the Board
and whether the reports give a balanced assessment of the principal risks and the effectiveness of the system of internal control
in managing those risks; (d) the going concern and viability statements; and (e) the Group Treasury policy.

The key elements of the Group’s system of internal control 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, capital expenditure and corporate governance;

• Annual budgets and strategic business plans for all operating units, identifying key risks and opportunities;
• Monitoring of performance against budgets and forecasts and reporting thereon to the Directors on a regular basis;
• A Risk Management Group which independently reviews key business processes and controls and their effectiveness; and
• The Audit Committee which approves audit plans, monitors performance against plans and deals with significant control issues

raised by the Risk Management Group or external audit.

The preparation and issue of financial reports is managed by the Group Finance department, as delegated by the Board.
The Group financial reporting process is controlled using the Group accounting policies and reporting systems. The Group
Finance team supports all reporting entities with guidance on the preparation of financial information. Each business unit
has a Finance Director who is responsible for information which accords with agreed policies. The Group seeks to continually
test and improve its internal control environment.

Further details on how the Board and the Audit Committee have discharged their responsibilities along with the reviews
undertaken by the Audit Committee in the financial year can be found on pages 92 to 96. Details of the Group’s hedging and
financial risk management policies are set out in Note 23 and 24, to the Group Financial Statements respectively. Details of the
Group’s financial key performance indicators (‘KPIs’) are set out on pages 22 and 23. These disclosures form part of this report.

In FY19, the financial information for each business unit was subject to a review at reporting entity and Group level by the
Chief Executive Officer, Chief Financial Officer and Chief Operating Officer along with the senior team. The Annual Report
and Financial Statements are reviewed by the Audit Committee in advance of presentation to the Board for approval.

During the year under review, senior management completed a Financial Internal Control Questionnaire which was used
to identify control strengths and weaknesses across all financial areas and any weaknesses were subsequently addressed.

Finally, the Directors, through the use of appropriate procedures, systems and the employment of competent personnel, have
ensured that measures are in place to secure compliance with the Company’s obligation to keep adequate accounting records.
The accounting records are kept at the registered office of the Company.

Annual Report and Financial Statements 2019

Directors’ ReportReport on Directors’ Remuneration

Report on
Directors’
Remuneration

T H E C O M M I T T E E C O N T I N U E S T O F O C U S D I L I G E N T L Y

O N O U R A P P R O A C H T O R E M U N E R A T I O N A N D H A S P L A C E D

S I G N I F I C A N T E M P H A S I S O N E N S U R I N G P A Y - F O R -

P E R F O R M A N C E A N D A H I G H L E V E L O F T R A N S P A R E N C Y .

Heather Ann McSharry

Dear Shareholder,
On behalf of my colleagues on the Remuneration Committee (the ‘Committee’) and the Board, I am pleased to present the Report
on Directors’ Remuneration for the financial year ended 27 September 2019 (‘FY19’) and the proposed 2020 Remuneration Policy
(‘2020 Remuneration Policy’).

FY19 was another active year for the Committee. Following the disposal of the US business and the associated return of capital to
shareholders in early FY19, we conducted a comprehensive review of the performance measures, weightings and targets under
both the long term and short term incentive plans. This review was a key part of our considerations relating to our revised
2020 Remuneration Policy, further details of which are set out below.

2020 Remuneration Policy
The Annual General Meeting (‘AGM’) in January 2020 marks the third anniversary of the adoption of the current remuneration
policy, and we will be submitting the proposed 2020 Remuneration Policy to shareholders for an advisory resolution at the AGM
in 2020. The Committee spent much of its time during FY19 reviewing the existing remuneration framework to ensure it remains
appropriate for Greencore over the coming years. As detailed in the Strategic Report, our business continued to evolve over
FY19, and we entered FY20 with a clear set of strategic objectives which are to drive growth in an expanding food to go market,
to deepen customer relevance and to adopt a distinctive and repeatable Greencore Way of working.

Despite this shift in focus, our core remuneration principles remain unchanged, and centre on:

• Alignment and fairness;
• Pay-for-performance; and
• Transparency and simplicity.

The Committee has also monitored the significant developments in the external landscape since our remuneration policy was
last approved in 2017, driven in the main by revisions to the 2018 UK Corporate Governance Code (the ‘2018 Code’) which applies
to Greencore from FY20.

Many of the themes and principles underpinning the 2018 Code are already incorporated into Greencore’s corporate governance
and remuneration frameworks. However, the timely review of the current remuneration policy ahead of the 2020 AGM has given
us the opportunity to review, adjust and reconfirm our approach in light of evolving market and best practice.

62 Greencore Group plc

The conclusion of the Committee’s review was that our remuneration structure generally remained fit-for-purpose, particularly
following the implementation of a number of changes to our current remuneration policy following the AGM in 2017, including:

• The introduction, with effect from FY18, of malus and clawback provisions to both the Performance Share Plan (‘PSP’) and the

Annual Bonus Plan (‘ABP’) during the vesting period and for two years post-vesting;

• The introduction of Total Shareholder Return (‘TSR’) as an additional measure for our long term PSP awards, to further augment

alignment with shareholders and diversify the measures used under the PSP; and

• The increase in shareholding guidelines, such that all Executive Directors must attain a shareholding of 200% of salary within

five years of appointment to the Board.

Following the aforementioned changes, as well as continuous shareholder engagement, the Committee was pleased with the
high level of support for the FY18 Annual Report on Remuneration at the AGM in 2019, which received over 90% support.
Notwithstanding the above, the Committee believes that certain amendments should be introduced to the 2020 Remuneration
Policy to reflect our evolving strategy and shareholder expectations.

The main proposed changes contained within the 2020 Remuneration Policy are as follows:

1. Aligning pension contributions for all newly appointed Executive Directors with pension contributions available to the wider
colleague base – the Committee supports the principle of reducing, over time, the disparity in pension contributions between
Executive Directors and the wider colleague base. This policy has already been adopted in relation to the appointment to the
Board of the Chief Operating Officer (‘COO’), Peter Haden, whose pension contribution, upon appointment to the Board in
May 2019, was set at 8% of salary, which is in line with the pension contribution level currently available to the wider colleague
base. In line with the 2018 Code, only basic salary will be pensionable;

2. Capping incumbent Executive Director pension contribution levels – with effect from FY20, the Chief Executive Officer

(‘CEO’), Patrick Coveney and the Chief Financial Officer (‘CFO’), Eoin Tonge have agreed a voluntary cap on their future annual
pension contributions to FY19 levels (of €315,000 and £105,000, respectively). Notwithstanding the supportive feedback
received from a number of shareholders on this proposal, the Committee is mindful of the strong and evolving views of
some shareholders in this area. We will keep our approach to incumbent Executive Director pensions under review in light
of developing market practice and shareholder expectations, whilst remaining highly cognisant of the contractual constraints
in this regard; and

3. Introducing a post-employment shareholding policy – with effect from 2020, Executive Directors will be expected, in normal
circumstances, to maintain a post-employment shareholding of Greencore shares at a level equal to the lower of the in-post
shareholding guideline or the individual’s actual shareholding for a period of two years.

Changes to measures in the Annual Bonus Plan (‘ABP’) – In addition to the above, the Committee proposes changes to the
implementation of the 2020 Remuneration Policy in respect of the ABP. Specifically, it is proposed that Adjusted Earnings Per
Share (‘EPS’) and Return on Invested Capital (‘ROIC’) are replaced with Adjusted Operating Profit and Free Cash Flow. Adjusted
Operating Profit and Free Cash Flow are both Group Key Performance Indicators (‘KPIs’) and introducing these into the ABP will
generate differentiation between the measures used for our long term and short term incentive plans, and create more direct
alignment between incentives and the delivery of the Group’s strategy.

Shareholder engagement
The Committee is very cognisant of the need to ensure that Executive Directors and shareholders’ interests are aligned and
therefore, we consulted shareholders with a total holding of close to 70% of our issued share capital, as well as proxy advisors,
on our initial proposals. Shareholder engagement in respect of the proposed 2020 Remuneration Policy was valuable with
support evident for the strategic ambition and direction of the Company. While the feedback varied by investor, there was
broad acceptance that the proposed 2020 Remuneration Policy was aligned with our strategic imperatives. Discussions held
with shareholders focused on:

• The introduction of, and rationale for, the proposed new ABP measures of Adjusted Operating Profit and Free Cash Flow.
During consultation, certain shareholders sought to understand the operation of the proposed measures and weightings
in further detail. The Committee will ensure that a clear emphasis is placed on the disclosure of the performance underlying
any payouts in the year of payment under all measures;

• The introduction of pension contributions for newly appointed Executive Directors in line with the contribution available

to the wider colleague base, as implemented during FY19;

• The proposal to cap the pension contributions for the incumbent CEO and the CFO at FY19 contribution levels. Certain

shareholders advised that the proposals signified positive steps towards addressing the disparity between the Executive
Directors’ pensions and the pension contribution levels available to colleagues. Shareholders also sought clarity on the
contractual restraints facing the Committee in terms of reducing contributions for incumbents. Overall, there was an
acknowledgement of the importance of ensuring stability at a key juncture for the strategic development of the Group; and

Annual Report and Financial Statements 2019

Directors’ ReportReport on Directors’ Remuneration continued

• The potential introduction of a post-employment shareholding policy for Executive Directors. In our initial proposals, the

Committee had proposed not to include a formal post-employment shareholding policy, as the strength of existing deferral
arrangements and the nature of leaver provisions dictated that Executive Directors would be required to hold shares after
departure. During engagement, however, it became clear to the Committee that a number of shareholders expected the
adoption of a post-employment shareholding guideline in line with the 2018 Code. As outlined, the Committee revised the
proposed 2020 Remuneration Policy to include a formal post-employment shareholding policy with effect from January 2020.

The programme of engagement with shareholders and proxy advisors has provided valuable insights and important learnings for
the Committee. The feedback received has been helpful in determining the remuneration structure and in building understanding
on how best to communicate the decisions of the Committee. Our shareholder base is multi-jurisdictional and many of our
shareholders have their own individual guidelines and policies as well as differing views on appropriate levels of remuneration
and how best to incentivise management. While it is not always possible to reconcile views, which are sometimes diverging,
we have taken all shareholder inputs into account and sought to reflect the balance of these views when applying appropriate
judgement.

The engagement exercise also provided us with the opportunity to understand the wider priorities for each shareholder we
engaged with. The importance of the Committee promoting the long term success of the Group in its remuneration decisions
was a recurring message. Outside of discussions on the specific proposals, it was clear that environmental, social and governance
(‘ESG’) matters are at the forefront of shareholders’ agendas and, more specifically, how quantitative ESG related measures
could be introduced to the remuneration framework. In this regard, this year the Committee reviewed the outcome of both
the Group’s financial and non-financial Key Performance Indicators (‘KPIs’), as set out on pages 22 to 25, when considering the
outcome of the Executive Directors’ personal and strategic objectives element of the ABP. Furthermore, the Group is currently
progressing its sustainability agenda (see pages 26 to 33), and the Committee will continue to consider how ESG measures might
be incorporated in incentives in the future.

FY19 business performance and remuneration
Following the disposal of the US business in November 2018, the Group fully reset its capital structure as well as its strategic
and financial objectives. In January 2019, the Group returned £509m of capital to shareholders in the form of a tender offer and
now has a clear set of strategic objectives which are underpinned by an economic model of disciplined growth and investment,
driving shareholder value. In FY19, the Group delivered modest growth in proforma revenue and operating profit with a solid
performance in Adjusted EPS growth and a strong improvement in Free Cash Flow Conversion on an underlying basis.

The FY19 incentive outcomes reflect another year of efficient growth for the Group, as well as contributions from the individual
Executive Directors. The Executive Directors each received payouts under the ABP of 35% of maximum. The payouts were driven
by strong ROIC performance as well as strong individual Executive Director contributions in terms of wider strategic and personal
objectives. There was no payout under the Adjusted EPS measure.

In addition, PSP awards granted in early 2017 will vest in early 2020 at 50% of maximum, based on the achievement, in full, of
the ROIC performance condition. There was no payout under the Adjusted EPS measure. The Committee reviewed the Group’s
performance in the round and determined that the formulaic outcomes of both incentive plans are fully aligned with underlying
performance and a fair reflection of the shareholder experience over both performance periods. Further details of performance
targets and actual outturns are set out on page 67.

During FY19, and in particular in advance of the granting of awards under the PSP in February 2019, the Committee spent a
significant amount of time considering both the performance measures and associated targets in light of the significant change
to our portfolio and the evolution of strategy. While PSP awards are generally granted in December, as detailed in last year’s
Report on Directors’ Remuneration, the Committee determined it was appropriate to defer the granting of FY19 awards to the
CEO and CFO until the process around the sale of the US business and the return of capital to shareholders had concluded. The
awards were granted in February 2019 and details of the awards and the associated targets were detailed in an announcement,
released via a Regulatory News Service on 8 February 2019 and are set out on page 85. In light of the disposal of the US
business, following a detailed review the peer group that relates to the relative TSR element of PSP awards was altered in respect
of the FY19 PSP grant of awards.

64 Greencore Group plc

Remuneration in FY20
Following a review during November 2019, the Committee approved salary increases of 1.25% and 2.5% for the CEO and CFO
respectively. The increase for the CEO is below the 2% increase received by the wider colleague base. The increase for the
CFO is slightly ahead of the increase awarded to the wider colleague base, and reflects the additional responsibilities taken
on during FY19.

As outlined above, from FY20 the ABP performance measures will be updated to reflect our evolving business model.
Adjusted EPS and ROIC will be replaced with Adjusted Operating Profit (weighted 50% of the bonus) and Free Cash Flow
(weighted 25% of the bonus) respectively, with the remainder (weighted 25% of the bonus) subject to the achievement of
personal and strategic measures. Both Adjusted Operating Profit and Free Cash Flow are KPIs for Greencore and introducing
these into the ABP will create more direct alignment between incentives and performance against the delivery of the Group’s
strategy. Adjusted Operating Profit measures the underlying and ongoing operating performance of each business unit and
of the Group as a whole, whilst Free Cash Flow measures the amount of cash available for distribution and allocation.

Under the PSP, awards will be made in late 2019 equivalent to 200% of salary to the CEO and 150% of salary to the CFO.
The performance measures and targets remain unchanged from FY19 and are detailed on page 87.

As set out in the Chairman’s Statement on page 11, Peter Haden will step down from his role as Executive Director on
31 December 2019, and will leave the Group in April 2020. Therefore he will not receive any salary increase or awards under
the PSP for FY20. Further details are set out on page 86.

Executive remuneration reforms
In addition to guidance on Executive Director pensions and post-employment shareholding, the 2018 Code also sets out a
clear expectation that the remit of the Committee should be extended to include the review of wider employee remuneration
and related policies. Given the importance of all colleagues to our business, ensuring that pay arrangements are equitable
and motivational across the organisation has always been a cornerstone of Greencore’s approach to remuneration, and the
Committee will continue to consider wider colleague remuneration as part of its annual agenda.

The Committee also welcomes the focus on discretion under the 2018 Code. Our incentive plans provide the Committee with
the ability to override formulaic outcomes in the event that they do not reflect individual or underlying company performance.
The Committee considers this discretion a fundamental aspect of its role in overseeing the operation of the incentive framework.

Once again, I would like to thank shareholders and proxy advisors for providing both their time and input during the year,
and also thank my fellow members on the Committee and the wider Board for their valuable contribution to the remuneration
agenda during FY19.

I hope our efforts to enhance our incentive framework and reporting over the past three years will be reflected in your support
at the 2020 AGM, where I will, as always, be available to respond to any questions shareholders may have on the Report on
Directors’ Remuneration or in relation to the Committee’s activities. I also remain available to meet and discuss our remuneration
arrangements with shareholders outside of the AGM and I look forward to continuing to engage with shareholders on all future
remuneration matters.

Heather Ann McSharry
On behalf of the Remuneration Committee
25 November 2019

Annual Report and Financial Statements 2019

Directors’ ReportReport on Directors’ Remuneration continued

Remuneration
at a glance

T H I S S E C T I O N P R O V I D E S A S N A P S H O T O F T H E G R O U P ’ S P E R F O R M A N C E O V E R F Y 1 9 A S W E L L

A S T H E R E M U N E R A T I O N R E C E I V E D B Y O U R E X E C U T I V E D I R E C T O R S . F U L L D E T A I L S C A N B E

F O U N D I N T H E A N N U A L R E P O R T O N R E M U N E R A T I O N O N P A G E S 7 9 T O 9 1 .

T H E C O M P A N Y I S S U B M I T T I N G A R E V I S E D R E M U N E R A T I O N P O L I C Y ( ‘ 2 0 2 0 R E M U N E R A T I O N

P O L I C Y ’ ) F O R A N A D V I S O R Y S H A R E H O L D E R V O T E A T T H E A N N U A L G E N E R A L M E E T I N G ( ‘ A G M ’ )

O F T H E C O M P A N Y T O B E H E L D O N 2 8 J A N U A R Y 2 0 2 0 . I F A P P R O V E D , T H E 2 0 2 0 R E M U N E R A T I O N

P O L I C Y W I L L T A K E E F F E C T F R O M T H E D A T E O F T H E A G M . T H E 2 0 2 0 R E M U N E R A T I O N P O L I C Y

I S S E T O U T O N P A G E S 6 9 T O 7 8 .

A S S E T O U T O N P A G E 4 8 , T H E C O M P A N Y I S N O T S U B J E C T T O T H E U K E X E C U T I V E

R E M U N E R A T I O N R E Q U I R E M E N T S A S S E T O U T I N T H E L A R G E A N D M E D I U M - S I Z E D C O M P A N I E S

A N D G R O U P S ( A C C O U N T S A N D R E P O R T S ) ( A M E N D M E N T ) R E G U L A T I O N S 2 0 1 3 . N O N E T H E L E S S ,

I N O R D E R T O E N S U R E T R A N S P A R E N C Y T O A L L O F O U R S T A K E H O L D E R S , W E H A V E S O U G H T

T O C O M P L Y W I T H T H E S E R E Q U I R E M E N T S O N A V O L U N T A R Y B A S I S , T O T H E E X T E N T P O S S I B L E

U N D E R I R I S H L A W .

The Committee applies the following overarching remuneration principles to the design and
implementation of our remuneration policy:

Alignment and fairness
Aligning Executive Directors’ and shareholders’ interests, and ensuring pay
arrangements are fair and equitable across the Group.

Pay-for-performance
Ensuring targets are appropriately stretching, and setting safeguards against
paying for failure.

Transparency and simplicity
Designing a simple remuneration structure, and clearly communicating
remuneration decisions to shareholders.

It is in the context of the above principles that the 2020 Remuneration Policy has been developed, and the remuneration
outcomes for FY19 and the implementation of the 2020 Remuneration Policy for FY20 have been determined.

66 Greencore Group plc

FY19 Remuneration outcomes
Annual bonus
The maximum annual bonus potential of 150% of basic salary for Executive Directors was based on a mix of financial
(weighted 75% of the bonus) and personal and strategic (weighted 25% of the bonus) performance measures for FY19.

The performance targets and actual performance outcomes are set out in the table below. The ROIC figure has been adjusted
(from 14.4%) to exclude the impact of the acquisition of Freshtime. The Committee considered this adjustment appropriate in
the context of assessing the achievement of the performance targets (which did not include Freshtime) and the timing of the
acquisition (3 September 2019). The impact of adjusting Adjusted EPS on the same basis is minimal and does not impact the
outcome of this element of the annual bonus.

Weighting
(% of total)

Target
(50% payout)

Stretch
(100% payout)

Actual FY19

Resulting bonus

outturn/achievement

outcome

Performance targets

Measure

Adjusted EPS

ROIC

Financial element

Personal and strategic
objectives

50%

25%

75%

16.1p

14.4%

17.2p

15.4%

25% Patrick Coveney:

• Capital return and restructuring
• Effective leadership of the organisation through

a period of change

• Customer engagement

Eoin Tonge:
• Capital management
• Stakeholder relations and sustainability
• Cash management and cost reduction
• Driving growth

Peter Haden:
• Driving operational enhancements
• Developing employee engagement mechanisms
• Driving UK organisational change

16.0p

0% out of 50%

15.0% 20% out of 25%

20% out of 75%

15% out of 25%

35% out of 100%

Personal and strategic
element

Total

25%

100%

Patrick Coveney, Eoin Tonge and Peter Haden each received 35% of the maximum bonus, which represents 52.5% of salary,
respectively. In line with our remuneration policy, the bonus outcome for Patrick Coveney and Eoin Tonge will be paid 50% in
cash and 50% in shares deferred for three years, subject to continued employment. Peter Haden will step down from the Board
on 31 December 2019 and details of his arrangements are set out on page 86.

FY17 PSP award
The Performance Share Plan (‘PSP’) values in respect of the FY19 single figure relate to awards granted in early 2017. Awards were
subject to Adjusted EPS growth and ROIC performance targets measured over the period from the start of FY17 to the end of
FY19, with FY16 as the base year. Target and actual outturns are set out in the table below. 50% of awards granted will vest in
early 2020.

The reported FY19 ROIC figure has been adjusted (from 14.4%) to exclude the impact of the acquisition of Freshtime. The
Committee considered this adjustment appropriate in the context of assessing the achievement of the performance targets
(which did not include Freshtime) and the timing of the acquisition (3 September 2019). The impact of adjusting Adjusted EPS
on the same basis is minimal and does not impact the outcome of this element of the PSP.

Measure

Adjusted EPS growth
FY19 ROIC

Total

Weighting
(% of award)

Performance

targets

Actual FY19
outturn

Vesting
(% of award)

50%
50%

5% to 15% p.a.
12.5% to 15%

0% p.a.
15%

0%
50%

50%

Annual Report and Financial Statements 2019

Directors’ Report

Report on Directors’ Remuneration continued

Remuneration at a glance continued
Implementation of the 2020 Remuneration Policy in FY20

Element of pay

Implementation for FY20

Fixed remuneration

Base salary

Pension

Patrick Coveney received a 1.25% salary increase effective from 1 October 2019. His FY20 salary is €850,705.
Eoin Tonge received a 2.5% increase effective from 1 October 2019. His FY20 salary is £428,655. Peter Haden
did not receive any increase for FY20. His salary remains at £450,000.

Per the terms of his contract, Patrick Coveney receives a taxable non-pensionable cash allowance in lieu
of participation in a defined contribution pension scheme. Eoin Tonge and Peter Haden participate in the
Greencore UK Master Trust Pension Scheme which is a defined contribution pension scheme and each
receive a taxable non-pensionable cash allowance.

For FY20, Patrick Coveney and Eoin Tonge have agreed a voluntary cap on their future annual pension
contributions at FY19 levels (of €315,000 and £105,000, respectively). These figures represent 35% of FY19
pensionable earnings for Patrick Coveney and 25% of salary for Eoin Tonge. There will be no change
to Peter Haden’s current pension contribution of 8% of salary for FY20 which is in line with the pension
contribution currently available to our wider colleague base.

Benefits

No change to FY19 provisions.

Variable pay

Annual Bonus
Plan (‘ABP’) and
Deferred Bonus
Plan (‘DBP’)

No change to maximum opportunity: 150% of salary.

The performance measures have been revised for FY20: 50% Adjusted Operating Profit, 25% Free Cash
Flow, and 25% personal and strategic objectives.

50% of bonus earned will be deferred in shares for three years under the DBP.

Performance
Share Plan (‘PSP’)

No change to award opportunities: 200% of salary for Patrick Coveney and 150% of salary for Eoin Tonge.
As set out on page 86, Peter Haden will not receive any PSP awards in FY20.

The performance measures and weightings unchanged: ⅓rd Adjusted EPS growth, ⅓rd ROIC, and ⅓rd
relative TSR vs. bespoke group of sector peers.

PSP awards granted to Executive Directors are subject to a three year performance period and an
additional two year holding period. Vested awards may not be sold during the holding period except
to cover tax liabilities.

Safeguards and
risk management

Malus and clawback provisions apply to the ABP and the PSP both prior to vesting and for a period of
two years post-vesting. This enables the Company to withhold payment/vesting of any sums and/or recover
sums paid on the occurrence of specific trigger events (e.g. a material misstatement of the Company’s audited
results, a material failure of risk management, a material breach of health and safety regulations,
or serious reputational damage).

Pay-performance alignment
Overview of performance measures for FY20 incentives and how these relate to our strategic priorities.

Performance measure

Incentive plan

Reason for selection

Link to strategy

Adjusted EPS1

ROIC1

Relative TSR

PSP

Adjusted Operating Profit1 ABP

Free Cash Flow1

Personal and strategic
objectives

ABP

Captures long term growth and improves financial returns by
leveraging operational efficiency

Improves capital discipline and efficiency

Provides alignment with shareholder value creation

Incentivises strong underlying and ongoing operating performance
of each business unit and the Group as a whole

Measures the amount of cash available for distribution and allocation

Aligned with short and medium-term strategic objectives to promote
long term performance and success
 Read more in the KPIs section (pages 22 to 25)

1. Each of the financial performance measures are Key Performance Indicators (‘KPIs’) as set out on pages 22 and 23. The KPIs are non-IFRS measures,

referred to as Alternative Performance Measures (‘APMs’), and are used to monitor the performance of the Group’s operations and the Group as a whole.
APM definitions and reconciliations to IFRS measures are provided in the APMs section on pages 180 to 184.

68 Greencore Group plc

2020 Remuneration Policy
The Directors’ Remuneration Policy (the ‘2020 Remuneration Policy’) set out below will be put to an advisory shareholder
vote and subject to shareholder approval, will become effective from the date of the AGM in 2020. The main aim of the 2020
Remuneration Policy is to align the interests of Executive Directors with the Group’s strategic priorities and the long term creation
of shareholder value. The 2020 Remuneration Policy is intended to pay the Executive Directors competitively and appropriately,
having taken into account a number of other factors, including the remuneration practices of other companies of similar size
and scope, the current economic climate and the regulatory and governance framework. The Remuneration Committee (the
‘Committee’) also takes into consideration remuneration practices throughout the Group when considering Executive Directors’
pay and ensures that the Group pays its Executive Directors no more than is necessary.

Remuneration principles
The following principles have been adopted as a framework to guide our remuneration decisions:

Remuneration principle

In action

Alignment and fairness

• Encouraging all employees to become shareholders;
• Operating a Performance Share Plan (‘PSP’) for senior management personnel;
• Offering share plans to all eligible colleagues;
• Operating shareholding guidelines including a post-employment shareholding policy from 2020,

bonus deferral and a post-vesting holding period for Executive Directors’ PSP awards; and;

• Keeping shareholder value in sharp focus.

Pay-for-performance

• Commitment to ensuring targets are appropriately stretching and vesting levels are reflective

of shareholder experience;

• No variable remuneration for mediocre performance; and
• Ensuring personal and strategic objectives are accurately assessed and clearly communicated.

Transparency and simplicity

• Increased focus on effectively communicating decisions to shareholders through shareholder

engagement and the Annual Report and Financial Statements; and

• Simple incentive structure based on the measures central to our strategy and business model.

Executive Directors’ Remuneration Policy table
The table below sets out the element and purpose of Executive Directors’ compensation and how each element
operates, as well as the maximum opportunity of each element and any applicable performance measures.

Element of
remuneration

Purpose and
link to strategy

Operation

Maximum opportunity

Performance measures

Base salary To provide
the basis of
a market-
competitive
overall
remuneration
package.

Not applicable.

Base salaries are determined taking into
account a number of factors, including:

• individual responsibilities, performance

and experience;

• the role, skills and contribution

of individuals;

• practice at other companies of
a similar size and complexity;

• the pay arrangements throughout

the organisation; and

• the Company’s progress towards

its objectives.

Salaries are usually reviewed during
November and any increases will
normally be effective from the preceding
1 October. However, the Committee
reserves the right to make salary
increases effective from any other
time where considered appropriate.

Whilst there is no maximum
salary, increases will
normally be in line with the
average increase awarded
to other colleagues in
the Group.

However, the Committee
retains the discretion
to make increases above
this level in certain
circumstances, including,
but not limited to:

• an increase in scope
and/or responsibility
of a role;

• a new Executive Director
being moved to market-
competitive positioning
over time; and

• an existing Executive
Director falling below
market positioning.

Annual Report and Financial Statements 2019

Directors’ ReportReport on Directors’ Remuneration continued

2020 Remuneration Policy continued
Executive Directors’ Remuneration Policy table continued

Element of
remuneration

Purpose and
link to strategy

Operation

Maximum opportunity

Performance measures

Pension

To provide
competitive
and appropriate
retirement
plans.

The Chief Executive Officer (‘CEO’)
receives a taxable non-pensionable cash
allowance in lieu of participation in a
Defined Contribution Pension Scheme.

The Company’s maximum
contribution/cash allowance
for existing Executive
Directors is as follows:

Not applicable.

The Chief Financial Officer (‘CFO’) and the
Chief Operating Officer (‘COO’) participate
in part in the Greencore UK Master Trust
Pension Scheme which is a Defined
Contribution Pension Scheme and receive
a partial non-pensionable cash allowance.

• CEO – monetary value
capped at €315,000,
representing 35% of FY19
pensionable earnings
(the total of salary
and benefits);

When determining pension arrangements
for new appointments to the Board, the
Committee will give regard to the cost
of the arrangements and market practice
and will set the pension contribution
rate to be in line with the pension
contributions available to the wider
colleague base at that time.

Benefits

To provide
market typical
benefits to
ensure that
the overall
remuneration
package is
competitive.

Executive Directors receive health
insurance for the individual and their
immediate family, life assurance and
permanent health insurance, and a car
allowance (or a company car and payment
of related expenses).

Other benefits may be provided at the
discretion of the Committee based on
individual circumstances and business
requirements, such as appropriate
relocation and expatriate allowances
and support.

• CFO – monetary value
capped at £105,000,
representing 25%
of FY19 salary; and
• COO – 8% of salary

in line with the pension
contribution currently
available to the wider
colleague base.

For new appointments to
the Board the Committee
will set a pension
contribution rate which
is in line with the pension
contributions available
to the wider colleague
base at that time.

The cost of benefit
provision will depend on
the cost to the Company
of providing individual
items and the individual’s
circumstances and
therefore there is no
maximum value.

Not applicable.

70 Greencore Group plc

Element of
remuneration

Purpose and
link to strategy

Operation

Maximum opportunity

Performance measures

The maximum annual
bonus opportunity is 150%
of salary.

The bonus earned at
threshold performance is
nil with up to 50% of the
award normally payable for
target performance. 100%
of the award is payable
for maximum performance.

Annual
Bonus Plan
(‘ABP’)

To incentivise
and reward the
achievement of
annual financial
and non-
financial targets,
in line with the
Company’s
strategic
objectives.

The deferred
element aligns
the interests
of Executive
Directors and
shareholders
and provides a
strong retention
mechanism.

Performance is assessed over the relevant
financial year.

The level of payment is determined by
the Committee after the year-end, based
on performance against targets and any
additional factors they deem significant.

A proportion (normally 50% unless the
Committee determines otherwise) of any
bonus is paid in cash, with the remainder
deferred into a share award under the
Deferred Bonus Plan. Cash bonuses are
paid following the year-end.

Deferred Bonus Plan (‘DBP’)
The deferred shares will normally vest
three years after the grant of an award
(unless the Committee determines an
alternative vesting period is appropriate).
The vesting of deferred shares will
normally be subject to continued
employment.

Dividend equivalents may be awarded
in respect of the awards that vest.

The annual bonus is subject to malus
and clawback provisions, i.e. forfeiture
or reduction of the deferred portion or
recovery of paid amounts, in exceptional
circumstances. Such circumstances
include, but are not limited to a
material misstatement of the Company’s
audited results, a material failure of
risk management, a material breach of
health and safety regulations, or serious
reputational damage to any member
or business unit of the Group.

The bonus is
determined based on
performance against
financial performance
metrics and personal
and strategic
objectives.

Measures and
weightings will
be determined at
the start of each
performance year to
align with the Group’s
short term financial
and strategic priorities.
No more than 25%
of the annual bonus
opportunity will be
based on personal and
strategic objectives.

The Committee sets
targets every year
to ensure that they
are appropriately
stretching.

For FY20, the
performance metrics
will be Adjusted
Operating Profit (50%
weighting), Free Cash
Flow (25% weighting)
and personal and
strategic objectives
(25% weighting). The
Committee has the
discretion to adjust
the measures and
weightings before
each cycle to ensure
that they continue
to reflect strategic
objectives. Further
details are provided
in the Annual Report
on Remuneration.

Annual Report and Financial Statements 2019

Directors’ ReportReport on Directors’ Remuneration continued

2020 Remuneration Policy continued
Executive Directors’ Remuneration Policy table continued

Element of
remuneration

Purpose and
link to strategy

Operation

Maximum opportunity

Performance measures

Performance
Share Plan
(‘PSP’)

To create
alignment
between the
interests of
Executive
Directors and
shareholders
through the
delivery of
rewards in
Company
shares.

To incentivise
Executive
Directors
to deliver
long term
shareholder
value creation
and the
achievement of
financial targets.

ShareSave
Scheme

To encourage
eligible
employees to
save in order
to buy shares
in Greencore.

72 Greencore Group plc

Awards of conditional shares, nil-cost
options, or forfeitable shares are made
annually, with vesting dependent on the
achievement of performance conditions.

Awards normally vest based on
performance measured over a period
of three years or such other period
as the Committee may determine.

The Committee determines the extent
to which the performance measures have
been met. In adjudicating the final vesting
outcome, the Committee will also consider
the underlying financial performance of
the business, as well as the value added
to shareholders. The formulaic vesting
outcome may be adjusted where, in the
Committee’s opinion, an adjustment is
warranted.

An additional two year holding period
applies to Executive Directors’ vested
shares before they are released
to Executive Directors on the fifth
anniversary of the grant date (or another
date determined by the Committee).

In respect of vested PSP awards that are
still subject to a holding period, awards
will normally be released at the end of the
holding period, however, the Committee
has discretion to determine otherwise,
taking into account the circumstances
at the time.

Dividend equivalents may be awarded
in respect of the awards that vest.

PSP awards are subject to malus and
clawback, i.e. forfeiture of reduction
of unvested awards, application of
additional conditions for vesting, or
recovery of vested awards, in exceptional
circumstances. Such circumstances
include, but are not limited to, a
material misstatement of the Company’s
audited results, a material failure of
risk management, a material breach of
health and safety regulations, or serious
reputational damage to any member or
business unit of the Group.

Participants may elect to contribute from
their net pay to a three year savings
contract. Options are then granted under
the savings contract at a discount to the
market price at the time of invitation over
three years savings contract. The discount
is currently set at 20% in the UK or 25%
in Ireland of the market price at the time
of invitation over three year savings
contracts, and options are exercisable
during the six-month period following
completion of the savings contract.

The maximum annual
award level is 200%
of salary.

For threshold levels
of performance, up to
25% of the award vests,
increasing to 100% of
the award for maximum
performance. There
is straight-line vesting
between these points.

Performance measures
are selected to align
with the Group’s
longer term strategy.

The Committee
determines targets
each year to
ensure that they
are appropriately
stretching and
represent value
creation for
shareholders, whilst
remaining motivational
for management.

For FY20, the
performance
metrics are Adjusted
Earnings per Share
(Adjusted ‘EPS’),
Return on Invested
Capital (‘ROIC’)
and relative Total
Shareholder Return
(‘TSR’), weighted
equally, although the
Committee has the
discretion to adjust
the measures and
weightings before
each cycle to ensure
that they continue
to reflect strategic
priorities. Further
details are provided
in the Annual Report
on Remuneration.

Not applicable.

The maximum a participant
can save in the ShareSave
Scheme is currently £18,000
or €18,000 over the term
of the savings contract.
However, this may vary
depending on changes
to tax legislation and/or
revenue rules.

Executive Director shareholding guidelines and policy
The Committee continues to recognise the importance of Executive Directors aligning their interests with shareholders through
building up a significant shareholding in the Company. Shareholding guidelines are in place whereby all Executive Directors
are required, under normal circumstances, to acquire a holding of shares in the Company equal to 200% of salary, typically
over a five year period commencing on the date of their appointment to the Board. Details of the Executive Directors’ current
shareholdings are provided in the Annual Report on Remuneration.

With effect from 2020, Executive Directors will also be subject to a post-employment shareholding policy. Executive Directors
will normally be expected to maintain a holding of Greencore shares at a level equal to the lower of the in-post shareholding
guideline or the individual’s actual shareholding for a period of two years from the date the individual ceases to be a Director.
The specific application of this shareholding policy will be at the Committee’s discretion.

Payments from previously agreed remuneration arrangements
The Committee reserves the right to make any remuneration payments and payments for loss of office (including the exercise
of any discretion available to it in connection with such payments), notwithstanding that they may not be in line with the 2020
Remuneration Policy where the terms of the payment were agreed either before the 2020 Remuneration Policy came into effect
or at a time when the relevant individual was not a Director of the Company and in the opinion of the Committee, the payment
was not in consideration for the individual becoming a Director of the Company. This does not apply to pension contributions
for new appointments to the Board, which will be aligned with the pension contribution currently available to the wider colleague
base, on appointment to the Board. Details of any such payments will be set out in the Annual Report on Remuneration as
they arise.

Discretion
The Committee may make minor amendments to the 2020 Remuneration Policy (e.g. for regulatory, exchange control,
tax or administrative purposes or to take account of a change in legislation) without obtaining shareholder approval for
that amendment.

The Committee has discretion to adjust the formulaic ABP and PSP vesting outcomes to ensure alignment of pay with
performance, i.e. to ensure the final outcome is a fair and true reflection of underlying business performance. The Committee
also has discretion to vary the ABP and PSP performance measures and weightings each year to reflect strategic priorities.

Awards granted under the ABP and the PSP:

• may be settled in cash;
• may incorporate the right to receive in cash or shares the value of dividends which would have been paid or allotted

on the shares between grant and vesting. This may assume the reinvestment of those dividends in the Company’s shares
on a cumulative basis; and

• may be adjusted in the event of a variation of the Company’s share capital or a demerger, delisting, special dividend, rights

issue or other event, which may, in the Committee’s opinion, affect the current or future value of awards. The Committee may
amend or substitute performance conditions applicable to an outstanding PSP award if an event (or events) occurs which
causes the Committee to consider that an amended or substituted performance condition would be more appropriate and
would not be materially less difficult to satisfy than was originally intended.

Selection of performance measures
The ABP is based on financial performance, as well as personal and strategic objectives. It is intended that the financial element
for FY20 and going forward will be based on Adjusted Operating Profit and Free Cash Flow. Adjusted Operating Profit and Free
Cash Flow are both Group Key Performance Indicators (‘KPIs’) and introducing these into the ABP will generate differentiation
between the measures used for the long term and short term incentive plans, and create more direct alignment between
incentives and delivery of the Group’s strategy. The achievement of key personal and strategic objectives is also considered
important to drive the performance of the business over the longer term.

The PSP is currently based on Adjusted EPS, ROIC and relative TSR. The earnings measure incentivises Executive Directors to
grow earnings for shareholders over the long term, whilst the return measure ensures that the growth is sustainable and in the
long term interests of the Company and its shareholders. Relative TSR provides additional shareholder alignment and incentivises
our outperformance against companies in our sector.

The mix of annual and long term measures is discussed in further detail in the Annual Report on Remuneration. Targets are set
taking into account a number of factors including internal and external forecasts, and market practice.

The Committee keeps the performance measures, weightings and targets of both the ABP and PSP under review and reserves
the right to adjust these if they are no longer considered to be appropriate.

Annual Report and Financial Statements 2019

Directors’ ReportReport on Directors’ Remuneration continued

2020 Remuneration Policy continued
Remuneration arrangements throughout the Group
Remuneration arrangements throughout the Group are based on the same high-level remuneration principles as for the
Executive Directors. We believe that individuals should be rewarded based on their contribution to the Group and 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. Specific packages will differ, taking into account the role, location, seniority and level of responsibility.

Senior management personnel participate in the ABP and the PSP based on broadly the same principles as those for the
Executive Directors.

In addition, eligible employees are entitled to join the Group’s ShareSave Schemes, which provide a means of saving and gives
employees the opportunity to become shareholders in the Company.

Non-Executive Directors’ remuneration policy
The remuneration policy for the Non-Executive Directors, including the Chairman, 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 appropriate.

Details are set out in the table below:

Element of
remuneration

Fees

Incentive
arrangements

Benefits

Purpose and link to strategy Operation

Maximum opportunity

Performance measures

To attract and retain
Non-Executive
Directors of the
highest calibre with
broad commercial
and other
experience relevant
to the Company.

Not applicable.

The maximum annual
aggregate basic fee
for all Non-Executive
Directors is currently
€850,000, but,
subject to shareholder
approval, as required
under the Company’s
Articles of Association,
this figure may
increase or decrease.

Not applicable.

Non-Executive Directors are paid a basic fee
for membership of the Board with additional
fees being paid for the role of the Chairman,
the Senior Independent Director or Chair
of a Board Committee, to take into account
the additional responsibilities and workload
required. If a Non-Executive Director is a Chair
of more than one Committee, the additional
fee is capped at the higher Committee fee.
If a Non-Executive Director is also the Senior
Independent Director, the fee is capped at
the additional Senior Independent Director
fee. Additional fees may also be paid for
other Board responsibilities or roles if this
is considered appropriate.

Fees are reviewed at appropriate intervals
and are set taking into account the level
of responsibility, relevant experience and
specialist knowledge of each Non-Executive
Director and fees at other companies of
a similar size and complexity.

Fees are normally paid in cash.

None of the Non-Executive Directors are
eligible to participate in any of the Group’s
incentive arrangements.

Non-Executive Directors do not currently
receive any benefits; however, benefits may
be provided in the future if, in the view of the
Board, this is considered appropriate. Travel
and other reasonable expenses (including
fees incurred in obtaining professional advice
in the furtherance of their duties) incurred
in the course of performing their duties are
reimbursed. The Company may settle any
tax due on benefits or taxable expenses.

74 Greencore Group plc

Remuneration policy for new hires
The Group is committed to ensuring appropriate succession plans are in place, specifically in respect of Executive Directors and
other senior management. When considering the remuneration package of a potential new Executive Director, the Committee
would seek to apply the following principles:

• The Committee will ensure that the package is sufficient to attract the appropriate individual, having regard to the calibre,

skills and experience required, whilst being cognisant of not paying more than is necessary.

• The Committee’s policy is to set the remuneration package for a new Executive Director in accordance with the approved

remuneration policy at the time of the appointment, both in terms of structure and overall limit on variable pay (being 350%
of salary).

• In addition, where an individual forfeits outstanding incentive payments and/or contractual rights at a previous employer
as a result of their appointment at the Group, the Committee may offer additional compensatory payments or awards
(‘buy-out’) in such form as it considers appropriate. In doing so, it will take into account all relevant factors including the form
of awards, expected value and vesting time frame of forfeited opportunities. When determining such buy-out arrangements,
the Committee’s intention would be that awards would generally be made on a ‘like for like’ basis as those forfeited. In order
to facilitate any such buy-out awards, the Committee may exercise the discretion available under the Listing Rules to grant
awards under an alternative structure to those set out in the policy without seeking prior shareholder approval.

• Where an Executive Director is required to relocate from their home location to take up their role, the Committee may

provide reasonable assistance with relocation in line with local market norms.

• In the event that an internal candidate is promoted to the Board, legacy terms and conditions (with the exception of pension

entitlements) and any outstanding incentive awards will normally be honoured.

• The remuneration package for a newly appointed Non-Executive Director will normally be in line with the structure set out

in the Non-Executive Directors’ remuneration policy table above.

Executive Director service contracts and policy on payments to Executive Directors leaving the Group
The Executive Directors have service contracts with an indefinite term, which are terminable by either the Company or the
Executive Director on 11 and three months’ notice, respectively. The service contracts make provision, at the Board’s discretion,
for early termination involving payment of salary and other emoluments in lieu of notice.

Effective dates of Executive Director service contracts are as follows:

Executive Director

Patrick Coveney
Eoin Tonge
Peter Haden

Date of contract

31 March 2008
3 October 2016
21 May 2019

Annual Report and Financial Statements 2019

Directors’ ReportReport on Directors’ Remuneration continued

2020 Remuneration Policy continued
Remuneration opportunities in different performance scenarios
The charts below illustrate the potential future value and composition of the Executive Directors’ remuneration opportunities in
four performance scenarios: minimum, on-target (i.e. in line with the Company’s expectations), maximum, and maximum plus 50%
share price appreciation, a scenario where 50% share price appreciation is included.

The potential remuneration opportunities are based on the proposed 2020 Remuneration Policy, applied to the Executive
Directors’ base salaries as at 1 October 2019.

Patrick Coveney, CEO (€000)

Eoin Tonge, CFO (£000)

Peter Haden, COO (£000)

5,052

51%

4,202

40%

30%

25%

2,500

26%

1,224

100%

49%

29%

24%

5,000

4,000

3,000

2,000

1,000

2,500

2,000

1,500

1,000

500

2,162

45%

1,841

35%

30%

1,117

22%

29%

555

100%

50%

30%

26%

2,500

2,000

1,500

1,000

500

860

39%

61%

522

100%

1,1971

56%

44%

Minimum On-target Maximum Maximum+50%

Fixed pay

Annual bonus

Long-term incentive

1. As set out on page 86, Peter Haden will not receive any awards under the PSP for FY20.

The charts above exclude the effect of any Company share price appreciation except in the ‘maximum +50%’ scenario.

Assumptions:

Performance scenario

Includes

Minimum

On-target

Maximum

• Salary, pension and benefits (‘fixed remuneration’)
• No bonus payout
• No vesting under the PSP

• Fixed remuneration
• 50% of maximum annual bonus payout (i.e. 75% of salary)
• 25% of maximum vesting under the PSP (i.e. 50% and 37.5% of salary for the CEO

and CFO respectively)

• Fixed remuneration
• 100% of maximum annual bonus payout (i.e. 150% of salary)
• 100% of maximum vesting under the PSP (i.e. 200% and 150% of salary for the CEO

and CFO respectively)

Maximum+50%

• Fixed remuneration
• 100% of maximum annual bonus payout (i.e. 150% of salary)
• 100% of maximum vesting under the PSP, plus 50% share price appreciation

76 Greencore Group plc

Policy on payments to Executive Directors leaving the Group
When determining leaving arrangements for an Executive Director, the Committee takes into account any contractual agreements
including the provisions of any incentive arrangements, typical market practice and the performance and conduct of the
individual. The table below summarises how the awards under incentive plans are typically treated in specific circumstances,
with the final treatment remaining subject to the Committee’s discretion. When considering the use of discretion, the Committee
reviews all potential incentive outcomes to ensure that any application of discretion is fair to both shareholders and participants.

Plan

Scenario

Timing and calculation of payment/vesting

Annual Bonus Plan
(‘ABP’)

All leavers (except for reasons set
out below)

No bonus is paid and deferred share awards
will lapse.

Death

Ill-health, injury, disability,
redundancy, retirement, the sale or
transfer of their employing entity out
of the Group, or any other reason at
the Committee’s absolute discretion
(‘Good Leaver’)

Change of control

The Committee may determine that an Executive
Director is eligible to receive a bonus for the year.
The Committee will determine the level of bonus
taking into account performance.

Outstanding deferred share awards will vest in
full – or to a lesser extent as determined by the
Committee – on the normal vesting date, although
the Committee has discretion to accelerate vesting.

The Committee will assess the most appropriate
treatment for the outstanding bonus period
according to the circumstances. Deferred share
awards will vest in full.

Performance Share Plan
(‘PSP’)

All leavers (except for reasons
set out below)

Awards lapse.

Death

Change of control

Awards will vest immediately to the extent
determined by the Committee, taking into
account the extent to which the performance
conditions have been met and, if the Committee so
determines, the period of time elapsed since grant.

Awards will vest on the original vesting date,
or, if the Committee so determines, as soon as
practicable after the date of cessation. The extent
to which awards vest in these circumstances will be
determined by the Committee, taking into account
the extent to which the performance conditions
have been satisfied, and, unless the Committee
determines otherwise, the period of time from the
date of grant up to the date of cessation.

Awards vest immediately, subject to performance,
and will be pro-rated for time (based on the
proportion of the vesting period elapsed) unless
the Committee determines otherwise. Alternatively,
awards may be exchanged for new equivalent
awards in the acquirer where appropriate.

In respect of vested PSP awards that are still subject to a holding period, awards will normally be released at the end of the
holding period, however, the Committee has discretion to determine otherwise, taking into account the circumstances at the time.

Annual Report and Financial Statements 2019

Directors’ ReportReport on Directors’ Remuneration continued

2020 Remuneration Policy continued
Change of control
In the event of a change of control of the Company, Executive Directors are entitled to terminate their employment with the
Company with 30 days’ prior notice at any time within six months after the change in control if the Executive Director has
reasonable grounds to contend that the 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 Director’s contract is terminated in the event of the change of control, the Executive Director 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 his or her basic salary, the bonus paid to the Executive Director in the
calendar year immediately preceding such termination and any retained bonus approved but unpaid for the year immediately
prior to the year in which the Executive Director’s contract was terminated. These provisions reflect Irish employment law.

Treatment of incentives on a change of control is set out in the table on page 77. In the event of a merger, demerger, delisting,
special dividend or other event which may, in the opinion of the Committee, affect the current or future value of the Company’s
shares, the Committee may allow DBP and PSP awards to vest on the same basis as set out above.

Non-Executive Director letters of appointment
The Non-Executive Directors have Letters of Appointment, the terms of which recognise that their appointments are subject
to the Company’s Articles of Association and their services are at the direction of the shareholders.

All Non-Executive Directors submit themselves for election at the AGM following their appointment, and in line with the
Company’s Articles of Association and the 2018 UK Corporate Governance Code, each Director retires at each subsequent
AGM and offers him or herself for re-election as appropriate.

Non-Executive Directors are not entitled to any payment in lieu of notice. The Letters of Appointment are available for
shareholders to view at the AGM and also from the Company Secretary upon request.

The table below shows the appointment and expiry dates for the Non-Executive Directors:

Name

Gary Kennedy
Sly Bailey
Heather Ann McSharry
John Moloney
Helen Rose
John Warren

Effective date of appointment

Expiry of appointment 1

20 November 2008
17 May 2013
30 January 2013
8 February 2013
11 April 2018
30 January 2013

28 January 2020
28 January 2020
28 January 2020
28 January 2020
28 January 2020
28 January 2020

In line with the Company’s Articles of Association and the 2018 UK Corporate Governance Code, each year at the AGM of the Company each Director
retires, and where appropriate offers him or herself for re-election.

Consideration of wider employee views
The Committee generally considers pay and employment conditions elsewhere in the Group when determining pay for Executive
Directors. During FY19, the HR Director made a comprehensive presentation to the Committee in respect of the remuneration
structures throughout the Group, the annual salary review process for the wider colleague base as well as the Greencore UK
Master Trust Pension Scheme.

In considering increases to the base salary for Executive Directors, the Committee took the Group-wide annual salary review
process into account.

The Committee does not consider it appropriate to consult directly with employees regarding Executive Directors’ remuneration.
However, employees are encouraged to become shareholders under the Company’s ShareSave Scheme and once an employee
becomes a shareholder, he or she can vote on resolutions in respect of Directors’ remuneration along with any other resolutions
put before the AGM.

Consulting with our shareholders
The Committee is dedicated to ensuring open dialogue with shareholders in relation to remuneration. In advance of any proposal
to amend the remuneration policy, the Committee, led by the Committee Chair, will liaise with key shareholders and proxy
advisory firms to discuss the proposed amendments and receive their feedback. During the year, the Chair of the Committee led
a comprehensive consultation process in respect of the proposed changes contained within this proposed 2020 Remuneration
Policy. Communications detailing the proposals issued to shareholders holding close to 70% of the Company’s issued share
capital. Consultations were held with shareholders representing c.50% of issued share capital as well as four proxy advisors.
The consultation process proved very valuable for the Committee in finalising the proposals contained herein and further
information on the consultation process is set out on pages 63 and 64.

78 Greencore Group plc

Annual Report on Remuneration
The following section sets out our Annual Report on Remuneration, outlines decisions made by the Remuneration Committee
(the ‘Committee’) in relation to Directors’ remuneration in respect of FY19 and how the Committee intends to apply the proposed
Remuneration Policy for FY20 (‘2020 Remuneration Policy’). As set out on page 66, the proposed 2020 Remuneration Policy will
be subject to an advisory shareholder vote at the Annual General Meeting (‘AGM’) of the Company to be held on 28 January 2020.
The Annual Report on Remuneration will also be subject to an advisory shareholder vote at the AGM to be held on 28 January
2020. Where information has been audited, this has been stated. All other information in this report is unaudited.

Role and responsibilities of the Remuneration Committee
The Committee currently consists of three Non-Executive Directors whose collective role is to ensure that the Group’s
remuneration arrangements are aligned with the Group’s strategic priorities. The Terms of Reference of the Committee include
the determination of the remuneration packages for Executive Directors, the Group Company Secretary and other members
of the senior management team. The Chairman and the Executive Directors determine the fees for the Non-Executive Directors.

The Terms of Reference for the Committee are reviewed annually and are updated as appropriate and are available under
the Corporate Governance section of the Group’s website, www.greencore.com.

Members
The Committee currently comprises of the following Non-Executive Directors:

Name

Remuneration Committee position

Heather Ann McSharry

Gary Kennedy
John Moloney

Chair (appointed to Committee on 28 January 2014 and appointed Committee Chair
from 31 January 2017)
Member (appointed to Committee on 11 March 2010)
Member (appointed to Committee on 31 January 2017)

Each of the Committee members has extensive experience on remuneration related matters, gained from both their executive
careers and from their experience on the Committee as well as remuneration and compensation committees of other companies.
The Group Company Secretary acts as Secretary to the Committee. During the year, the Chief Executive Officer (‘CEO’), Chief
Financial Officer (‘CFO’) and the Group HR Director attended meetings on an ad hoc basis at the invitation of the Committee
and provided information and support as requested. However, no individual was present when his/her own remuneration was
being discussed.

Advisors
The Committee’s independent advisor during the year was Mercer Kepler, having been appointed in September 2016 following
a competitive tender process. Mercer Kepler attends Committee meetings on an ad hoc basis and provides advice on
remuneration for Executive Directors, benchmarking analysis, and updates on market developments and best practice. Mercer
Kepler is a founding member of the Remuneration Consultants Group and adheres to its code of conduct. Mercer Limited
(Mercer Kepler’s parent company) additionally provided the Group with pension actuarial services during FY19. The Committee
reviews the performance of its advisors annually and remains satisfied that Mercer Kepler provides independent and objective
remuneration advice to the Committee and does not have any connections with Greencore which may impair its independence.
The fees paid to Mercer Kepler in respect of work carried out for the Committee in the year under review amounted to £84,550.

Key activities during the year
During FY19, the Committee held four scheduled meetings. Details of the attendances at these meetings are set out on page 58.
The Committee also held a number of additional meetings to cover the significant amount of work undertaken by the Committee
during the year, including the review of the 2020 Remuneration Policy. The key activities and matters discussed at Committee
meetings included:

• Review of the remuneration structures, the proposed 2020 Remuneration Policy and consulting with shareholders

on the proposed changes for inclusion in the 2020 Remuneration Policy;

• Review of feedback received from the shareholder consultation as detailed on pages 63 and 64;
• Review of changes to the legislative, regulatory and corporate governance environments, and consideration of trends

in executive remuneration;

• Review and approval of performance and payout in respect of the FY18 Annual Bonus Plan (‘ABP’);
• Review of the impact of the disposal of the US business on incentive plans;
• Review and approval of performance in respect of the FY16 Performance Share Plan (‘PSP’) awards;
• Approval of opportunities/award levels and performance targets for the FY19 ABP and PSP awards, and consideration

of performance measures for the FY20 ABP and PSP awards;

• Review and approval of the FY18 Report on Directors’ Remuneration;
• Review of the Irish and UK ShareSave Schemes activities;
• Review of the Committee’s Terms of Reference; and
• Review of the Committee’s effectiveness.

Annual Report and Financial Statements 2019

Directors’ ReportReport on Directors’ Remuneration continued

Annual Report on Remuneration continued
Shareholder voting
The table below shows the voting outcome of the resolution proposed at the 2019 AGM in relation to the FY18 Annual Report
on Remuneration as well as the outcome of the resolution proposed at the 2017 AGM in relation to the FY17 Remuneration Policy.

Resolution

FY18 Annual Report on Remuneration

FY17 Remuneration Policy

For

Against

Total votes cast

Votes withheld

90.1%

59.9%

9.9% 398,306,905

8,049,927

40.1% 446,480,145

7,914

Peter Haden’s remuneration package
Peter Haden was appointed as Executive Director on 21 May 2019, and his remuneration package on appointment was as follows:

• Salary: £450,000 p.a.
• Maximum bonus opportunity: 150% of salary
• PSP award opportunity: 150% of salary
• Pension: 8% of salary

Peter Haden’s employer pension contribution is in line with the pension contribution available to the wider colleague base. Peter
was promoted to the role from a below-Board position, and as such did not receive any recruitment or buy-out awards in relation
to his appointment. Under the terms of the 2020 Remuneration Policy, any outstanding awards made to Peter Haden prior
to his appointment will be honoured. These awards will be disclosed in the relevant year’s Annual Report on Remuneration.

Single figure of total remuneration for Executive Directors (audited)
The following table sets out the single figure of total remuneration for Executive Directors in FY19 and FY18.

Patrick Coveney

Eoin Tonge

Peter Haden5

Salary
(000)

Pension
(000)

Benefits1
(000)

Total

fixed (000)

FY19
FY18

FY19

€840
€824

£418
£410

£166

€315
€309

£105
£102

£13

€58
€59

£21
£216

£13

€1,213
€1,192

£544
£533

£192

Annual
bonus
– deferred
share
award
(000)

PSP

(000)

Total
variable
(000)

Total
remuneration
(000)

€221
€111

£110
£55

£43

€6982,3
€04

£2672
£04

£1812

€1,140
€222

£487
£110

£267

€2,353
€1,414

£1,031
£643

£459

Annual
bonus
– cash
(000)

€221
€111

£110
£55

£43

1. Benefits include car allowance as well as medical insurance.
2. FY19 values: 50% of the FY17 PSP awards will vest on 10 January 2020, based on performance to 29 September 2019 and subject to continued

employment on the vesting date. As the share price on the date of vesting is currently unknown, the values shown are estimated using the average
share price between 28 June 2019 and 27 September 2019 of £2.1921. The awards for Patrick Coveney and Eoin Tonge will be subject, upon vesting,
to a two year holding period.

3. In addition to footnote 2 above, the value of Patrick Coveney’s FY17 PSP award has been converted into euro using the average exchange rate

for FY19 of €1: £0.8838.

4. FY18 values: FY16 PSP awards vested at 0% and therefore lapsed on 2 December 2018.
5. Peter Haden was appointed to the Board on 21 May 2019. His FY19 salary, pension, benefits and annual bonus relate to the period 21 May 2019

to 27 September 2019. As Peter was not an Executive Director in FY18, his remuneration for FY18 is not included in the table above.

6. There was a clerical error in the reporting of Eoin Tonge’s benefits in respect of FY18 which were listed as £31k; this figure has now been corrected.

80 Greencore Group plc

Single figure of total remuneration for Non-Executive Directors (audited)
The following table sets out the single figure of total remuneration for Non-Executive Directors in FY19 and FY18.

Gary Kennedy

Sly Bailey1

Heather Ann McSharry

John Moloney

Kevin O’Malley2

Helen Rose3

Thomas Sampson4

John Warren

FY19
FY18

Base fee

Additional fees

Total fees

€78,000
€78,000

€26,000
€78,000

€78,000
€36,700

€26,000
€78,000

€78,000
€78,000

€247,000
€247,000

€325,000
€325,000

€16,500
€13,073

€12,000
€12,000

€10,000
€10,000

–
–

€16,500
€16,500

€94,500
€91,073

€90,000
€90,000

€88,000
€88,000

€26,000
€78,000

€78,000
€36,700

€26,000
€78,000

€94,500
€94,500

1. Sly Bailey was appointed Senior Independent Director on 14 December 2017.
2. Kevin O’Malley retired from the Board on 29 January 2019. His FY19 fees relate to the period 29 September 2018 to 29 January 2019.
3. Helen Rose was appointed to the Board on 11 April 2018. Her FY18 fees relate to the period 11 April 2018 to 28 September 2018.
4. Thomas Sampson retired from the Board on 29 January 2019. His FY19 fees relate to the period 29 September 2018 to 29 January 2019.

Notes to the single figure table (audited)
Base salary
The Committee reviewed Executive Directors’ salaries in late 2018 and agreed to award an increase of 2% for FY19 to both Patrick
Coveney and Eoin Tonge, which was marginally below the average increase awarded to the wider workforce. The new salaries,
effective from 1 October 2018, were €840,202 for Patrick Coveney and £418,200 for Eoin Tonge. Peter Haden was appointed
to the Board on 21 May 2019 on a salary of £450,000.

Pension
During FY19, Patrick Coveney received a taxable non-pensionable cash allowance equivalent to 35% of his pensionable earnings
in lieu of participation in a Defined Contribution Pension Scheme. Eoin Tonge participated in the Greencore UK Master Trust
Pension Scheme which is a Defined Contribution Pension Scheme and received a taxable non-pensionable cash allowance,
equivalent to 25% of his salary. Peter Haden also participated in the Greencore UK Master Trust Pension Scheme and with
effect from his appointment to the Board received a partial taxable non-pensionable cash allowance, equivalent to 8% of salary.

Patrick Coveney is also a deferred member of the Group’s Irish Defined Benefit Pension Scheme which closed to future accrual with
effect from 31 December 2009. The value of the frozen scheme benefits for Patrick was €51,600 as at 27 September 2019. His normal
retirement age under the scheme is 60 and he will not be entitled to any augmentation of benefit in the event that he retires early.

Annual bonus
The maximum bonus opportunity for FY19 was 150% of salary. The annual bonus is based on the achievement of stretching
short term financial targets (75% of maximum bonus) as well as personal and strategic objectives (25% of maximum bonus).
The mix of measures reflects the Committee’s aim of providing an appropriate balance between incentivising the achievement
of key financial targets and specific personal and strategic objectives.

Performance targets and actual outturn are set out in the table on page 82 to 84. The ROIC figure has been adjusted
(from 14.4%) to exclude the impact of the acquisition of Freshtime. The Committee considered this adjustment appropriate
in the context of assessing the achievement of the performance targets (which did not include Freshtime) and the timing
of the acquisition (3 September 2019). The impact of adjusting Adjusted EPS on the same basis is minimal and does not impact
the outcome of this element of the annual bonus.

Annual Report and Financial Statements 2019

Directors’ ReportReport on Directors’ Remuneration continued

Annual Report on Remuneration continued
Notes to the single figure table (audited) continued
Annual bonus continued

Financial element

Measure

Adjusted EPS
ROIC

Total

Performance targets

Weighting (% of
total)

Target (50%
payout)

Stretch (100%
payout)

FY19 outturn/
achievement

Actual

50%
25%

75%

16.1p
14.4%

17.2p
15.4%

16.0p
15.0%

Resulting
bonus

outcome

0% out of 50%
20% out of 25%

20% out of 75%

Both Adjusted EPS and ROIC are Group KPIs referred to as Alternative Performance Measures (‘APMs’). APMs are non-IFRS
measures and are used to monitor the performance of the Group’s operations and of the Group as a whole. Definitions and
reconciliations to IFRS measures are provided in the APMs section on pages 180 to 184.

Personal and strategic element
The personal and strategic objectives are set out in full below and on page 83 and included a significant focus on devising
a revised strategy for the Group following the sale of the US business in November 2018, continuing to promote strong relations
with our stakeholders, increasing cash generation and delivering operational and organisational efficiencies, including the
Greencore Excellence programmes. The Committee also took into account the significant contribution of the Executive Directors
in respect of the sale of the US business, the associated capital return to shareholders, the leadership of the Group’s revised
vision and strategy for the Group, as well as the delivery of a solid financial performance in a challenging market.

STRATEGIC PRIORITIES

Growth

Relevance

Differentiation

Outside of the financial performance measures, the following personal and strategic measures play a key role in drawing
a sharp focus on areas of significance for the Group’s performance:

Personal and
strategic objectives

Performance assessment

Patrick
Coveney

Capital return
and restructuring

Leadership

Customers

Following the successful negotiation of the deal to dispose of the US
business, and an extensive engagement exercise, Patrick led the
delivery of the capital return process, resulting in the efficient return
of £509m of capital to shareholders.

Patrick was instrumental in leading both the senior management
team and the wider Group through a period of significant change
following the disposal of the US business. After a thorough review
of Greencore’s competitive position, Patrick has led the development
of a specific and actionable multi year strategy for the Group as it
enters a new phase. His work on developing the strategy was detailed
extensively to investors at our Capital Markets Day in September.
As part of refocusing our strategy, Patrick has also frequently engaged
with employees across the Group, enabling a deeper understanding
of any change in priorities, the evolution of the business and the
possible implications on the Group’s culture.

Patrick’s role in pursuing and growing relationships with all our key
stakeholders, in particular with customers, is very important to the
continued success of our Group. During FY19, Patrick continued to
focus on strengthening relationships with customers, ensuring we
continue to offer compelling and innovative solutions as we drive
market share growth in the food to go market. Our success in
this area during FY19 was demonstrated when we received the
number one ranking in The Advantage Report™, which is a retailers’
assessment of suppliers. Further details are set out on page 19.

Link to Group
strategic priorities

Result

Above
target

At target

Above
target

Outcome of personal and strategic element

15% out of 25%

82 Greencore Group plc

Link to Group
strategic priorities

Personal and
strategic objectives

Performance assessment

Eoin
Tonge

Capital
management

Stakeholder
relations and
sustainability

Cash
management
and cost
reduction

Group growth

During FY19, Eoin led the resetting of the Group’s capital structure.
Following the disposal of the US business, Eoin successfully executed
a capital repayment plan and debt and financing restructure for the
Group. Eoin also successfully implemented a capital allocation model
which has resulted in a more lean and flexible structure best suited
to pursue our refocused strategy.

Eoin has been pivotal in the development of a new stakeholder led
approach to sustainability, ensuring the Group’s material sustainability
issues are clearly aligned to the Group’s strategy. Led by Eoin, the
Group secured a new primary bank debt facility with embedded
sustainability targets, the first of its kind in Ireland.

Eoin has continued to focus on effective cash management and
management of costs across the Group. Throughout FY19, Eoin
provided effective leadership in driving both UK and Group cost
performance, with a continued focus on cash management and central
cost reduction. Excluding US cash flows, Free Cash Flow Conversion
increased to 47% in FY19 from 33% in FY18. Eoin also developed new
financial objectives for the Group and effectively streamlined the
financial reporting processes across the Group.

Eoin placed a particular focus on analysing all organic and inorganic
growth opportunities during FY19. He played a pivotal role in the
identification and acquisition of Freshtime, including extensive cost
due diligence and setting out clear integration plans to further
enhance the Group’s position in salads. The acquisition extends
the Group’s presence in meal salads and chilled snacking. Further
details on the acquisition are set out on page 17.

Result

Above
target

At target

Outcome of personal and strategic element

Peter
Haden

Operational
enhancements

Employee
engagement

During FY19, Peter ensured functional delivery and maximised
operational performance by driving improvements and efficiencies.
His highly effective sponsorship of the Greencore Excellence
programmes unlocked key improvements and efficiencies across
the Group’s operational agenda. Further detail on the Greencore
Excellence programmes are set out in the Strategic Report on pages
20 and 21. Alongside Patrick Coveney and Eoin Tonge, he led the
implementation and internal and external communication of the
revised strategy for the Group.

Peter continued to promote the colleague agenda throughout
FY19, including leading additional initiatives to increase employee
engagement, such as enhancing the employee engagement survey,
devising actionable plans to increase engagement, regular townhalls
across sites and Group-wide communications. Peter has also been
instrumental in leading employee development projects across the
Group over FY19. Further details are set out on pages 27 to 29.

UK organisation One of Peter’s key mandates was to consider optimal revisions to

the UK structure with a focus on the UK team. This task was carried
out to high standards despite a challenging grocery and economic
environment, as well as during a period of portfolio change following
the disposal of US business. Following the disposal, Peter immediately
refocused and redefined the UK management team structure, with
a specific emphasis on the commercial and operational functions.

15% out of 25%

At target

Above
target

Outcome of personal and strategic element

15% out of 25%

Annual Report and Financial Statements 2019

Directors’ Report
Report on Directors’ Remuneration continued

Annual Report on Remuneration continued
Notes to the table (audited) continued
Annual bonus continued
The Committee reviewed each Executive Director’s achievements against personal and strategic objectives during the year,
and determined the following levels of payout:

Executive Director

Patrick Coveney
Eoin Tonge
Peter Haden

Outcome

15% out of 25%
15% out of 25%
15% out of 25%

The resulting bonus outcomes for FY19 for the Executive Directors are as follows:

Executive Director

Patrick Coveney
Eoin Tonge
Peter Haden1

Annual bonus
outcome

(% of maximum)

Annual bonus
outcome

(% of salary)

Annual bonus
outcome
(000)

35%
35%
35%

52.5%
52.5%
52.5%

€442
£220
£86

1. Peter Haden was appointed to the Board on 21 May 2019, and his bonus outcome is applied to his pro-rated salary of £165,577 from 21 May 2019

to 27 September 2019.

In line with our remuneration policy, the bonus outcome for Patrick Coveney and Eoin Tonge will be paid 50% in cash and 50%
in shares deferred for a three year period, subject to continued employment. Peter Haden will step down from the Board on
31 December 2019 and details of his arrangements are set out on page 86.

Long term incentives: vesting of FY17 PSP awards
In early 2017, the Executive Directors received awards under the PSP as set out in the table below:

Executive Director

Patrick Coveney
Eoin Tonge
Peter Haden2

Date of grant

7 Feb 2017
7 Feb 2017
10 Jan 2017

Number
of awards
granted

562,829
243,572
164,880

Share price on
date of grant

£2.4631
£2.4631
£2.4263

Face value
on date
of grant

£1,386k
£600k
£400k

Award as

% of salary

Vesting
date

200% 7 Feb 2020
150% 7 Feb 2020
10 Jan 2020

n/a

1. Average share price for the three days commencing on 31 January 2017.
2. Peter Haden was not an Executive Director at the time of the award was granted in FY17; his award is disclosed here for transparency. In line with other

non-Board senior management personnel in the Group, Peter Haden received his FY17 PSP award on 10 January 2017.

3. Average share price for the three days commencing on 4 January 2017.

PSP awards granted in early 2017 were subject to Adjusted EPS and ROIC performance targets measured over the period
FY17 to FY19, using FY16 as base year. Target and actual outturn have been as set out below. The reported FY19 ROIC figure
has been adjusted (from 14.4%) to exclude the impact of the acquisition of Freshtime. The Committee considered this adjustment
appropriate in the context of the timing of the acquisition (3 September 2019). The impact of adjusting Adjusted EPS on the
same basis is minimal and does not impact the outcome of this element of the PSP.

Measure

Adjusted EPS growth
FY19 ROIC

Total

Weighting

(% of award)

Performance

Actual FY19

Vesting

targets

outturn

(% of award)

50%
50%

5% to 15% p.a.
12.5% to 15%

0% p.a.
15%

0%
100%

50%

Performance targets for the FY17 awards were set in late 2016, taking into account a range of reference points, including the
Group’s strategic plan, at that time. These reference points excluded any performance impact from the subsequent acquisition
of Peacock Foods which completed in December 2016. As such, no adjustment to the targets and/or performance outcome for
FY17 PSP awards is necessary to reflect the sale and disposal of Peacock Foods within the performance period. However, the
targets did take into consideration the legacy US business, excluding Peacock Foods, which formed part of the US disposal in
November 2018. Although the legacy US business is excluded from the Group’s FY19 results, the Committee carefully considered
the impact of its disposal on Adjusted EPS and ROIC and determined that no adjustment should be made to either measure with
respect to FY17 awards. In coming to its decision, the Committee considered a range of approaches, and concluded that given
the complexity of disaggregating the legacy US business from base year (FY16) results, and the fact that the performance profile
of the US business was broadly in line with that of the wider Group, the Committee is satisfied that the targets originally set are
not materially tougher or easier to achieve than originally intended.

84 Greencore Group plc

Based on performance over the period 1 October 2016 to 27 September 2019, 50% of the FY17 PSP awards will vest
on 10 January 2020 for Peter Haden and 7 February 2020 for Patrick Coveney and Eoin Tonge, subject to the PSP rules.
The Committee reviewed the underlying financial performance of the business, as well as the value added to shareholders,
and considered that the formulaic vesting outcome was appropriate. A mandatory two year holding period applies to vested
PSP awards for Patrick Coveney and Eoin Tonge; vested awards may not be sold during the holding period except to cover
tax liabilities. As the FY17 PSP award for Peter Haden was made prior to his appointment to the Board, it is not subject
to a holding period.

PSP awards granted in FY19
During FY19, the Executive Directors received awards under the PSP as set out in the table below:

Executive Director

Patrick Coveney
Eoin Tonge
Peter Haden2

Date of grant

8 Feb 2019
8 Feb 2019
12 Dec 2018

Number of
awards granted

Share price on
date of grant

Face value on
grant

Award as % of
salary

Vesting date

754,430
320,508
289,452

£1.9571
£1.9571
£1.8063

£1,476k
£627k
£523k

200% 8 Feb 2022
150% 8 Feb 2022
12 Dec 2021

n/a

Holding period
expiry

8 Feb 2024
8 Feb 2024
n/a

1. Average share price for the three days commencing on 4 February 2019.
2. Peter Haden was not an Executive Director at the time his award was granted in FY19; his award is disclosed here for transparency. In line with other
non-Board senior management personnel in the Group, Peter received his FY19 PSP award on 12 December 2018. The performance conditions are the
same as those applying to FY19 awards to Executive Directors. As the FY19 PSP award for Peter Haden was made prior to his appointment to the Board,
it is not subject to a holding period.

3. Average share price for the three days commencing on 4 December 2018.

The performance measures are Adjusted EPS, ROIC and TSR. Performance will be assessed over the period FY19 to FY21,
using FY18 as the base year, against targets as set out below:

Performance targets1

Measure

Adjusted EPS growth
FY21 ROIC
Relative TSR vs. bespoke group of sector peers2

Weighting

(% of award)

Below
threshold

(0% vesting)

1/3rd
1/3rd
1/3rd

Below 5% p.a.
Below 14%
Below median

Threshold

(25% vesting)

Stretch

(100% vesting)

5% p.a.
14%
Median

15% p.a.
16%
Upper quartile

1. Straight-line interpolation applies between threshold and stretch.
2. For the FY19 awards, the peer group comprises the following peers: A.G.Barr, Aryzta, Britvic, Cranswick, Dairy Crest, Devro, Glanbia, Greenyard Foods,

Greggs, Hilton Food, Kerry Group, Premier Foods, SSP Group, and Total Produce.

As in prior years, prior to determining the level of vesting, the Committee will also consider the underlying financial performance
of the business, as well as the value added to shareholders. The level of vesting may be adjusted where the Committee
considers that there is a material difference between the formulaic vesting outcome and underlying performance.

The awards for Patrick Coveney and Eoin Tonge will vest three years from the grant date, subject to meeting the performance
conditions and continued employment. Clawback and malus provisions apply. A mandatory two year holding period applies
to vested PSP awards which may not be sold during the holding period except to cover tax liabilities. Peter Haden will step down
from the Board on 31 December 2019 and details of his arrangements are set out on page 86. As the FY19 PSP award was made
to Peter Haden before his appointment to the Board, the FY19 awards are not subject to a holding period.

Deferred Bonus Plan (‘DBP’) awards granted in FY19
The following deferred bonus shares were awarded to Patrick Coveney and Eoin Tonge during FY19. Peter Haden is not
included in the table as he was not an Executive Director at the time. The awards relate to the bonus awarded for performance
during FY18.

Executive Director

Patrick Coveney
Eoin Tonge

Date of grant

7 Dec 2018
7 Dec 2018

Number of
awards granted

Share price on
date of grant1

Face value
on grant

Vesting date

54,788
30,647

£1.806
£1.806

£98,947
£55,348

7 Dec 2021
7 Dec 2021

1. Average share price for the three days commencing on 4 December 2018

Payments for loss of office
No payments for loss of office were made during the year under review.

Payment to past Directors
No payments were made to past Directors during the year under review.

Annual Report and Financial Statements 2019

Directors’ Report
Report on Directors’ Remuneration continued

Annual Report on Remuneration continued
Peter Haden’s departure
Peter Haden will step down as an Executive Director of Greencore Group plc on 31 December 2019. Peter will continue
to be an employee of the Group until 12 April 2020.

During that period the following arrangements will apply:

• Peter will continue to receive salary, benefits and pension payments in line with the existing remuneration policy;
• Peter will be entitled to be considered for an annual bonus for FY20 but any bonus will be pro-rated to the date he leaves

Greencore, and subject to an assessment of the relevant measures. Taking into account the circumstances of his departure, the
Committee is exercising discretion permitted under the remuneration policy such that performance will be assessed (and full
disclosure provided in the FY20 Annual Report on Remuneration), and any bonus will be paid upon Peter’s departure date; and

• Peter will not receive a grant under the PSP for FY20.

Peter is departing the business as a result of the need to simplify the management structure under the leadership of Patrick
Coveney following the Group’s exit from the US and the reset of the Group’s strategy. Therefore, Peter will be treated as a Good
Leaver under the Company’s incentive plans. All of Peter’s outstanding share awards were granted to him prior to (and not in
connection with) his appointment to the Board and, as such, their treatment will be aligned with the Company’s normal practice
for good leavers below the Board. Peter’s outstanding PSP awards will be pro-rated to reflect his employment during the vesting
period, and for performance. Peter’s outstanding DBP awards will vest in full. Peter is entitled to 11 months’ notice under his
service agreement, and upon cessation of employment will receive payments in lieu of salary, benefits, and pension payments
in respect of the proportion of the notice period not worked.

All payments will be in line with the Company’s existing remuneration policy where payments relate to Peter’s service as an
Executive Director, and otherwise consistent with his service agreement and statutory employment rights, as well as the terms
applying to his outstanding incentive awards.

Implementation of the Remuneration Policy in FY20
Executive Director remuneration in FY20
A summary of how the proposed 2020 Remuneration Policy will be applied to Executive Director remuneration for FY20
is set out below.

Base salary
The Committee reviewed Executive Directors’ salaries in late 2019 and agreed to award an increase of 1.25% for Patrick Coveney
and 2.5% for Eoin Tonge. Peter Haden will not be receiving any increase in salary. The increase for Patrick Coveney was below
the average increase of 2% which was awarded to the wider colleague base, whilst Eoin Tonge’s increase was slightly ahead of
the wider colleague base average increase and reflects additional responsibilities taking on during the year, including leading
the sustainability and stakeholder engagement agenda. The new salaries, effective from 1 October 2019, will be as follows:

Executive Director

Patrick Coveney
Eoin Tonge
Peter Haden

Salary from
1 Oct 2019

Salary from
1 Oct 2018

increase

€850,705
£428,655
£450,000

€840,202
£418,200
£450,0001

1.25%
2.5%
0%

1. This figure represents Peter Haden’s salary following his appointment as Executive Director on 21 May 2019.

Pension and benefits
From FY20, Patrick Coveney and Eoin Tonge have agreed a voluntary cap on their future annual pension contributions at FY19
levels (of €315,000 and £105,000, respectively). These figures represent 35% of FY19 pensionable earnings for Patrick Coveney
and 25% of FY19 salary for Eoin Tonge. Peter Haden will continue to receive a pension contribution of 8% of salary in FY20, which
is in line with the pension contribution available to the wider colleague base. The Committee is mindful of the strong views of
some shareholders in this area and will keep incumbent Executive Director’s pensions under review in light of evolving market
practice and shareholder expectations whilst remaining highly cognisant of our contractual obligations to both Patrick Coveney
and Eoin Tonge.

Annual bonus
Annually, the Committee conducts a review of the incentive framework to ensure it remains fully aligned with our forward-looking
strategy and takes account of shareholder expectations. Following the review during FY19 and taking into account the preference
of some shareholders for greater differentiation between the measures used in the ABP and the PSP, from FY20 the Adjusted
EPS (weighted 50% of the bonus opportunity) and ROIC (weighted 25% of the bonus opportunity) metrics will be replaced
with Adjusted Operating Profit (weighted 50% of the bonus opportunity) and Free Cash Flow (weighted 25% of the bonus
opportunity) respectively, in the ABP. Both Adjusted Operating Profit and Free Cash Flow are Group KPIs and introducing these

86 Greencore Group plc

metrics into the bonus will create more direct alignment between incentive outcomes and the Group’s performance in terms of
these measures. The remaining 25% of the bonus opportunity will continue to be based on personal and strategic objectives,
to help ensure a continued focus on the short and medium term strategic objectives that are most critical in continuing to grow
the Group’s market leading position in the UK. The outcome of both the financial and non-financial KPIs will be considered by the
Committee when determining the personal and strategic performance.

As in previous years, the targets for FY20 will be set with reference to budget as well as broker forecasts and other external
considerations, and the Committee considers its approach to target-setting to be robust. If maximum performance targets are
achieved, the Committee considers that this would represent exceptional performance and add significant value for shareholders.
Performance targets are considered by the Committee to be commercially sensitive and have therefore not been disclosed on
a prospective basis. Full retrospective disclosure of the targets and performance against them will be provided in next year’s
Annual Report on Remuneration.

The maximum opportunity for FY20 remains unchanged from FY19 and will be 150% of salary. Half of any bonus earned will be
deferred in shares, vesting after three years subject to continued employment. Both the cash bonus and deferred bonus awards
are subject to malus and clawback provisions.

Long term incentive
For FY20, Patrick Coveney and Eoin Tonge will receive awards under the PSP of 200% and 150% of salary, respectively,
in late 2019.

The performance measures will continue to be Adjusted EPS, ROIC and TSR, as the Committee believes these to be the most
appropriate measures for the next three year cycle for growth and returns in the business. Performance will be assessed over
the period FY20 to FY22, using FY19 as the base year, and the targets, which have been set taking into account the impact
of IFRS 16 Leases, are set out below:

Measure

Adjusted EPS growth
FY22 ROIC
Relative TSR vs. bespoke group of sector peers2

Performance targets1

Weighting

(% of award)

Below threshold

(0% vesting)

Threshold

(25% vesting)

Stretch

(100% vesting)

1/3rd
1/3rd
1/3rd

Below 5% p.a.
Below 13%
Below median

5% p.a.
13%
Median

15% p.a.
15%
Upper quartile

1. Straight-line interpolation applies between threshold and stretch.
2. For the FY20 PSP awards, the peer group comprises the following peers: A.G.Barr, Aryzta, Britvic, Cranswick, Devro, Glanbia, Greenyard Foods, Greggs,

Hilton Food, Kerry Group, Premier Foods, SSP Group, and Total Produce. Dairy Crest has been removed from the FY20 PSP peer group following its delist
during 2019.

As in previous years, the Committee will consider the underlying financial performance of the business as well as the value
added to shareholders in adjudicating the final overall PSP vesting level.

The awards will vest three years from the grant date, subject to meeting the performance conditions and continued employment
and a two year holding period will apply post-vesting. Malus and clawback provisions apply to the FY20 PSP awards both prior to
vesting and for a period of two years post-vesting, and vested awards may not be sold during the two year holding period post
vesting except to cover tax liabilities.

Non-Executive Director fees in FY20
Non-Executive Director fees are determined by the Chairman and the Executive Directors, with the exception of the Chairman,
whose remuneration is determined by the Committee. Basic fees shall not exceed the limit as set out in the Articles of Association
and approved by shareholders. The fees for the Chairman and the Non-Executive Directors were last reviewed in November 2019,
and no changes were made. Fees are set out in the table below:

Basic fee
Chairman
Non-Executive Director

Additional fees
Chairman
Senior Independent Director
Audit Committee Chair
Remuneration Committee Chair
Nomination and Governance Committee Chair

FY20

FY19

€78,000
€78,000

€247,000
€16,500
€16,500
€12,000
€10,000

Annual Report and Financial Statements 2019

Directors’ ReportReport on Directors’ Remuneration continued

Annual Report on Remuneration continued
Relative importance of spend on pay
The table below illustrates shareholder distributions (i.e. dividends and share buybacks) and total employee pay for FY19
and FY18, and the year-on-year change.

Distribution to shareholders
Total employee pay3

FY19
(000)

FY18
(000)

£34,7521
£264,500

£39,364
£372,500

change

-11.7%2
-28.99%

1. This does not include £509m returned to shareholders via the tender offer executed on 31 January 2019.
2. Reflects the reduction in issued share capital following the tender offer.
3. Total employee pay stated for FY19 includes employees in the US business up to the date of disposal in November 2018.

Historical TSR performance and remuneration outcomes for the CEO
The graph below compares the Company’s TSR against the FTSE All-Share Index and the FTSE 250 Index for over a period of
ten years up to 27 September 2019. It reflects the change in a hypothetical £100 holding in shares. The FTSE 250 Index has been
chosen as the Company is a constituent of this index, whilst the FTSE All-Share Index has been chosen to provide a broader
comparator group.

£450

£400

£350

£300

£250

£200

£150

£100

£50

£0

Sep
09

Sep
10

Sep
11

Sep
12

Sep
13

Sep
14

Sep
15

Sep
16

Sep
17

Sep
18

Sep
19

Greencore
FTSE All-Share Index
FTSE 250 Index

FTSE 250

FTSE All-Share

Greencore Group Plc

The table below illustrates the CEO’s single figure of total remuneration over the same ten year period to 27 September 2019.

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

Single figure (€000)1
Annual bonus outcome
PSP vesting2

€2,223
95%
n/a

€2,227 €2,449
92%
n/a

78%
n/a

€2,074 €2,590 €5,038
73%
92.3%

98%
n/a

89%
n/a

€3,131
83%
79%

€1,670
22%
35%

€1,414 €2,353
35%
50%

18%
0%

1. The disclosures of the single figures of total remuneration for the CEO for FY11 to FY18 have been converted from GBP into euro,

using the average exchange rate for the relevant financial year, to facilitate comparison over time.

2. No performance-based long term incentive awards were awarded prior to March 2013.

External appointments
We recognise the opportunities and benefits to both the Company and to the Executive Directors of serving as Non-Executive
Directors of other companies. During FY19, the Board introduced a policy on external appointments for both Executive and
Non-Executive Directors. Executive Directors are permitted to take on a Non-Executive Directorship with another publicly listed
company with the approval of the Board. Any fees arising from such appointments will generally be retained by the individual.

On 30 May 2014, Patrick Coveney was appointed as a Non-Executive Director of Glanbia plc. In FY19, Patrick received €85,000
for this role which he is entitled to retain.

88 Greencore Group plc

Outstanding share awards (audited)
Details of the Executive Directors’ existing share awards as at 27 September 2019 in the Company’s share schemes are set out
in the table below:

Number of
options/
awards at
start of year

Granted/
awarded
during the
year

Date of
grant

Vested/
exercised in
the year

Lapsed
during the
year

Number of
options
awarded at
year end

Market price
of date of
grant

Exercise
price

Earliest date

of exercise Expiry date

06.07.18

11,522

–

11,522

€2.0938 €1.5700

01.09.21

28.02.22

Patrick Coveney

Deferred Bonus Plan

02.12.15
10.01.17
18.12.17
07.12.18

Performance Share Plan 02.12.15
07.02.17
18.12.17
08.02.19

115,9641
175,197
114,090
–

211,0341
562,829
708,744
–

–
–
–
54,788

–
–
–
754,430

125,7772
–
–
–

–
–
–
–

–

ShareSave

Eoin Tonge

Deferred Bonus Plan

02.12.15
10.01.17
18.12.17
07.12.18

59,7421
63,717
64,516
–

–
–
–
30,647

64,7962
–
–
–

Performance Share Plan 02.12.15
07.02.17
18.12.17
08.02.19

107,9901
243,572
300,587
–

–
–
–
320,508

ShareSave

23.07.151
06.07.18

8,649
12,162

–
–

Peter Haden3

Deferred Bonus Plan

Performance Share Plan

10.01.17
18.12.17
07.12.18

10.01.17
18.12.17
12.12.18

54,968
64,516
–

164,880
195,503
–

–
–
283,106

–
–
289,452

ShareSave

06.07.18

12,162

–

–
–
–
–

–
–

–
–
–

–

–
–
–
–

211,034
–
–
–

–
175,197
114,090
54,788

–
562,829
708,744
754,430

£2.62341
£2.4260
£2.0460
£1.8060

£2.62341
£2.4633
£2.0460
£1.9572

£1.7775
–
–
–

02.12.18
10.01.20
18.12.20
07.12.21

02.12.18
–
02.12.18
07.02.20
– 07.02.20
–
18.12.20
18.12.20
– 08.02.22 08.02.22

–

–
–
–
–

–
63,717
64,516
30,647

107,990
–
–
–

–
243,572
300,587
320,508

£2.62341
£2.4260
£2.0460
£1.8060

£2.62341
£2.4633
£2.0460
£1.9572

£1.7775
–
–
–

02.12.18
10.01.20
18.12.20
07.12.21

02.12.18
02.12.18
–
07.02.20
– 07.02.20
–
18.12.20
18.12.20
– 08.02.22 08.02.22

8,649
–

–
12,162

£3.1530 £2.0800
£1.4800
£1.8445

01.09.18
01.09.21

28.02.19
28.02.22

–
–
–

–

54,968
64,516
283,106

164,880
195,503
289,452

£2.4260
£2.0460
£1.8060

–
–
–

10.01.20
18.12.20
07.12.21

10.01.20
18.12.20
12.12.21

10.01.20
18.12.20
07.12.21

10.01.20
18.12.20
12.12.21

12,162

£1.8445 £1.4800 01.09.21

28.02.22

1. The number of options and the market price for awards granted in FY15 and FY16 have been adjusted in line with the rights issue which completed

in December 2016.

2. The difference between awards granted in 2015 and shares exercised in 2018 represents scrip dividend payments on the awards.
3. Peter Haden’s awards as detailed in this table were all granted before he was appointed to the Board; the awards are disclosed for transparency.

For the purposes of Section 305 of the Companies Act 2014, the aggregate gains by Executive Directors on the exercise
of share options during the year ended 27 September 2019 was £338,743.51 (FY18: £916,189.46).

Annual Report and Financial Statements 2019

Directors’ ReportReport on Directors’ Remuneration continued

Annual Report on Remuneration continued
Statement of directors’ shareholding and share interests (audited)
The Company has adopted Executive Director shareholding guidelines whereby all Executive Directors shall acquire a holding
of shares in the Company equal to 200% of base salary, typically over a five year period commencing on the date of their
appointment to the Board.

As referred to in the 2020 Remuneration Policy, it is intended that with effect from January 2020, Executive Directors will be
subject to a post-employment shareholding guideline. Executive Directors will normally be expected to maintain a holding
of Greencore shares at a level equal to the lower of the in-post shareholding guideline or the individual’s actual shareholding
for a period of two years from the date the individual ceases to be a Director. The specific application of this shareholding
guideline will be at the Committee’s discretion.

There are currently no shareholding guidelines in place for Non-Executive Directors, however, all Non-Executive Directors
are encouraged to hold shares in the Company.

The table below shows the beneficial interests of Directors on 27 September 2019 (including the beneficial interest of their
spouses, civil partners, children and stepchildren) in the Ordinary Shares of the Company, as well as unvested awards.

Ordinary Shares
held at
28 Sep 2018
(or appointment
if later)

Ordinary Shares
held at

27 Sep 2019

Shareholding
requirement as
% of salary

Current
shareholding as
% of salary1

Shareholding
requirement

met

Subject to
deferral/holding
period2

Unvested and
subject to
performance
conditions3

3,613,544
553,552
45,126

200%
200%
200%

1,067%
290%
22%

Yes
Yes
No

344,075
158,880
402,590

2,026,003
864,667
649,835

153,363
55,576
57,903
47,307
–
60,000

153,363
55,576
57,903
47,307
25,000
60,000

Executive Directors

Patrick Coveney
Eoin Tonge
Peter Haden4

Non-Executive Directors

Gary Kennedy
Sly Bailey
Heather Ann McSharry
John Moloney
Helen Rose
John Warren

Group Company Secretary

Jolene Gacquin

8,066

1. Calculated based on FY19 salaries and the average share price between 28 June 2019 and 27 September 2019 of £2.1921. In addition

Patrick Coveney’s shareholding value has been converted into euro using the average exchange rate for FY19 of €1:£0.8838.

2. Includes deferred bonus shares and vested shares subject to a holding period under the PSP where applicable.
3. Includes unvested PSP shares.
4. Peter Haden was appointed to the Board on 21 May 2019 and will step down from the Board on 31 December 2019. Under the guidelines,

Executive Directors have a period of five years from Board appointment to reach the shareholding guidelines.

There were no changes to current Directors’ interests in Greencore shares during the period 27 September 2019 to
25 November 2019.

None of the Directors had a material interest in any contract of significance, other than a service contract in the case
of Executive Directors, with the Company or any of its subsidiaries at any time during the period.

90 Greencore Group plc

Share-based payments
The Group operates a ShareSave Scheme in both Ireland and in the UK, which encourages eligible employees to save in order
to buy shares in the Company. The ShareSave Schemes provide a means of saving and give employees the opportunity to
become shareholders. Currently, there are approximately 1,400 participants in the schemes. 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 ShareSave Scheme, and awards granted under the DBP and the PSP. The related charge in respect of share-based payments
issued to Executive Directors totalled £1.7m (FY18: £0.3m). Further detail in respect of the DBP and PSP awards is outlined in
Note 34 of the Financial Statements.

Options outstanding under the Company’s DBP, PSP and ShareSave Schemes at 27 September 2019 amounted to 13,944,853
Ordinary Shares (FY18: 15,635,761) made up as follows:

Deferred Bonus Plan
Performance Share Plan
ShareSave Scheme

Number of

Ordinary Shares1

1,340,498
6,342,214
137,982
6,124,159

Price range1

–
–
€1.57-€2.58
£1.48-£2.17

Normal
exercise
dates

2019-2022
2019-2022
2019-2023
2019-2023

1. The number of shares and the prices in respect of options granted in 2016 have been adjusted in line with the rights issue which completed

in December 2016.

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 Investment Association 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. At 27 September 2019, there were 3,396,791 shares in the Company’s share ownership trust (as at 28 September 2018:
3,386,641). Current shareholder dilution is circa 0.76%.

Annual Report and Financial Statements 2019

Directors’ ReportReport of the Audit Committee

Report of the
Audit Committee

T H E A U D I T C O M M I T T E E A S S I S T S T H E B O A R D I N F U L F I L L I N G

I T S O V E R S I G H T R E S P O N S I B I L I T I E S B Y E N S U R I N G T H E

I N T E G R I T Y O F T H E G R O U P ’ S F I N A N C I A L I N F O R M A T I O N ,

A U D I T Q U A L I T Y, T H E E F F E C T I V E N E S S O F I N T E R N A L

C O N T R O L S A N D T H E R I S K M A N A G E M E N T P R O C E S S .

John Warren

Dear Shareholder,
On behalf of the Audit Committee (the ‘Committee’) and the Board, I am pleased to present the Report of the Committee for the
year ended 27 September 2019. This report details how the Committee fulfilled its responsibilities and includes an overview of the
principal matters which the Committee has assessed in FY19. During the year, the Committee continued to focus on its core areas
of responsibility, namely protecting the interests of the Group and our shareholders through ensuring the integrity of the Group’s
financial information, audit quality and the effectiveness of internal controls and the risk management process.

Role of the Committee
The role, authority, responsibilities and scope of the Committee are set out in its Terms of Reference which are available on the
Corporate Governance section of our website, www.greencore.com. The Terms of Reference are reviewed on an annual basis and
were last reviewed in September 2019 with minor amendments made.

Membership of the Committee
The Committee is composed of four Non-Executive Directors: Ms Sly Bailey, Ms Heather Ann McSharry, Ms Helen Rose and myself,
each considered by the Board to be independent. Further details of the Committee members’ experience and qualifications can
be found in our biographical details as set out on pages 44 and 45.

Committee Members

Date Appointed

John Warren
Sly Bailey
Heather Ann McSharry
Helen Rose

20 March 2013
25 July 2013
20 March 2013
11 April 2018

The Board has determined that Ms Rose and I both have recent and relevant financial experience. Ms Rose also has specific
risk expertise, having been involved in risk management in TSB Banking Group plc. The Committee as a whole brings a broad
range of relevant experience and expertise from a variety of industries as well as knowledge of the Company which enables
it to provide effective governance. Following a review of both the Committee and Committee members’ effectiveness, the
Committee has confirmed that, as a collective, it is competent in the manufacturing sector.

In accordance with the Committee’s Terms of Reference, the Group Company Secretary acts as Secretary to the Committee.
In line with Principle C.3 of the 2016 UK Corporate Governance Code (‘2016 Code’) and its associated provisions, the Board ensures
that there are formal and transparent arrangements in place for considering how corporate reporting is applied, monitoring
risk management and internal control principles and maintaining a suitable relationship with the external auditor.

92 Greencore Group plc

Committee meetings
The Committee meets at least three times in the financial year and attendance at the scheduled meetings held during FY19 is
shown on page 58. The meetings of the Committee are scheduled to take place in advance of Board meetings. This provides
me with the opportunity to keep the Board apprised of the key items discussed at Committee meetings. The Board also receives
copies of the minutes of the Committee meetings.

During FY19, the Chief Executive Officer (‘CEO’), Chief Financial Officer (‘CFO’), Group Financial Controller, Head of Risk
Management and Head of Legal and Compliance as well as representatives from the external auditor attended Committee
meetings upon invitation. In addition, other individuals from within the Group attended Committee meetings during the year,
and provided the Committee with updates on certain key areas of the business, such as health and safety, IT systems, cyber risk,
food safety, environmental matters and insurance. Up until his departure in January 2019, Non-Executive Director Mr Tom Sampson
attended the meetings.

In my capacity as Chair of the Committee, I am available to all Board members to discuss any audit or risk related issues they
may have, either on a collective or individual basis. I meet with the external auditor and the Head of Risk Management, absent
management, on a regular basis in order to discuss any issues which may have arisen during the year under review. The Head of
Risk Management, whose appointment or removal is subject to Committee approval, has direct access to both the Board Chairman
and myself.

How the Committee has discharged its responsibilities
Key areas of focus
The work of the Committee principally fell under the following key areas:

Key areas of focus

New accounting
standards

The Committee, together with management, completed the review of the impact of the Group’s
transition to IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers
during FY19. The impact assessment on the adoption of new standards is set out in Note 1
to the Financial Statements.

The Committee, together with management, continues to review the estimated impact on
the Group’s transition to IFRS 16 Leases, as well as its implementation in FY20. The estimated
impact of IFRS 16 Leases on the Group’s key measures is also set out in Note 1 to the
Financial Statements.

Risk management
and internal controls

The Committee continued to monitor and review the progress of the risk management
framework. Further details are set out on page 94.

External audit
FY19

Review of impact
of US disposal

FY19 marked the first year of Deloitte Ireland LLP’s (‘Deloitte’) tenure as external auditor.
The Committee monitored the activities undertaken by Deloitte to ensure external auditor
independence and that an effective audit was carried out. The Committee met with Deloitte
in May and September 2019 to discuss and consider the FY19 external audit plan, which was
set taking into consideration the nature of risks to, and the strategy of, the Group.

The Committee reviewed the impact of the disposal of the US business. Specifically the Committee
considered the accounting treatment of the US disposal and the associated capital restructuring.
This included the profit on disposal and the charge which resulted from reshaping the Group’s
debt and derivative portfolio. These items were presented as exceptional items in the year.

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;

• We reviewed the half year and full year results statements for FY19, having discussed them with the external auditor and
compared the results to management accounts and budgets, focusing on key areas of judgement before recommending
to the Board their release; and

• We reviewed, prior to making recommendations to the Board, the Annual Report and Financial Statements for the year ended

27 September 2019.

Annual Report and Financial Statements 2019

Directors’ ReportReport of the Audit Committee continued

In undertaking this review, we discussed with management and the external auditor the critical accounting policies and
judgements that had been applied. These were:

Accounting for
exceptional items

Accounting
for acquisition
of Freshtime

Goodwill

Exceptional items are items which have been disclosed separately due to their amount or
nature, the purpose of which is to assist the user in understanding underlying performance.
Management exercises judgement in assessing each exceptional item and analysing whether
the treatment of exceptional items is consistent with accounting policies and practice. During the
year, the Group had an exceptional credit of £25.9m. This included a credit of £55.9m relating to
the profit on disposal of our US business and a £25.4m charge relating to the debt restructuring
we undertook following the disposal. The Committee discussed all of the exceptional items with
management and with Deloitte and was satisfied that the identification of items as exceptional
items was applied on a consistent basis and the accounting policy and disclosures were in line
with previous practice.

The Group acquired Freshtime on 3 September 2019. When acquiring a business, the Group
is required to bring acquired assets and liabilities onto the Group Balance Sheet at their fair
value, the determination of which requires a significant degree of judgement. Judgement is
also required in the assessment and valuation of intangible assets, in this case customer related
intangible assets. The Committee discussed and reviewed the accounting for the acquisition with
Deloitte, in particular the valuation and remaining life of the intangible asset. It also reviewed the
costs relating to the acquisition of £1.8m which were presented as an exceptional item.

The Group had goodwill of £448.4m at 27 September 2019 as set out in Note 14 to the Group
Financial Statements. Management’s judgement is required in testing the carrying value of goodwill
for impairment when comparing the value in use of the cash generating unit (‘CGU’)
to the carrying value of the CGUs. As part of its audit, Deloitte assessed the Group’s impairment
model for each CGU and performed analysis on the assumptions which had been used by the
Group in the impairment model. Following a detailed review and discussions with Deloitte, the
Committee was satisfied that the assumptions used were appropriate and, as there was sufficient
headroom, was satisfied that no impairment was required.

Principal activities in FY19
Risk management and internal controls
The Committee supports the Board in its duties to review and monitor, on an ongoing basis, the effectiveness of the Group’s
system of internal control and risk management. In order to fulfil these duties during the year under review the Committee:

• formally met with the Head of Risk Management who provided reports on the Risk Management Group’s key findings from

business process and control reviews and management’s response to same;

• approved the FY19 Risk Management Plan in September 2018. The Committee received an update on the FY19 Risk

Management Plan in January 2019 which had been refined following the completion of the sale of the US business. In May 2019,
the Committee was provided with an update on the refocused FY19 Risk Management Plan which included an enhanced focus
on the IT road map, cyber security, business continuity planning, ethical employment requirements, food defence mechanisms
and GDPR compliance;

• received presentations on principal risks and discussed with senior management the material internal controls that exist to

mitigate these to levels within the Board’s risk appetite;

• reviewed and approved the Risk Management Plan for FY20 which sets out the planned activities, including staffing and

resources, for the Risk Management Group for the year ahead. The plan is driven by the maturity of the individual businesses
and their perceived level of risk;

• received and reviewed the final comprehensive report on the activities of the Risk Management Group for FY19. The report

included detailed information in relation to how the Risk Management Group had delivered against the FY19 plan, a summary
of its risk assessment process for the year under review, its key findings and comprehensive information in relation to each
of the risk management reports which had been issued since the previous report; and

• undertook a review of the Risk Management Group’s mission and objectives along with its internal audit charter in order

to assess how effectively it had performed during the year. Following the review, the Committee was satisfied that the Risk
Management Group had performed well against its mission and objectives. Furthermore, the deployment of its formalised
audit approach had ensured appropriate escalation and accountability processes remained in place.

In light of the above, the Committee continues to be satisfied that the Group control environment remains appropriate and
effective and has reported this opinion to the Board. A detailed overview of the Group’s internal control and risk management
framework is set out on pages 38 to 43.

94 Greencore Group plc

Whistleblowing arrangements
At Committee meetings during the year, the Committee reviewed the Group’s arrangements for employees to raise concerns,
in confidence, relating to accounting, risk issues, auditing issues or any other impropriety or area of concern. This review
included a review of the Group’s ‘Expolink’ whistleblowing hotline. This service, which is run by an independent external provider,
is multilingual and is accessible to all employees and third parties by phone, toll free 24 hours per day. The Committee also
considered the whistleblowing reports, which included information on the nature of issues reported, an analysis of the issues
raised by location, category and type along with the outcome of the investigations into the allegations.

Compliance statement
During the year the Audit Committee reviewed the appropriateness of the Directors’ Compliance Policy Statement and also
considered reports from senior management in respect of the compliance structures and arrangements in place for the year
under review to ensure the Company’s material compliance with its relevant obligations. Following the review, as well as a review
of the report from the Risk Management Group in respect of the compliance structures and arrangements, the Committee
confirmed to the Board that in its opinion the Company is in material compliance with its relevant obligations.

Viability statement
The Committee reviewed management’s work on assessing the potential risks to the business and the appropriateness of the
Company’s choice of a three year assessment period. Following this review, the Committee was satisfied that management had
conducted a robust assessment and recommended to the Board that it could approve and make the viability statement, as set
out on page 49.

Going concern statement
The Committee received the information, underlying assumptions and analysis presented in support of the going concern
statement. The Committee concluded that it was appropriate to recommend the adoption of the going concern basis in
preparing the financial statements. Further information is set out on page 49.

Fair, balanced and understandable assessment
Under Provision C.3.4. of the 2016 Code, the Committee, upon request from its Board, should ‘provide advice 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 company’s position and performance, business model and strategy.’

The Board has tasked the Committee with this role, which is incorporated into the Committee’s Terms of Reference.

In line with the above, the Committee has undertaken a review of the Annual Report and Financial Statements and confirmed
to the Board that it was the opinion of the Committee that, taken as a whole, the Annual Report and Financial Statements was
fair, balanced and understandable and provided the information necessary for shareholders to assess the Group’s position and
performance, business model and strategy. In advance of providing such a confirmation to the Board, the Committee considered
the adequacy of the systems and internal controls, the consistency of the various elements of the Annual Report and Financial
Statements (taking into account reports received by the Board during the year), the level of information provided, the narrative
reporting and the language used.

External audit effectiveness
The Committee, on behalf of the Board, is responsible for monitoring the quality, objectivity and effectiveness of the external
auditor. This year marked the formal transition of auditor. KPMG completed the FY18 external audit and Deloitte’s appointment
was formally approved by shareholders at the Company’s Annual General Meeting (‘AGM’) on 29 January 2019.

The Committee assessed the quality and effectiveness of the FY18 external audit process in conjunction with the business units
and the central team. The assessment of the FY18 audit highlighted that KPMG performed well and demonstrated strong technical
knowledge. The feedback confirmed that KPMG was committed to audit quality and had provided an appropriate level of
challenge to management. The Committee has concluded that overall KPMG carried out its audit for FY18 effectively.

As set out above, FY19 is the first year of Deloitte’s tenure as external auditor following its appointment at the January 2019 AGM.
An advisory resolution will be put to the shareholders at the forthcoming AGM in relation to the continuation in office of Deloitte
as auditor.

In May, the external auditor’s Letter of Engagement was reviewed by the Committee and signed on behalf of the Group in
advance of the commencement of the audit. The Letter of Engagement set out confirmation of Deloitte’s independence within
the meaning of the regulations and professional standards.

In November 2019, in advance of the finalisation of the Group’s Financial Statements, the Committee reviewed a report from
Deloitte on its key audit findings, including the key risk areas and significant judgements, and discussed it with Deloitte in order
for the Committee to form a judgement on the Financial Statements. In addition, we considered the Letter of Representation
and the management letter. The Committee meets at least annually with the external auditor absent management to discuss
any issues the external auditor may wish to raise directly with the Committee.

Annual Report and Financial Statements 2019

Directors’ ReportReport of the Audit Committee continued

Non-audit services
In order to ensure external auditor independence and objectivity, the Committee has a formal approved policy on the provision
of audit and non-audit services by the external auditor. The policy is circulated to management at least twice yearly and is
reviewed by the Committee on an annual basis. The policy details a schedule of prohibited non-audit services and sets out
that no non-prohibited, non-audit work may be undertaken by the external auditor without the prior written approval of the
CFO and the Committee, whose role includes monitoring the level of fees incurred for the provision of non-audit services.

Deloitte did not provide any non-audit services during FY19.

Audit Committee effectiveness
During FY19, the Board and the Committee reviewed the operation, performance and effectiveness of the Committee. The review
confirmed that the Committee continues to operate effectively and efficiently and has access to the resources required in order
to perform its role appropriately. I would like to thank my fellow Committee members for their commitment and input to the work
of the Committee during the year. The Committee will continue to focus on the impact of new accounting standards, including
IFRS 16 Leases, external audit quality, internal controls and risk management during FY20. 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 2019

96 Greencore Group plc

Report of the Nomination and Governance Committee

Report of the
Nomination
and Governance
Committee

T H E N O M I N A T I O N A N D G O V E R N A N C E C O M M I T T E E

F O C U S E D O N N O N - E X E C U T I V E D I R E C T O R R E F R E S H M E N T ,

S U C C E S S I O N P L A N N I N G A N D C O R P O R A T E G O V E R N A N C E

D E V E L O P M E N T S D U R I N G F Y 1 9 .

John Moloney

Dear Shareholder,
As Chair of the Nomination and Governance Committee (the ‘Committee’), it is my pleasure to present the Committee’s report
for the year ended 27 September 2019 (‘FY19’). The main purpose of this report is to highlight the role of the Committee and
to outline the key areas of focus for the Committee during FY19.

Membership of the Committee
The Committee is made up of three Non-Executive Directors: Ms Sly Bailey, Mr Gary Kennedy and myself. On pages 44 and 45,
you will find further details of each of the Committee member’s qualifications, experience and expertise.

Committee Members

Date Appointed

John Moloney

Sly Bailey
Gary Kennedy

10 May 2013
28 January 2014 (Appointed Chairman)
28 January 2014
26 July 2012

Following a review of its effectiveness, structure and membership in FY19, both the Committee and the Board believe that the
Committee’s composition is appropriate and the Committee as a whole is suitably equipped to perform its duties effectively.

Activities of the Committee
The Committee operates under Terms of Reference, which are reviewed annually and are available under the Corporate
Governance section of our website, www.greencore.com. In January 2019, the Committee undertook the annual review of its
Terms of Reference and following amendments to accord with best practice, the amended Terms of Reference were approved
by the Board.

In the year, in addition to the three scheduled meetings, the Committee also held a number of unscheduled meetings. All
Committee members attended all scheduled and unscheduled meetings. Further details of attendance can be found on page 58.

During FY19, the Committee focused on:

• Board and Board committees (collectively the ‘Committees’) composition and succession planning,

including Non-Executive Director tenure;

• Senior management development and succession planning;
• The appointment of a new Group Company Secretary;
• The requirements of the 2018 UK Corporate Governance Code effective from FY20;
• The review of new policies to enhance Board governance; and
• The introduction of the role of Workforce Engagement Director.

Annual Report and Financial Statements 2019

Directors’ ReportReport of the Nomination and Governance Committee continued

Board and Committee composition
As a result of the disposal of the US business, Non-Executive Directors Mr Thomas Sampson and Mr Kevin O’Malley retired from
the Board following the 2019 Annual General Meeting (‘AGM’). Following their departure, the Committee undertook a rigorous
review of the composition of both the Board and the Committees to ensure that they were appropriately constituted and
there was an appropriate balance of skills, knowledge, experience, independence and diversity on the Board and each
of the Committees.

Senior management development
In October 2018 the Committee recommended to the Board the appointment of Ms Jolene Gacquin as Group Company Secretary.
Ms Gacquin replaced Mr Conor O’Leary on 29 January 2019. Following a formal selection process, the Committee recommended
the appointment of Mr Peter Haden to the Board as Executive Director. The Board approved the appointment and Mr Haden
was appointed with effect from 21 May 2019.

Following the Group’s exit from the US market, along with the reset of Group strategy and the consequent need to simplify
the management structure under the leadership of Mr Patrick Coveney as Chief Executive Officer, Mr Haden will step down
from the Board on 31 December 2019. Mr Haden will remain with the Group until April 2020 to enable the Group to transition
seamlessly to the new structure. The strong contribution that he has made to the development and performance of Greencore
over the past five years is appreciated by the Board.

Experience and skills
The chart below shows the diverse mix of skills held by the Board.

Skills and experience

Number of board members

Food industry

Consumer behaviours

Ethics and governance

Financial expertise

Leadership and strategy

Audit and risk management

Global transactions

C-suite

Non-executive directorship

Succession planning and Chairman tenure
One of the roles of the Committee is to ensure that succession plans are in place for the Directors and senior management
taking into consideration the current structure, leadership requirements, the commercial environment and the future plans for the
Group. A cornerstone of strong succession planning is ensuring it is aligned with the evaluation of strategy rather than operating
in isolation.

As part of the Board and Committee’s composition review during FY19, the Committee also undertook a detailed review of the
tenure of each of the Non-Executive Directors, and the Board as a whole. Following on from the review, the Committee built on
existing practice and instigated a formalised Non-Executive Director refreshment and succession planning exercise to ensure that
appropriate plans are in place to secure the orderly succession of Non-Executive Directors with longer tenure who will step down
from the Board over the coming years.

The Committee, together with the Board, has carried out detailed reviews of the requirements of the 2018 UK Corporate
Governance Code (‘2018 Code’) which applies to the Company with effect from FY20. In alignment with the principles of the
2018 Code, one of the key areas of focus for the Committee during the year was succession planning and talent management
at both Board and senior management levels covering short to long term planning. MWM Consulting which has no affiliation
with the Group is assisting the Committee in its Non-Executive Director refreshment and succession planning exercise.

Following the Chairman evaluation, led by the Senior Independent Director, during FY19, the Board and the Committee concluded
that Mr Gary Kennedy should remain in situ as Chairman to oversee the outlined refreshment and succession planning exercise.
The Committee acknowledges that this is a departure from the relevant provision of the 2018 Code which states that the
Chairman should not remain in post beyond nine years from the date of his first appointment to the Board. The 2018 Code does
recognise that, in certain circumstances, this period may be extended to allow for effective succession planning and to facilitate

98 Greencore Group plc

the development of a diverse Board. The 2018 Code goes on to refer, in particular, to circumstances where the Chairman was
an existing Non-Executive Director on appointment. The Committee believe that both apply here and Mr Kennedy is the ideal
Chairman to further facilitate the development of a diverse Board.

Mr Kennedy has overseen considerable change in the business during his tenure, particularly in the last three years. His
leadership has been key to our success and the Committee recognises that his experience brings helpful perspective and
challenge to our strategic discussions. As the Board undergoes significant change over the period ahead, there is a clear
advantage to retaining Mr Kennedy while new Board members establish themselves.

Our Non-Executive Directors’ tenure on our Board as at 27 September 2019 was as follows:

Length of service

Less than 1 year

Between 1-2 years

Between 3-5 years

Between 5-10 years

More than 10 years

Number of

Non-Executive Directors

The Letters of Appointment of each of the Non-Executive Directors are available for inspection at the Company’s registered
office during normal office hours and at the Company’s AGM.

Corporate governance developments
Both the Committee and the Board have undertaken a detailed evaluation of the 2018 Code which applies to the Group with
effect from FY20. Following on from the analysis of the principles and provisions of the 2018 Code, the Committee developed
additional policies and processes in order to enhance corporate governance standards, each of which have been approved
by the Board. These policies include a new Site Visit Policy and an External Appointments Policy.

In addition, on the recommendation of the Committee, the Board approved the appointment of Ms Sly Bailey as the designated
Non-Executive Director with responsibility for engagement with the Company’s workforce (‘Workforce Engagement Director’) with
effect from FY20. The role of the Workforce Engagement Director is to ensure that there is effective engagement between the
Board and our colleagues. This role is operating under Board approved objectives for FY20. Further information will be provided
in the FY20 Annual Report and Financial Statements.

Diversity
Both the Board and the Committee are committed to ensuring that diversity remains a key area of focus for the Group.
As at the end of FY19, over 33% of our Board members are females, whilst females represent 58% of our senior management
team. Further information in relation to our gender diversity breakdown is set out on page 50.

In the year under review, the Committee also considered both the Board Diversity Policy and the Group Diversity and Inclusion
Policy to ensure that they remained appropriate. Minor amends to the Group Diversity and Inclusion Policy were approved by
the Board in September 2019. The Board Diversity Policy sets out both the Committee and the Board’s approach and commitment
to diversity planning.

Areas of focus
One of the areas of focus for the Committee for FY20 will be succession planning and diversity throughout FY20. In addition,
as set out above, the Committee dedicated a significant amount of time to reviewing the requirements, of the 2018 Code to
ensure that appropriate mechanisms were in place to address each of the principles and provisions, and the Committee intends
to keep the 2018 Code and external developments under review during FY20 to ensure that Company procedures align to
best practice where appropriate.

My Committee colleagues and I will be available at the forthcoming AGM of the Company to answer any queries that
shareholders may have in relation to the Committee.

John Moloney
On behalf of the Nomination and Governance Committee
25 November 2019

Annual Report and Financial Statements 2019

Directors’ ReportStatement of Directors’ Responsibilities

The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law
and regulations.

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 (‘IFRS’) as adopted
by the European Union (‘EU’) and applicable accounting law including Article 4 of the International Accounting Standards (‘IAS’)
Regulation. The Directors have elected to prepare the Company Financial Statements in accordance with FRS 101: Reduced
Disclosure Framework, comprising the financial reporting standards issued by the Financial Reporting Council and published
by the Institute of Chartered Accountants in Ireland, together with the Companies Act 2014.

Under company law directors must not approve the Group and Company Financial Statements unless they are satisfied that
they give a true and fair view of assets, liabilities and financial position of the Group and Company of the Group’s profit
or loss for that year.

In preparing these Group and Company Financial Statements, the Directors are required to:

• Select suitable accounting policies and apply them consistently;
• Make judgements and estimates that are reasonable and prudent;
• State that the Group Financial Statements comply with IFRS as adopted by the EU and as regards the Company,

comply with FRS 101 as applicable in accordance with the Companies Act 2014;

• Assess the Group Company’s ability to continue as a going concern, disclosing, as applicable, matters related to

going concern; 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 (as amended) (the ‘Transparency
Regulations’) 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 and
Financial Statements.

The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time
the assets, liabilities, financial position and profit or loss of the Group and Company and which enable them to ensure that the
Financial Statements of the Group and Company comply with the provision of the Companies Act 2014. The Directors are also
responsible for taking all reasonable steps to ensure such records are kept by its subsidiaries which enable them to ensure
that the Financial Statements of the Group comply with the provisions of the Companies Act 2014 including Article 4 of the
IAS Regulation. They are responsible for such internal controls as they determine is necessary to enable the preparation of
Financial Statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for
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 also responsible for preparing a Directors’ report that complies with the
requirements of the Companies Act 2014.

The Directors are responsible for the maintenance and integrity of corporate and financial information included on the Group’s
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 2016 UK 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 position and performance, business model and strategy.

100 Greencore Group plc

Regulation 21 of SI 255/2006 ‘EC (Takeover Bids Directive) Regulations 2006’
For the purposes of Regulation 21 of SI 255/2006 ‘EC (Takeover Bids Directive) Regulations 2006’, the information given under
the following heading on page 46 and 47 (share capital), 44, 45 and 47 (Directors), 48 (Significant Shareholdings), 81 to 84
(Performance Related Annual Bonus and Deferred Bonus Plan, 84 and 85 (Performance Share Plan), 91 (Share Option Schemes),
90 (Directors’ and Company Secretary’s Shares Interests), 89 and 91 (Share Options), 91 (Share-Based Payments) and 80 and 81
(Remuneration and Fees Paid in respect of FY19) 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 amendments of the Articles of Association, are available on the Greencore website and 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 allow for the early exercise of outstanding options upon
a change in control of the Company, subject to the approval of the Remuneration Committee.

Responsibility Statement in Regard to Annual Report
Each of the Directors, whose names and functions are listed on pages 44 and 45 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 Company Financial

Statements prepared in accordance with FRS 101: Reduced Disclosure Framework, give a true and fair view of the assets,
liabilities, financial position of the Group and Company at 27 September 2019 and the profit/loss of the Group for the year
then ended; and

• The Directors’ Report contained in the Annual Report and Financial Statements includes a fair review of the development
and performance of the business and the position of the Group and Company, together with a description of the principal
risks and uncertainties that they face.

As required by the 2016 UK Corporate Governance Code:

• The Annual Report and Financial Statements, taken as a whole, is fair balanced and understandable and provides the

information necessary for shareholders to assess the Company’s position and performance, business model and strategy.

On behalf of the Board

Gary Kennedy
Chairman
Dublin
25 November 2019

Eoin Tonge
Director

Annual Report and Financial Statements 2019

101

Directors’ Report

Independent Auditor’s Report
to the members of Greencore Group plc

Report on the audit of the financial statements
Opinion on the financial statements of Greencore Group plc (the ‘Company’)
In our opinion the Group and Company financial statements:

• give a true and fair view of the assets, liabilities and financial position of the Group and Company as at 27 September 2019

and of the profit of the Group for the financial year then ended; and

• have been properly prepared in accordance with the relevant financial reporting frameworks, and in particular, with the
requirements of the Companies Act 2014 and, as regards the Group Financial Statements, Article 4 of the IAS Regulation.

The financial statements we have audited comprise:

The Group financial statements:

• the Group income statement;
• the Group statement of comprehensive income;
• the Group statement of financial position;
• the Group statement of cash flows;
• the Group statement of changes in equity; and
• and the related Notes 1 to 37, including a summary of significant accounting policies as set out in Note 1.

The Company financial statements:

• the Company statement of financial position;
• the Company statement of changes in equity; and
• and the related Notes 1 to 12, including a summary of significant accounting policies as set out in Note 1.

The relevant financial reporting framework that has been applied in the preparation of the Group financial statements is the
Companies Act 2014 and International Financial Reporting Standards (IFRS) as adopted by the European Union and interpretations
as approved by the International Accounting Standards Board (IASB) (“the relevant financial reporting framework”).

The relevant reporting framework that has been applied in the preparation of the Company financial statements is the
Companies Act 2014 and FRS 101 “Reduced Disclosure Framework” issued by the Financial Reporting Council (“the relevant
financial reporting framework”).

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law.
Our responsibilities under those standards are described below in the “Auditor’s responsibilities for the audit of the financial
statements” section of our report.

We are independent of the Group and the Company in accordance with the ethical requirements that are relevant to our audit
of the financial statements in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory
Authority (IAASA), as applied to public interest entities, and we have fulfilled our other ethical responsibilities in accordance
with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

102 Greencore Group plc

Summary of our audit approach

First Year Audit
Transition and
Key Audit
Matters

This is the first year we have been appointed as auditors to the Group. We undertook a number of
transitional procedures to prepare for the audit. Before we commenced our audit we had to establish
our independence of the Group which involved ceasing a commercial relationship. We used the time
prior to commencing our audit to meet with key members of management to gain an understanding
of the business, its challenges and the environment in which it operates.

The key audit matters that we identified in the current year were:
• Impairment of goodwill;
• Revenue recognition (Transition to IFRS 15);
• Exceptional items;
• Acquisition accounting

Materiality

Key audit matters considered by the Group’s auditor in the prior year were broadly aligned with the
items identified above, but also included consideration of disposal group held for sale and discontinued
operations and post retirement benefit obligations, which are less significant in the current year.

The materiality for the Group that we used in the current year was £3.5m which was determined on
the benchmark of profit before taxation from continuing operations and before exceptional items
representing 4% of the benchmark. In 2018, the predecessor auditor determined materiality at £3m,
on the basis of 3% of the Group’s profit before taxation excluding the impact of the exceptional costs.

The materiality for the Company that we used in the current year was £1.75m which was determined on
the benchmark of net assets representing 0.35% of this benchmark. In 2018, the predecessor auditor
determined materiality at £1.7m, on the basis of 0.11% of the Company’s total assets.

Scoping

We determined the scope of our Group audit by obtaining an understanding of the Group and its
environment and assessing the risks of material misstatement at the Group level.

Our audit scoping provides full scope audit coverage of 96% of revenue, 96% of profit before taxation
and exceptionals and 88% of total assets.

In 2018, audits for Group reporting purposes were performed based on identified key reporting
components. The predecessor auditors scoping for group reporting purposes was 87% of revenue,
90% of profit before taxation and exceptionals and 95% of total assets.

Conclusions relating to principal risks, going concern and viability statement
We have nothing to report in respect of the following information in the annual report, in relation to which ISAs (Ireland) require
us to report to you whether we have anything material to report, add or draw attention to:

• The Directors confirmation in the annual report on pages 60 to 61 that they have carried out a robust assessment of the

principal risks facing the Group and the Company, including those that would threaten its business model, future performance,
solvency or liquidity;

• The disclosure on pages 38 to 43 in the annual report that describes those principal risks and explain how they are being

managed or mitigated;

• the Directors’ statement on page 49 in the annual report and page 117 in the financial statements about whether the Directors

consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements and the Directors’
identification of any material uncertainties to the Group’s and the Company’s ability to continue to do so over a period of
at least twelve months from the date of approval of the financial statements;

• whether the Directors’ statement relating to going concern required under the Listing Rules in accordance Listing Rule

9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit; or

• the Directors’ explanation on page 49 in the annual report as to how they have assessed the prospects of the Group and

Company, over what period they have done so and why they consider that period to be appropriate, and their statement as
to whether they have a reasonable expectation that the Group and Company will be able to continue in operation and meet
its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any
necessary qualifications or assumptions.

Annual Report and Financial Statements 2019

103

Financial StatementsIndependent Auditor’s Report continued
to the Members of Greencore Group plc

Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current financial year and include the most significant assessed risks of material misstatement (whether
or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.

Impairment of goodwill

Key audit matter
description

As described in Note 1 (Critical Accounting Estimates and Judgements) and Note 14 (goodwill and intangible
assets), the Group held £448.4m (2018: £409.7m) of Goodwill at 27 September 2019 which represents 39%
of the Group’s total assets. Director’s judgement is required in identifying indicators of impairment and
estimation is required in determining the recoverable amount of the Group’s cash generating units (CGU).
There is a risk that incorrect inputs or inappropriate assumptions and estimates could be included in the
Group’s impairment assessment model leading to an impairment charge that has not been included in the
Group’s financial statements. This risk relates to the two CGU’s of the Group.

When a review for impairment is carried out, the recoverable amount of each CGU is compared to
its carrying value. The recoverable amount is determined based on value in use calculations which rely
on Director’s assumptions and estimates of future trading performance.

The key assumptions utilised by the Director’s in the impairment reviews are discount rates and
growth rates.

How the scope
of our audit
responded to the
key audit matter

The Audit Committee’s discussion of this key audit matter is set out on page 94.

We, in conjunction with our valuation specialists, evaluated the methodology applied by Director’s in
preparing the value in use calculations and the judgements applied in determining the CGUs.

We evaluated the design and determined the implementation of the relevant controls in place over
Director’s impairment review process.

We challenged cash flow projections by comparing them to historic rates and Group strategic plans.
We challenged the Group’s forecasts with reference to recent performance, economic and industry
forecasts and trend analysis including historic growth rates and market available information.

We assessed the reasonableness of related assumptions used in determining terminal values.
We developed an independent view of the key assumptions used in the model, in particular, the Group
discount rate and growth rate, and benchmarked the rates used by Directors against market data and
comparable organisations.

We evaluated Director’s sensitivity analysis and performed our own sensitivity analysis on the
key assumptions used.

We evaluated the completeness and accuracy of the disclosures in relation to goodwill and whether
they meet the requirements of the relevant accounting standards.

Key observations We have no observations that impact on our audit in respect of the amounts and disclosures related

to the carrying value of goodwill.

104 Greencore Group plc

Revenue Recognition (Transition to IFRS 15)

Key audit matter
description

As described in Note 1 (accounting polices, new standards and interpretation) the Group adopted IFRS 15
‘Revenue from Contracts with Customers’ effective from 29 September 2018. Two key judgement areas
were identified arising from the transition to IFRS 15:

• Variable Consideration
• Principle v Agent

Many of the Group’s revenue contracts include an element of variable consideration, such as trade
discounts, namely in the form of rebate arrangements or other incentives to customers. Director’s
assessment of rebates and their application under IFRS 15 required an element of judgement to ensure
revenue was recorded on an appropriate basis.

In transitioning to IFRS 15, the Group assessed how revenue from the sale of third party manufactured
goods are accounted for and whether it was more appropriate to account for revenue on an agency or
net basis, versus principal or gross basis. The majority of the Group’s contracts for the sale of third party
manufactured goods are accounted for on a gross basis. The application of the standard is reliant upon
a number of key estimates primarily on the interpretation of control of goods.

How the scope
of our audit
responded to the
key audit matter

The Audit Committee discussion of this key audit matter is set out on page 93.

We obtained and documented our understanding of the process Director’s undertook to identify the
impacts of the new standard and to develop the accounting policy papers including the consideration
of key judgments as outlined above.

We evaluated the design and determined the implementation of the relevant controls in place over
the review of revenue contracts and the identification of selling arrangements which contain variable
consideration within the Group.

We obtained an understanding of and reviewed the various selling contracts and arrangements in
place across the Group to challenge the appropriate identification of variable consideration and related
recognition.

We challenged the key judgements in assessing when control passed to customers to determine whether
the company was the agent or principal to ensure revenue was recorded in line with the requirements
of IFRS 15. Where appropriate, we reviewed the detailed assessment against the contracted arrangements
and the underlying requirements of the accounting standard.

We evaluated the completeness and accuracy of the disclosures in relation to the transition to IFRS 15
and whether they were appropriate and meet the requirements of the relevant accounting standard.

Key observations We have no observations that impact on our audit in respect of the amounts and disclosures related to

revenue recognised as it relates to the adoption of IFRS 15.

Annual Report and Financial Statements 2019

105

Financial StatementsIndependent Auditor’s Report continued
to the Members of Greencore Group plc

Exceptional Items

Key audit matter
description

As described in Note 1 (accounting polices, judgement and estimates) and Note 7 (exceptional items)
the Group classified a gain of £25.9m (2018: loss £51.7m) as an exceptional item (comprising of a loss on
continuing operations of £30m and a gain on discontinued operations of £55.9m). The gain resulted from
the disposal of the US business.

The Group has identified and presented a significant amount of items as exceptional in the financial year
ended 27 September 2019 in accordance with its stated accounting policy. The classification of items as
exceptional affects adjusted earnings per share and is inherently judgemental. As a result there is a risk
that items are not consistently classified as exceptional items in line with the stated accounting policy.

How the scope
of our audit
responded to the
key audit matter

The Audit Committee’s discussion of this key audit matter is set out on page 94.

We obtained and documented our understanding of the process Directors undertook to identify and
present exceptional items and testing the design and determined the implementation of the relevant
controls therein.

We challenged the classification of transactions as exceptional items in accordance with the Group and
Company’s accounting policy, whilst also, challenging whether the accounting policy for exceptional items
is appropriate and is consistent with previous periods.

We evaluated the completeness and accuracy of disclosures in the Group’s financial statements for
the financial year ended 27 September 2019 against requirements under IFRS and Irish Company Law.
Our work focused on items of income or expense that could impact the quality of earnings.

Key observations We have no observations that impact on our audit in respect of the amounts and disclosures related

to exceptional items.

Acquisitions accounting

Key audit matter
description

As described in Note 1 (accounting polices, judgement and estimates) and Note 9 (acquisition of
undertakings), the Group completed the acquisition of Freshtime (UK) Limited on the 3 of September
2019 for consideration of £56.2m. The transaction has been accounted for in line with IFRS 3 “Business
Combinations” and resulted in customer related intangibles of £17.5m and goodwill of £38.7m.

How the scope
of our audit
responded to the
key audit matter

This acquisition included intangible assets and goodwill. Intangible assets recognised by the Group
include customer relationships. Valuing these intangible assets is a subjective process requiring a high
level of estimation and judgement by the Directors. Therefore, we have identified a key audit matter
in relation to the completeness and valuation of separately identifiable intangible assets recognised
upon acquisition.

The Audit Committee’s discussion of this key audit matter is set out on page 94.

In order to address this key audit matter we have completed audit procedures including:

• assessed the design and determined the implementation of key relevant controls which relate

to the completeness and valuation of the identifiable intangible assets;

• engaging our valuation specialist to assist the audit team in assessing the completeness and

challenging key valuation assumptions such as the discount rate;

• challenging Director’s key assumptions regarding the useful life of the contracts and the resulting

amortisation period;

• evaluated the completeness and accuracy of the disclosures in relation to the acquisition and whether

they were appropriate and meet the requirements of the relevant accounting standards; and

• assessed whether the accounting treatment was in line with IFRS 3.

Key observations We have no observations that impact on our audit in respect of the amounts and disclosures related

to the acquisition of Freshtime (UK) Limited.

Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole,
and not to express an opinion on individual accounts or disclosures. Our opinion on the financial statements is not modified
with respect to any of the risks described above, and we do not express an opinion on these individual matters.

106 Greencore Group plc

Our application of materiality
We define materiality as the magnitude of misstatement that makes it probable that the economic decisions of a reasonably
knowledgeable person, relying on the financial statements, would be changed or influenced. We use materiality both in planning
the scope of our audit work and in evaluating the results of our work.

The materiality for the Group that we used in the current year was £3.5m which was determined on the benchmark of profit
before taxation from continuing operations and before exceptional items representing 4.0% of the benchmark. We have
considered the profit before taxation from continuing operations and before exceptional items to be the appropriate benchmark
for determining materiality because it is the most important measure for users of the Group’s financial statements. In 2018, the
predecessor auditor determined materiality at £3m, on the basis of 3% of the Group’s profit before taxation excluding the impact
of the exceptional costs.

Profit before taxation
and exceptional items
£86.6m

95%

Materiality
£3.5m

Audit Committee
reporting threshold
£0.175m

The materiality for the Company that we used in the current year was £1.75m which was determined on the benchmark of
net assets representing 0.35% of the benchmark. As a non trading company it does not generate significant revenues but instead
incurs costs. Net Assets are of most relevance to users of the financial statements.

In 2018, the predecessor auditor determined materiality at £1.7m, on the basis of 0.11% of the Company’s total assets.

We agreed with the Audit Committee that we would report to them all audit differences in excess of £0.175m as well as
differences below this threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit
Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.

An overview of the scope of our audit
We determined the scope of our Group audit by obtaining an understanding of the Group and it’s environment, including Group-
wide controls, and assessing the risks of material misstatement at the Group level. Based on that assessment, we focused our
Group audit scope primarily on the audit of 28 components which were subject to a full audit and 4 components were subject
to specified audit procedures where the extent of our testing was based on our assessment of the associated risks of material
misstatement and of the materiality of the components operations to the Group. In 2018, the predecessor auditor subjected 19
components to a full audit and 7 components were subject to specified audit procedures. Discontinued operations in the form
of the US disposal were subject to specified procedures.

These components were selected based on the level of coverage achieved and to provide an appropriate basis for undertaking
audit work to address the risks of material misstatement identified above. Our audit work for all components was executed at
levels of materiality applicable to each individual unit which were lower than Group materiality and ranged from £1.050m to £2.4m.

At the Group level, we also tested the consolidation process and carried out analytical procedures to confirm our conclusion
that there were no significant risks of material misstatement of the aggregated financial information of the remaining components
not subject to a full audit.

Annual Report and Financial Statements 2019

107

Financial StatementsIndependent Auditor’s Report continued
to the Members of Greencore Group plc

External Revenue, Net Assets and Profit before Tax % Tested

Revenue

96%

Full audit
Specified
account balance
Other analytic
procedures

Net assets

12%

Full audit
Specified
account balance
Other analytic
procedures

88%

Profit before tax

96%

Full audit
Specified
account balance
Other analytic
procedures

Full audit
Specified Audit Balances
Analytical Procedures

Revenue

Net Assets

Profit before Tax

96%
0%
4%

88%
0%
12%

96%
3%
1%

The Group audit team attended planning meetings at a number of significant component locations, including Ireland
and the UK, during the year and participated in audit meetings with other significant components and a number of non
significant components.

In addition to our planning meetings, we sent detailed instructions to our component audit teams, included them in our
team briefings, discussed their risk assessment, attended client planning and closing meetings, and reviewed their audit
working papers.

Other information
The Directors are responsible for the other information. The other information comprises the information included in the annual
report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether there is a material misstatement in the financial statements
or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

In this context, we also have nothing to report with regard to our responsibility to specifically address the following items in the
other information and to report as uncorrected material misstatements of the other information where we conclude that those
items meet the following conditions:

• Fair, balanced and understandable – the statement given by the Directors that they consider the annual report and financial
statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders
to assess the Group’s and the Company’s performance, business model and strategy, is materially inconsistent with our
knowledge obtained in the audit; or

• Audit committee reporting – the section describing the work of the audit committee does not appropriately address matters

communicated by us to the audit committee; or

• Directors’ statement of compliance with the 2018 UK Corporate Governance Code – the parts of the Directors’ statement

required under the Listing Rules relating to the Company’s compliance with the 2018 UK Corporate Governance Code
containing provisions specified for review by the auditor in accordance with Listing Rule 9.8.10R (2) do not properly disclose
a departure from a relevant provision of the 2018 UK Corporate Governance Code.

108 Greencore Group plc

Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view and otherwise comply with the Companies Act
2014, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.

As part of an audit in accordance with ISAs (Ireland), we exercise professional judgment and maintain professional scepticism
throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and Company’s
internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related

disclosures made by the Directors.

• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit

evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s and Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of the
auditor’s report. However, future events or conditions may cause the entity (or where relevant, the Group) to cease to continue
as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether

the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the business activities within the Group

to express an opinion on the consolidated financial statements. The Group auditor is responsible for the direction, supervision
and performance of the Group audit. The Group auditor remains solely responsible for the audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that the auditor identifies during
the audit.

For listed entities and public interest entities, the auditor also provides those charged with governance with a statement that
the auditor has complied with relevant ethical requirements regarding independence, including the Ethical Standard for Auditors
(Ireland) 2016, and communicates with them all relationships and other matters that may be reasonably be thought to bear on the
auditor’s independence, and where applicable, related safeguards.

Where the auditor is required to report on key audit matters, from the matters communicated with those charged with
governance, the auditor determines those matters that were of most significance in the audit of the financial statements of the
current period and are therefore the key audit matters. The auditor describes these matters in the auditor’s report unless law
or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, the auditor determines that
a matter should not be communicated in the auditor’s report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.

This report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act 2014.
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.

Annual Report and Financial Statements 2019

109

Financial StatementsIndependent Auditor’s Report continued
to the Members of Greencore Group plc

Report on other legal and regulatory requirements
Opinion on other matters prescribed by the Companies Act 2014

Based solely on the work undertaken in the course of the audit, we report that:

• We have obtained all the information and explanations which we consider necessary for the purposes of our audit.
• In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily

and properly audited.

• The Company statement of financial position is in agreement with the accounting records.
• In our opinion the information given in those parts of the Directors’ report as specified for our review is consistent

with the financial statements and has been prepared in accordance with the Companies Act 2014.

Corporate Governance Statement
We report, in relation to information given in the Corporate Governance Statement on pages 52 to 61 that:

• In our opinion, based on the work undertaken during the course of the audit, the information given in the Corporate

Governance Statement pursuant to subsections 2(c) and (d) of section 1373 of the Companies Act 2014 is consistent with the
Company’s statutory financial statements in respect of the financial year concerned and such information has been prepared
in accordance with the Companies Act 2014. Based on our knowledge and understanding of the Company and its environment
obtained in the course of the audit, we have not identified any material misstatements in this information.

• In our opinion, based on the work undertaken during the course of the audit, the Corporate Governance Statement contains
the information required by Regulation 6(2) of the European Union (Disclosure of Non-Financial and Diversity Information
by certain large undertakings and groups) Regulations 2017 (as amended); and

• In our opinion, based on the work undertaken during the course of the audit, the information required pursuant to section

1373(2)(a),(b),(e) and (f) of the Companies Act 2014 is contained in the Corporate Governance Statement.

Matters on which we are required to report by exception
Based on the knowledge and understanding of the Group and the Company and its environment obtained in the course of
the audit, we have not identified material misstatements in those parts of the Directors’ report that have been specified for
our review.

The Companies Act 2014 also requires us to report to you if, in our opinion, the Company has not provided the information
required by Regulation 5(2) to 5(7) of the European Union (Disclosure of Non-Financial and Diversity Information by certain large
undertakings and Groups) Regulations 2017 (as amended) for the financial year ended 27 September 2019. We have nothing
to report in this regard.

We have nothing to report in respect of the provisions in the Companies Act 2014 which require us to report to you if, in our
opinion, the disclosures of Directors’ remuneration and transactions specified by law are not made.

Other matters, which we are required to address
Greencore Group plc appointed us on 29 January 2019 to audit the financial statements for the financial year ended
27 September 2019 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals
and reappointments of the firm is one financial year, covering the financial year ending 27 September 2019.

The non-audit services prohibited by IAASA’s Ethical Standard were not provided and we remained independent of the Company
in conducting the audit.

Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance
with ISA (Ireland) 260.

James Schmidt
For and on behalf of Deloitte Ireland LLP
Chartered Accountants and Statutory Audit Firm
Dublin, Ireland

25 November 2019

110 Greencore Group plc

Group Income Statement
year ended 27 September 2019

Continuing operations
Revenue
Cost of sales

Gross profit
Operating costs, net

Group Operating Profit before acquisition
related amortisation
Amortisation of acquisition related intangibles

Group Operating Profit
Finance income
Finance costs
Share of profit of associates after tax

Profit before taxation
Taxation

Profit for the period from continuing operations

Discontinued operations
Result from discontinued operations

Profit for the financial year

Attributable to:
Equity shareholders
Non-controlling interests

Earnings per share (pence) – continuing operations
Basic earnings per share
Diluted earnings per share

Earnings per share (pence) – total
Basic earnings per share
Diluted earnings per share

2019

2018

Pre-
exceptional
£m

Exceptional
(Note 7)
£m

Notes

Total
£m

Pre-
exceptional
£m

Exceptional
(Note 7)
£m

Total
£m

8
8
10

12
12

1,446.1
(972.4)

473.7
(368.2)

105.5
(0.9)

104.6
0.8
(19.7)
0.9

86.6
(13.2)

73.4

8.9

82.3

80.1
2.2

82.3

–
–

–
(4.8)

(4.8)
–

(4.8)
–
(25.4)
–

(30.2)
0.2

(30.0)

55.9

25.9

25.9
–

25.9

1,446.1
(972.4)

473.7
(373.0)

1,498.5
(1,023.0)

475.5
(370.9)

104.6
(2.6)

102.0
0.2
(33.1)
0.9

70.0
(13.0)

57.0

31.2

88.2

85.5
2.7

88.2

100.7
(0.9)

99.8
0.8
(45.1)
0.9

56.4
(13.0)

43.4

64.8

108.2

106.0
2.2

108.2

7.7
7.7

19.9
19.9

–
–

1,498.5
(1,023.0)

–
(52.2)

(52.2)
–

(52.2)
–
–
–

(52.2)
7.8

(44.4)

(7.3)

(51.7)

(51.7)
–

(51.7)

475.5
(423.1)

52.4
(2.6)

49.8
0.2
(33.1)
0.9

17.8
(5.2)

12.6

23.9

36.5

33.8
2.7

36.5

1.4
1.4

4.8
4.8

Annual Report and Financial Statements 2019

111

Financial StatementsGroup Statement of Comprehensive Income
year ended 27 September 2019

Items of comprehensive income taken directly to equity for continuing
and discontinued operations

Items that will not be reclassified to profit or loss:
Actuarial (loss)/gain on Group legacy defined benefit pension schemes
Tax credit/(charge) on Group legacy defined benefit pension schemes

Items that may subsequently be reclassified to profit or loss:
Currency translation adjustment
Translation reserve transferred to Income Statement on discontinued operations
Hedge of net investment in foreign currency subsidiaries
Net investment hedge transferred to Income Statement for the year
Cash flow hedges:

fair value movement taken to equity
transfer to Income Statement for the year

Net (expense)/ income recognised directly within equity
Profit for the financial year

Total comprehensive income for the financial year

Attributable to:
Equity shareholders
Non-controlling interests

Total comprehensive income for the financial year

Attributable to:
Continuing operations
Discontinued operations

Total comprehensive income for the financial year

Notes

2019
£m

2018
£m

5
11

(13.3)
2.9

(10.4)

10.3
(24.5)
–
22.3

0.2
0.3

8.6

(1.8)
108.2

106.4

104.2
2.2

106.4

49.8
56.6

106.4

24.3
(4.5)

19.8

15.4
–
(10.6)
–

4.1
5.9

14.8

34.6
36.5

71.1

68.4
2.7

71.1

27.4
43.7

71.1

112 Greencore Group plc

Group Statement of Financial Position
at 27 September 2019

ASSETS
Non-current assets
Goodwill and intangible assets
Property, plant and equipment
Investment property
Investment in associates
Retirement benefit assets
Derivative financial instruments
Deferred tax assets

Total non-current assets

Current assets
Inventories
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Current tax receivable
Assets held for sale

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
Deferred tax liabilities

Total non-current liabilities

Current liabilities
Borrowings
Derivative financial instruments
Trade and other payables
Provisions
Current tax payable
Liabilities directly associated with assets held for sale

Total current liabilities

Total liabilities

Total equity and liabilities

Gary Kennedy
Director

Eoin Tonge
Director

Notes

2019
£m

2018
£m

14
15
16
10
26
23
11

17
18
23
20

21
23
26
19
25
11

21
23
19
25

483.3
332.5
5.8
1.2
36.4
5.5
37.1

901.8

45.9
173.8
–
41.6
0.7
–

425.3
323.0
6.3
1.3
15.3
0.5
41.7

813.4

39.1
181.0
0.3
37.0
–
944.7

262.0

1,202.1

1,163.8

2,015.5

4.5
0.1
294.8

299.4
6.4

305.8

330.1
3.3
128.4
3.7
6.7
6.9

479.1

–
0.3
358.4
5.5
14.7
–

378.9

858.0

7.1
650.8
79.3

737.2
6.4

743.6

537.9
13.4
104.6
3.7
8.9
4.2

672.7

0.2
0.1
377.9
6.7
11.3
203.0

599.2

1,271.9

1,163.8

2,015.5

Annual Report and Financial Statements 2019

113

Financial Statements

Group Statement of Cash Flows
year ended 27 September 2019

Profit before taxation
Finance income
Finance costs
Share of profit of associates (after tax)
Exceptional items

Continuing Operating Profit (pre-exceptional)
Discontinued Operating Profit (pre-exceptional)

Operating Profit (pre-exceptional)
Depreciation of property, plant and equipment
Amortisation of intangible assets
Employee share-based payment expense
Contributions to legacy defined benefit pension scheme
Working capital movement
Other movements

Net cash inflow from operating activities (pre-exceptional)
Cash outflow related to exceptional items
Interest paid
Tax paid

Net cash inflow from operating activities

Cash flow from investing activities
Dividends received from associates
Purchase of property, plant and equipment
Purchase of intangible assets
Acquisition of undertakings
Disposal of undertakings
Disposal of investment property

Net cash inflow/(outflow) from investing activities

Cash flow from financing activities
Proceeds from issue of shares
Ordinary shares purchased – own shares
Capital return via tender offer
Drawdown of bank borrowings
Repayment of bank borrowings
Repayment of non-bank borrowings
Repayment of private placement notes
Termination of swaps
Decrease in finance lease liabilities
Dividends paid to equity holders of the Company
Dividends paid to non-controlling interests

Net cash outflow from financing activities

Net increase in cash and cash equivalents

Reconciliation of opening to closing cash and cash equivalents
Cash and cash equivalents at beginning of year
Translation adjustment
Increase in cash and cash equivalents

Cash and cash equivalents at end of year

114 Greencore Group plc

Notes

8
8
10
7

15
14

26
29

9
33
16

12
22
22
22
22

20
22
22

2019
£m

56.4
(0.8)
19.7
(0.9)
30.2

104.6
9.1

113.7
32.9
4.5
3.6
(16.0)
(22.8)
0.8

116.7
(9.6)
(16.9)
(3.5)

86.7

1.0
(39.6)
(4.6)
(56.2)
811.9
0.5

713.0

0.1
(0.6)
(509.0)
67.0
(210.0)
(63.1)
(14.6)
(12.6)
(0.4)
(50.3)
(2.2)

(795.7)

4.0

37.0
0.6
4.0

41.6

2018
£m

17.8
(0.2)
33.1
(0.9)
52.2

102.0
30.4

132.4
47.3
25.3
1.6
(15.1)
(15.9)
(3.2)

172.4
(15.0)
(26.7)
(0.9)

129.8

0.8
(60.5)
(3.0)
–
–
–

(62.7)

0.2
(2.0)
–
–
(9.6)
(1.3)
–
–
–
(35.7)
(1.5)

(49.9)

17.2

19.8
–
17.2

37.0

Group Statement of Changes in Equity
year ended 27 September 2019

Share
capital
£m

Share
premium
£m

Other
reserves
£m

Retained
earnings
£m

At 28 September 2018

IFRS 9 transition adjustment

At 28 September 2018
Items of income and expense taken directly to equity
Currency translation adjustment
Translation reserve transferred to income statement
on discontinued operations
Net investment hedge transferred to income statement
Actuarial loss on Group legacy defined benefit
pension schemes
Tax charge on Group legacy defined benefit
pension schemes
Cash flow hedge fair value movement taken to equity
Cash flow hedge transferred to Income Statement
Profit for the financial year

Total recognised income and expense for the
financial year

Employee share-based payments expense
Tax on share-based payments
Exercise, lapse or forfeit of share-based payments
Shares acquired by Employee Benefit Trust (A)
Transfer to retained earnings on grant of shares
to beneficiaries of the Employee Benefit Trust (B)
Share capital reduction (C)
Capital return via tender offer (D)
Dividends

At 27 September 2019

7.1

–

7.1

–

–
–

–

–
–
–
–

–

–
–
–
–

–

(2.6)
–

4.5

650.8

105.1

–

650.8

105.1

–

–
–

–

–
–
–
–

–

–
–
0.1
–

–
(650.8)
–
–

10.3

(24.5)
22.3

–
0.2
0.3
–

8.6

3.6
–
(3.0)
(0.9)

0.8
–
2.6
–

Total
£m

737.2

(0.9)

736.3

10.3

(24.5)
22.3

(25.8)

(0.9)

(26.7)

–

–
–

–

(13.3)

2.9
–
–
106.0

2.9
0.2
0.3
106.0

Non-
controlling
interests
£m

6.4

–

6.4

–

–
–

–

–
–
–
2.2

Total
equity
£m

743.6

(0.9)

742.7

10.3

(24.5)
22.3

(13.3)

2.9
0.2
0.3
108.2

95.6

104.2

2.2

106.4

–
0.3
2.3
0.3

3.6
0.3
(0.6)
(0.6)

(0.8)
650.8
(509.0)
(34.8)

–
–
(509.0)
(34.8)

–
–
–
–

–
–
–
(2.2)

6.4

3.6
0.3
(0.6)
(0.6)

–
–
(509.0)
(37.0)

305.8

At 29 September 2017
Items of income and expense taken directly to equity
Currency translation adjustment
Net investment hedge
Actuarial gain on Group legacy defined benefit
pension schemes
Tax charge on Group legacy defined benefit
pension schemes
Cash flow hedge fair value movement taken to equity
Cash flow hedge transferred to Income Statement
Profit for the financial year

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)
Transfer to retained earnings on grant of shares to
beneficiaries of the Employee Benefit Trust (B)
Dividends

0.1

116.8

178.0

299.4

Share
capital
£m

Share
premium
£m

Other
reserves
£m

Retained
earnings
£m

Non-
controlling
interests
£m

Total
£m

7.1

647.8

92.2

(41.5)

705.6

5.2

–
–

–

–
–
–
–

–

–
–
–

–
–

–

–
–
–
–

–

–
0.2
–

–
2.8

15.4
(10.6)

–
–

15.4
(10.6)

–

24.3

–
4.1
5.9
–

14.8

1.6
(4.0)
(2.2)

2.7
–

(4.5)
–
–
33.8

53.6

–
4.0
0.2

(2.7)
(39.4)

(25.8)

(4.5)
4.1
5.9
33.8

68.4

1.6
0.2
(2.0)

–
(36.6)

737.2

–
–

–

–
–
–
2.7

2.7

–
–
–

–
(1.5)

6.4

Total
equity
£m

710.8

15.4
(10.6)

24.3

(4.5)
4.1
5.9
36.5

71.1

1.6
0.2
(2.0)

–
(38.1)

743.6

At 28 September 2018

7.1

650.8

105.1

Annual Report and Financial Statements 2019

115

Financial StatementsGroup Statement of Changes in Equity continued
year ended 27 September 2019

Other Reserves

Total recognised income and expense for the financial year

Employee share-based payments expense
Exercise, lapse or forfeit of share options
Shares acquired by Employee Benefit Trust (A)
Transfer to retained earnings on grant of shares to
beneficiaries of the Employee Benefit Trust (B)
Capital return via tender offer (D)

At 27 September 2019

At 29 September 2017
Items of income and expense taken directly to equity
Currency translation adjustment
Net investment hedge
Cash flow hedge fair value movement taken to equity
Cash flow hedge transferred to Income Statement

Total recognised income and expense for the financial year

At 28 September 2018

Share
schemes(E)

£m

4.2

Own
shares(F)
£m

Undenominated
capital
reserve(G)
£m

(8.1)

117.8

Foreign
currency
translation

reserve(I)

£m

(7.3)

Hedging
reserve(H)

£m

(1.5)

Total
£m

105.1

–

–
–
–
–

–

3.6
(3.0)
–

–
–

4.8

–

–
–
–
–

–

–
–
(0.9)

0.8
–

(8.2)

Share
schemes(E)

£m

6.6

Own
shares(F)
£m

(8.6)

–
–
–
–

–

1.6
(4.0)
–

–

4.2

–
–
–
–

–

–
–
(2.2)

2.7

(8.1)

–

–
–
–
–

–

–
–
–

–
2.6

–

10.3

–
–
0.2
0.3

0.5

–
–
–

–
–

(24.5)
22.3
–
–

8.1

–
–
–

–
–

(24.5)
22.3
0.2
0.3

8.6

3.6
(3.0)
(0.9)

0.8
2.6

120.4

(1.0)

0.8

116.8

Undenominated
capital
reserve(G)

Hedging
reserve(H)

£m

117.8

–
–
–
–

–

–
–
–

–

£m

(11.5)

–
–
4.1
5.9

10.0

–
–
–

–

Foreign
currency
translation

reserve(I)

£m

(12.1)

15.4
(10.6)
–
–

4.8

–
–
–

–

117.8

(1.5)

(7.3)

Total
£m

92.2

15.4
(10.6)
4.1
5.9

14.8

1.6
(4.0)
(2.2)

2.7

105.1

(A) Pursuant to the terms of the Employee Benefit Trust 318,247 (2018: 984,678) shares were purchased during the financial year ended 27 September 2019 at a cost

of £0.6m (2018: £2.0m). The nominal value of these shares, on which dividends have not been waived by the Employee Benefit Trust was £0.003m (2018: £0.01m)
at the date of purchase. The Employee Benefit Trust acquired 104,620 (2018: 56,858) shares in the Group with a combined value of £0.3m (2018: £0.2m) and
a nominal value at the date of purchase of £0.001m (2018: £0.0006m) through the utilisation of dividend income.

(B) During the year 412,717 (2018: 1,248,039) shares with a nominal value at the date of transfer of £0.004m (2018: £0.01m) at a cost of £0.8m (2018: £2.7m) were

transferred to beneficiaries of the Annual Bonus Plan, and the Performance Share Plan and the Executive Share Option Scheme.

(C) In November 2018, the High Court approved a capital reduction for the amount equal to the Share Premium of the Company of £650.8m which has been

recycled to retained earnings.

(D) The Group returned £509.0m to shareholders by way of a tender offer, executed on 31 January 2019. The Group acquired 261,025,641 Ordinary Shares in the
Company on the London Stock Exchange, at the tender offer Price of £1.95 per Ordinary Share and the shares were subsequently cancelled. The Ordinary
Shares acquired represented approximately 36.92% of the voting rights attributable to the Ordinary Shares immediately prior to acquisition. The total Ordinary
Shares in issue at 27 September 2019 was 446,006,581.

(E) The share-scheme payments reserve relates to equity settled share-based payments made to employees through the Performance Share Plan, the Annual
Bonus Plan, ShareSave Scheme and the Executive Share Option Scheme. Further information in relation to these share-based payments schemes is set out
in Note 6.

(F) The amount included as own shares relates to Ordinary Shares in Greencore Group plc which are held in trust. The shares held in trust are granted to

beneficiaries of the Group’s employee share award scheme when the relevant conditions of the scheme are satisfied.

(G) The undenominated capital reserve represents the nominal cost of cancelled shares and the amount transferred to reserves as a result of renominalising the

share capital of Greencore Group plc on conversion to the euro.

(H) The hedging reserve represents the effective portion of gains or losses on hedging instruments from the application of cash flow hedge accounting for which

the underlying hedged transaction is not impacting profit or loss. The cumulative deferred gain or loss on the hedging instrument is reclassified to profit or loss
only when the hedged transaction is no longer expected to occur.

(I) The currency reserve reflects the exchange difference arising from the translation of the net investments in foreign operations and on borrowings and other

currency instruments designated as hedges of such investments which are taken to equity. When a foreign operation is sold, exchange differences that are
recorded in equity are recognised in the Group Income Statement as part of the gain or loss on sale.

116 Greencore Group plc

Notes to the Group Financial Statements
year ended 27 September 2019

1. Group Statement of Accounting Policies
General information
Greencore Group plc (‘the Company’) together with its subsidiaries (‘the Group’) is a manufacturer of convenience foods in the UK.
The Company is publicly limited, incorporated and domiciled in the Republic of Ireland under registration number 170116 and the
Company Shares are publicly traded. The address of its registered office is 2 Northwood Avenue, Northwood Business Park, Santry,
Dublin 9, DO9 X5N9.

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 Act 2014, applicable to companies reporting under IFRS and Article 4
of the IAS Regulation.

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 periods commencing on or after 29 September 2018.

The accounting policies applied in the preparation of the Group Financial Statements for the year ended 27 September 2019
are set out below.

Going Concern
The directors, after making enquires have a reasonable expectation that the Group has adequate resources to continue
operating for the foreseeable future having consideration for all risks including Brexit. As part of these resources, the Group
had undrawn committed bank facilities of £175.0m as at 27 September 2019. For these reasons, they continue to adopt the going
concern basis in preparing the Group Financial Statements.

Basis of preparation
The Group Financial Statements, which are presented in sterling and rounded to the nearest million (unless otherwise stated),
have been prepared on a going concern basis under the historical cost convention, except where assets and liabilities are stated
at fair value in accordance with relevant accounting policies.

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 Group 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 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 2019. Comparatives are for the 52 week period ended
28 September 2018. The Statement of Financial Position for 2019 and 2018 have been prepared as at 27 September 2019 and
28 September 2018 respectively.

The profit attributable to equity shareholders in the Financial Statements of the Parent Company was £93.5m (2018: profit of £94.5m).

In accordance with section 304 of the Companies Act 2014, 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.

Following the disposal of Greencore’s US business in November 2018, the results of the business have been presented within
profit from discontinued operations in the Group Income Statement.

Critical Accounting Estimates and Judgements
The preparation of the Group Financial Statements in accordance with IFRS requires management to make certain estimates,
assumptions and judgements that affect the application of accounting policies and the reported amounts of assets, liabilities,
income and expenses. Estimates and underlying assumptions are reviewed on an ongoing basis. Changes in accounting estimates
may be necessary if there are changes in the circumstances on which the estimate was based or as a result of new information
or more experience. Such changes are recognised in the period in which the estimate is revised.

Critical Accounting Judgements
The critical accounting judgements exercised in applying the Group accounting policies are:

Accounting for exceptional items (Note 7)
The Group considers that items of income or expense which are material by virtue of their nature and amount should be
disclosed separately if the Group Financial Statements are to fairly present the financial position and financial performance
of the entity. The Group labels these items collectively as ‘exceptional items’.

Annual Report and Financial Statements 2019

117

Financial StatementsNotes to the Group Financial Statements continued
year ended 27 September 2019

1. Group Statement of Accounting Policies continued
Critical Accounting Estimates and Judgements continued
Critical Accounting Judgements continued
Accounting for exceptional items (Note 7) continued
Determining which transactions are to be considered exceptional in nature is often a subjective matter. However, circumstances
that the Group believes would give rise to exceptional items for separate disclosure are outlined in the exceptional accounting
policy on page 129. All exceptional items are included on the appropriate income statement line item to which they relate.
In addition, for clarity, separate disclosure is made of all items in one column on the face of the Group Income Statement.

Recognition of provisions for current and deferred tax; including deferred tax asset recognition (Note 11)
The Group considers that provisions for current and deferred taxes require significant judgement in areas where the treatment of
certain items may be the subject of debate with tax authorities. The Group provides for current and deferred taxes on the basis of
the most likely outcome, in the event of a tax authority audit. The Group is required to consider the range of possible outcomes for
a number of transactions/calculations across the jurisdictions where the Group is subject to income taxes and to provide for current
and deferred taxes accordingly. The Group considers this to be a significant judgemental area, due to increasing complexity and
a period of significant change in tax legislation worldwide.

Recognition of deferred tax assets requires consideration of the value of those assets and the likelihood that those assets
will be utilised in the foreseeable future. The recognition relies on the availability of sound and relatively detailed forecast
information regarding the future performance of the business which has the legal right to utilise the deferred tax assets. The
Group performed its assessment of the recovery of deferred tax assets at 27 September 2019, taking into account the Group’s
actual and historic performance, the impact of tax legislation enacted at the Financial Position date and the detailed financial
forecasts and budgets for the business covering the periods over which the assets are expected to be utilised. Following the
disposal of the US business, the Group recognises a deferred tax asset in respect of UK trading losses only. These losses arose
in years up to and including the period to September 2013, with the Group utilising losses in every year subsequent to that.
The losses have no expiry date and the Group expects to utilise them fully in the foreseeable future.

Assessment of carrying value of goodwill (Note 14)
Goodwill has been recognised in accounting for the acquisition of undertakings in a business combination. Management’s
judgement is required in testing the carrying value of goodwill for impairment when comparing the value in use of the cash
generating unit (‘CGU’) to the carrying value of the CGUs. The CGUs represent the lowest level within the Group at which the
associated goodwill is monitored for internal management purposes, and are not larger than the operating segments determined
in accordance with IFRS 8.

The value in use calculation is based on an estimate of future cash flows expected to arise from the CGUs and these are
discounted to net present value using an appropriate discount rate. The tests are dependent on management’s estimates and
judgements, in particular in relation to the forecasting of future cash flows, the discount rates applied to those cash flows, the
expected long term growth rate of the applicable businesses over a 30 year valuation period. Such estimates and judgements
are subject to change as a result of changing economic conditions. Details of the assumptions used are detailed in Note 14 to
the Group Financial Statements.

Provisions (Note 25)
The estimation of provisions is a key judgement area in the preparation of the Financial Statements due to the uncertainty
around the timing or amount for which the provision will be settled. As a result, there is a level of judgement required in the
recognition of provisions. A provision for closure or legal costs is required when the Group has a legal or constructive obligation
with regard to the exit of manufacturing of a Group facility or legacy legal claims. Judgement is required relating to the level
of provision required at the reporting date to satisfy the obligation.

Accounting for acquisitions and disposals (Note 9 and Note 33)
When acquiring a business, the Group is required to bring acquired assets and liabilities on to the Group Statement of Financial
Position at their fair value, the determination of which requires a significant degree of judgement.

Acquisitions may also result in intangible benefits being brought into the Group, some of which qualify for recognition as
intangible assets while other such benefits do not meet the recognition requirements of IFRS and therefore form part of
goodwill. Judgement is required in the assessment and valuation of these intangible assets. For intangible assets acquired,
the Group bases the valuation on expected future cash flows. This method employs a discounted cash flow analysis using the
present value of the estimated after tax cash flows expected to be generated from the purchased intangible assets using risk
adjusted discount rates, revenue forecasts and estimated customer attrition as appropriate. The period of expected cash flows
is based on the expected useful life of the intangible asset acquired.

When disposing of a business, the Group is required to apply IFRS 5: Non-current assets held for sale and discontinued
operations. There is judgement involved in whether the disposal group meets the reclassification criteria at the Financial Position
date. In addition, the Group is required to carry the disposal group at the lower of its carrying value and fair value less costs to
sell. Judgement is required to assess the fair value by considering expected disposal proceeds less any necessary adjustments
for debt, cash and working capital.

118 Greencore Group plc

Critical Accounting Estimates
The Group has identified Post-Retirement Benefits as a significant source of estimation uncertainty in the preparation of the Group.

Financial Statements. The estimation of, and accounting for, retirement benefit obligations involves assessments made in conjunction
with independent actuaries. These involve estimating the actuarial assumptions including mortality rates of members, increase in
pension payments and inflation linked to certain obligations and discount rates used in estimating the present value of the schemes
assets and liabilities. Details of the financial position of the Post-Retirement Benefit Schemes are set out in Note 26.

New Standards and Interpretation
The following new standards, interpretations and standard amendments became effective for the Group from 29 September 2018:

• IFRS 9 Financial Instruments
• IFRS 15 Revenue from Contracts with Customers

IFRS 9 Financial Instruments
IFRS 9 Financial Instruments was effective for the Group from 29 September 2018 and replaces IAS 39 Financial Instruments:
Recognition and Measurement. The new standard introduces new classification and measurement for financial assets, new rules
for hedge accounting and a new impairment model for financial assets. The Group has transitioned to the new standard using the
modified retrospective transition option and in accordance with the provisions of the new standard, comparative figures have not
been restated. The Group’s evaluation of the effect of IFRS 9 is outlined below.

The Group has assessed the business models and contractual cashflows which apply to its financial assets and liabilities and
classified them into the appropriate IFRS 9 categories. The classification under IFRS 9 did not impact the measurement or carrying
amount of financial assets on transition.

The new impairment model requires the recognition of impairment provisions based on expected credit losses rather than just
incurred credit losses. The standard provides a simplified approach as a practical expedient in assessing impairment of trade
receivables, which the Group has adopted on transition. The Group assessed its historic credit loss experience on aged trade
receivables adjusting for future economic conditions which resulted in a one-off adjustment of £0.9m, increasing the trade
receivables impairment provision through retained earnings on 29 September 2018.

The hedge accounting requirements in IFRS 9 are optional. The Group has chosen not to apply the new hedge accounting rules
under IFRS 9 and will continue to apply IAS 39. The decision has not impacted how the Group accounts for effective hedges.

IFRS 15 Revenue from Contracts with Customers
IFRS 15 Revenue from Contracts with Customers was effective for the Group for the reporting period commencing 29 September
2018. The Group adopted the new standard having completed a detailed review of its customer contracts and the new IFRS
15 revenue recognition requirements, resulting in a change to how the Group currently recognises revenue on third party
manufactured goods as set out below.

Under IFRS 15, an entity recognises revenue when or as a performance obligation is satisfied, i.e. when control of the goods or
services underlying the performance obligation is transferred to the customer. The Group’s revenue contracts typically include
one performance obligation (e.g. the manufacture of sandwiches) with the performance obligation satisfied at a point in time
when the control passes to the customer, which is deemed to be either when the goods are dispatched or received by the
customer, depending on the individual contract.

Many of the Group’s revenue contracts include an element of variable consideration, such as trade discounts, namely in the form
of rebate arrangements or other incentives to customers. The arrangements can take the form of volume rebates, marketing
fund contributions, promotional fund contributions or lump sum incentives. The Group recognises revenue net of such incentives
in the period in which the arrangement applies only when it is highly probable a significant reversal in the cumulative amount
of revenue will not occur. Volume based rebates are calculated on the Group’s estimate of rebates expected to be paid to
customers using the ‘most likely amount’ in line with IFRS 15 requirements, whereas fixed rebates are accounted for as a
reduction in revenue over the life of the contract.

In transitioning to IFRS 15, the Group assessed how revenue from the sale of third party manufactured goods is accounted
for and whether it was more appropriate to account for revenue on an agency or net basis, versus principal or gross basis.
The majority of the Group’s contracts for the sale of third party manufactured goods are accounted for on a gross basis.
On completion of the assessment, one customer contract in the Irish Ingredients business changed from a principal to agent
relationship, on the basis that the Group did not control the goods prior to transfer to the customer. The impact of the change
in accounting treatment in the current period is a reduction of £6.9m to reported revenue and costs of goods sold with no
impact on net profit. The Group has applied a modified approach on transition to IFRS 15 meaning there has been no restatement
to the prior year numbers included in the Group Income Statement.

In accordance with the requirements of IFRS 15, the Group has included additional disclosure on the disaggregation of revenue
by product category in Note 2.

Annual Report and Financial Statements 2019

119

Financial StatementsNotes to the Group Financial Statements continued
year ended 27 September 2019

1. Group Statement of Accounting Policies continued
Accounting standards not yet adopted
IFRS 16 Leases
IFRS 16 Leases sets out the principle for the recognition, measurement, presentation and disclosure of leases for both lessee
and lessor. It eliminates the classification of leases as either operating leases or finance leases and introduces a single lessee
accounting model where the lessee is required to recognise assets and liabilities for all material leases that have a term greater
than a year. The standard will primarily affect the accounting for the Group’s operating leases. The application of IFRS 16
will result in the recognition of additional assets and liabilities in the Group Statement of Financial Position and in the Group
Income Statement. It will replace the straight-line operating lease expense with a depreciation charge for the right-of-use asset
and an interest expense on the lease liabilities. Given that depreciation is charged on a straight-line basis, but interest reduces
over the life of a lease (as it is based on outstanding lease liabilities), the impact on the Group Income Statement will depend
on the maturity of the Group’s lease portfolio. In addition, the Group will no longer recognise provisions for operating leases
that it assesses to be onerous, instead the Group will perform impairment testing on the right-of-use asset.

IFRS 16 is effective for annual periods beginning on or after 1 January 2019. The Group will apply IFRS 16 from 28 September
2019 using the modified retrospective approach. Therefore, the cumulative effect of adopting IFRS 16 will be recognised as an
adjustment to the opening balance of retained earnings at 28 September 2019, with no restatement of comparative information.

The Group has entered into operating leases for a range of assets principally relating to property, plant and equipment
including vehicles and distribution fleet. The Group has elected to apply the recognition exemption for both short term and
low-value leases.

The Group will apply the practical expedient to grandfather the definition of a lease on transition. This means that it will apply
IFRS 16 to all contracts entered into before 28 September 2019 and identified as leases in accordance with IAS 17 and related
interpretations. On transition, the Group has also elected to measure the right-of-use assets for certain property leases as if the
new rules had always been applied. All other right-of-use assets will be measured at the amount of the lease liability on adoption.

As detailed in Note 30, the Group’s future non-cancellable operating lease commitments are £48.6m and the charge recognised
in the income statement for the year ended 27 September 2019 was £11.7m for the continuing business. These amounts provide
an indication of the scale of leases held by the Group but exclude the impact of discounting, assessment of the expected term
of leases, and exemptions for short term leases and low value leased assets.

The Group’s assessment of the impact of adopting IFRS 16 is at an advanced stage. The estimated impact on the Group’s results
are summarised below, however the actual adjustment on transition could differ from the estimated impact due to changes in
underlying assumptions or assessments of the expected term of lease.

Estimated adjustments on transition on 28 September 2019:

• Property, plant and equipment increase of £41m
• Net debt increase of £46m

Estimated impact on the results for the year ended 25 September 2020:

• Profit After Tax is marginal
• EBITDA increase of approximately £13m

IFRIC 23
IFRIC 23 Uncertainty over Income Tax Treatments (effective date: financial year beginning 28 September 2019): This IFRIC clarifies
the accounting for uncertainties in income taxes and is to be applied to the determination of taxable profit (or tax loss), tax bases,
unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12 Income
Taxes. The Group does not expect the adoption of this IFRIC to have a material impact on the Financial Statements.

Other changes to IFRS have been issued but are not yet effective for the Group. However, they are either not expected to
have a material effect on the Financial Statements or they are not currently relevant for the Group.

120 Greencore Group plc

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. The
Group controls an entity when it is exposed to, or has the rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity. All intra-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 Financial Position
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 Comprehensive Income reflects the Group’s share of any income and expense recognised
by the associate outside of profit or loss.

Revenue Recognition
The Group’s revenue is primarily derived from the manufacture of convenience food products and all revenue relates to revenue
from contracts with customers. The Group’s customer contracts typically include one performance obligation, with revenue
recognised when the performance obligation is satisfied.

Revenue represents the fair value of the sale of goods and rendering of services to external customers, net of value added
tax and volume based rebates in the ordinary course of the Group’s activities. Many of the Group’s revenue contracts include
an element of variable consideration, such as trade discounts, namely in the form of rebate arrangements or other incentives
to customers. The arrangements can take the form of volume and fixed rebates, marketing fund contributions, promotional
fund contributions or lump sum incentives. The Group recognises revenue net of such incentives in the period in which the
arrangement applies, only when it is highly probable a significant reversal in the cumulative amount of revenue will not occur.
Volume based rebates are calculated on the Group’s estimate of rebates expected to be paid to customers using the ‘most
likely amount’ in line with IFRS 15 requirements, whereas fixed rebates are accounted for as a reduction in revenue over the
life of the contract.

Revenue is recognised at a point in time, when control of the goods or services are transferred to the customer, which is
deemed to be either when the goods are dispatched or received by the customer, depending on individual contracts.

Supplier Rebates
The Group enters into rebate arrangements with its suppliers. The arrangements are primarily volume related. These supplier
rebates received are recognised primarily as a deduction from cost of sales, based on the entitlement that has been earned
up to the Financial Position date, for each relevant supplier arrangement.

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

25–50 years
3–25 years

Useful lives and residual values are reassessed annually.

Annual Report and Financial Statements 2019

121

Financial Statements
Notes to the Group Financial Statements continued
year ended 27 September 2019

1. Group Statement of Accounting Policies continued
Property, Plant and Equipment continued
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 profit or loss 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 profit or loss.

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 an 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 profit or loss. 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
charge 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 profit or loss 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 profit or loss on a
straight-line basis over the period of the lease. Income earned from operating leases is credited to the profit or loss when earned.

Business Combinations
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 12
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 Financial Position date with any adjustments to the
liability recognised in the profit or loss.

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
Financial Position. An appropriate interest charge, at a constant interest rate on the carrying amount, adjusted to reflect material
conditions, is reflected in the profit or loss 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.

Transaction costs are expensed as incurred, as an exceptional item.

122 Greencore Group plc

Goodwill
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 profit or loss in the period
of acquisition.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. On acquisition, goodwill is
allocated to CGUs expected to benefit from the combinations’ 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 profit or loss.

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 Intangibles
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, acquisition related intangible assets are carried at cost less any accumulated amortisation and
any accumulated impairment losses. The carrying amounts of finite 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 profit or loss.

The amortisation of intangible assets is calculated to write off the book value of finite 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 1–7 years. The useful life used to amortise intangible assets relates to the future performance of the assets acquired
and management’s judgement of the period over which economic benefit will be derived from the asset. The remaining useful life
of finite intangible assets are reviewed at reporting periods and revised where appropriate to reflect the period over which the
Group will receive the economic benefit from use.

Computer Software
Costs incurred on the acquisition of computer software and software licences are capitalised. Other costs directly associated with
developing and upgrading computer software programs are capitalised once the recognition criteria set out in IAS 38 Intangible
Assets are met.

Computer software is amortised over 5–7 years on a straight line basis.

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.

Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is calculated based on first-in, first-out 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.

Annual Report and Financial Statements 2019

123

Financial StatementsNotes to the Group Financial Statements continued
year ended 27 September 2019

1. Group Statement of Accounting Policies continued
Discontinued Operations and Disposal Group Held for Sale
Discontinued operations and disposal group held for sale is a component of the Group’s business, the operations and cashflows
of which can be clearly distinguished from the rest of the Group and which:

• 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. 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.

Disposal groups classified as held for sale are measured at the lower of the carrying value 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. When an operation is classified as a discontinued operation, the comparative statement
of profit or loss and other comprehensive income is re-presented as if the operation had been discontinued from the start of
the comparative year.

When the Group ceases to have control of an undertaking (disposal group), it is at this point the Group ceases to consolidate
the operations and any gain or loss on disposal is recognised in the Group Income statement. In addition, any movements
previously recognised in other comprehensive income in respect of that undertaking are accounted for as if the Group had
directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive
income are reclassified to profit or loss.

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 recognised in the profit or loss
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.

Finance Income and Expense
Finance income comprises interest income on funds invested and the unwind of discount on assets. Interest income is recognised
in profit or loss as it accrues, using the effective interest method.

Finance expense comprises interest expense on borrowings, unwind of discount on liabilities, interest on the net 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.

Financial Instruments
On initial recognition, a financial asset is classified as measured at amortised cost, or fair value through other comprehensive income
(‘FVOCI’) or fair value through profit and loss (‘FVPL’). The classification is based on the business model for managing the financial
asset and the contractual terms of the cashflows. Reclassification of financial assets is required only when the business model for
managing those assets changes. Financial assets are derecognised when the Group’s contractual rights to the cashflows from the
financial assets expire, are extinguished or are transferred to a third party.

Financial liabilities are classified as measured at amortised cost or FVPL. Financial Liabilities are derecognised when the Group’s
obligations specified in the contracts expire, are discharged or cancelled. 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, the recognition of a new liability which
has the result that the difference in the respective carrying amounts is recognised, together with any resulting costs.

124 Greencore Group plc

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. These are subject to insignificant risk of changes in value and have an original maturity
of three months or less.

Trade Receivables
Trade and other receivables are initially recognised at fair value and subsequently carried at amortised cost, net of allowance for
expected credit loss. Any trade and other receivables included in non-current assets are carried at amortised cost in accordance
with the effective interest rate method.

The Group applies the simplified approach to providing for expected credit losses (‘ECL’) permitted by IFRS 9 Financial
Instruments, which requires expected lifetime losses to be recognised from initial recognition of the trade receivables. The
Group uses an allowance matrix to measure the ECL’s of trade receivables based on its credit loss rates. Expected loss rates are
based on historical payment profiles of sales and the corresponding historical credit loss experience. The historical loss rates
are adjusted to reflect current and forward economic factors if there is evidence to suggest these factors will effect the ability
of the customer to settle receivables. The Group has determined the ECL default rate using market default risk probabilities with
regards its key customers. Balances are written off when the probability of recovery is assessed as being remote.

Trade receivables are derecognised when the Group no longer controls the contractual rights that comprise the receivables,
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 the credit risks and control of the receivable has transferred.

Trade and Other Payables
Trade and other payables are initially recorded at fair value and subsequently at amortised cost. Where the time value of money
is material, payables are initially recorded at fair value and subsequently carried at amortised cost.

Borrowings
All loans and borrowings are initially recognised at fair value less any directly attributable transaction costs. After initial
recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest
method. 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 Financial Position date.

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, cross-currency swaps 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
Financial Position 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 Financial Position date.

For those derivatives designated as hedges and for which hedge accounting is sought, 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.

Annual Report and Financial Statements 2019

125

Financial StatementsNotes to the Group Financial Statements continued
year ended 27 September 2019

1. Group Statement of Accounting Policies continued
Financial Instruments continued
Derivative Financial Instruments continued
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 foreign currency differences between the functional currency of

a foreign operation and the functional currency of the parent.

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 profit or loss and charged to finance income or expense. 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.

On transition to IFRS 9 Financial Instruments from 29 September 2018, the Group elected not to adopt the new hedge
accounting requirements under IFRS 9, as permitted under the standard, and continues to account under the hedge accounting
requirements of IAS 39.

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 Hedges
In the case of fair value hedges which are designated and qualify for hedge accounting, any gain or loss arising from the
remeasurement of the hedging instrument to fair value is reported in the profit or loss 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
profit or loss as finance income or 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 profit or loss 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 profit or loss as finance
income or 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 profit or loss as the cash flows of the hedged item impact the profit or loss.

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 profit or loss 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.

126 Greencore Group plc

Taxation
The charge/credit for the year comprises current and deferred tax. Tax is recognised in the profit or loss except to the extent
that it relates to items recognised in the Statement of Comprehensive Income or directly in equity, in which case the tax is also
recognised in the Statement of Comprehensive Income or directly in equity, respectively.

Current tax payable represents the expected tax payable on the taxable income for the year, using tax rates and tax laws enacted
or substantively enacted at the Financial Position 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 Group 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 date of the Statement of Financial Position.

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.

The Group is subject to income taxes in a number of 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 deferred tax provisions in the period in which such
determination is made. Once it has been concluded that a liability needs to be recognised, the liability is measured. We consider
the range of possible outcomes and record a liability based on the most likely single outcome, rather than alternative approaches
which could include a weighted average probability of outcomes or an ‘all or nothing’ approach.

Employee Benefits
Defined Contribution Pension Plans
A defined contribution pension plan is a 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 within
profit or loss 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
All of the legacy defined benefit pension schemes have been closed to future accrual since 31 December 2009. The cost of
providing benefits under the Group’s defined benefit pension 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 Financial Position date. These valuations attribute entitlement benefits to the current and prior periods to determine
current service costs and the present value of defined benefit pension obligations.

Re-measurements, comprising of actuarial gains and losses and the return on plan assets (excluding net interest), are
recognised immediately in the Statement of Financial Position with a corresponding debit or credit to retained earnings through
the Statement of Comprehensive Income in the period in which they occur. Re-measurements are not reclassified to profit or
loss in subsequent periods.

Past service costs are recognised in profit or loss on the earlier of:

• the date of the plan amendment or curtailment; and
• the date that the Group recognises restructuring-related costs.

Net interest is calculated by applying the discount rate to the net defined benefit pension liability or asset.

When a settlement (eliminating all obligations for defined 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 profit
or loss during the period in which the settlement or curtailment occurs.

Annual Report and Financial Statements 2019

127

Financial StatementsNotes to the Group Financial Statements continued
year ended 27 September 2019

1. Group Statement of Accounting Policies continued
Employee Benefits continued
Defined Benefit Pension Plans continued
The defined benefit pension asset or liability in the Group Statement of Financial Position comprises the total, for each plan,
of the present value of the defined benefit pension obligation (using a discount rate based on high quality corporate bonds)
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 the Performance Share Plan, the Deferred Bonus
Plan, the Employee ShareSave Scheme and the Executive Option Scheme). The fair value of these is determined at the date
of grant and is expensed to the profit or loss with a corresponding increase in equity on a straight-line basis over the vesting
period. The fair value is determined using an appropriate 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 Financial Position date, the Group revises its estimates of the number of options or awards
that are expected to vest, recognising any adjustment in the profit or loss, with a corresponding adjustment to equity.

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 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 profit or loss. To the extent that the deductible difference exceeds the cumulative charge to the
profit or loss, it is recorded in equity.

When the exercise of share options results in the issuance of shares, the proceeds received are credited to the share capital
and share premium accounts.

Foreign Currency
Functional and Presentational 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 also
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 profit or loss,
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.

Foreign Operations
The Income Statement and Statement of Financial Position of Group entities that have a functional currency different from the
presentation currency of the Company are translated into the presentation currency as follows:

• Assets and liabilities are translated at the closing rate at the date of the Statement of Financial Position;
• Income and expenses 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 long term
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 profit or loss 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 Statement of Financial
Position as a deferred credit and released to the profit or loss over the periods necessary to match the related depreciation
charges, or other expenses of the asset, as they are incurred.

128 Greencore Group plc

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 Operating segment is reported in a manner consistent with the internal management structure of the Group and the internal
financial information provided to the Group’s Chief Operating Decision Maker who is responsible for making strategic decisions,
allocating resources, monitoring and assessing the performance of each segment. 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. Note 2 sets out the operating and reportable segment of the Group.

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 but are not limited to, significant
reorganisation programmes, profits or losses on termination of operations, impact of significant plant development and related
onboarding of business, significant impairments of assets, transaction and integration costs related to acquisition activity,
transaction costs related to disposal activity and litigation costs and settlements. 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.

Non-Controlling Interest
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.

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 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.

2. Segment Information
Following the disposal of Greencore’s US business on 25 November 2018, the Group reviewed its reporting structure to ensure
that it continues to reflect the Group’s organisational structure and the nature of the financial information reported to and
assessed by the Chief Operating Decision Maker (‘CODM’) as defined by IFRS 8 Operating Segments. The CODM has been
identified as the Group’s Chief Executive Officer. Following the disposal of the US business the Group operates a single operating
segment, the Convenience Foods UK & Ireland segment. There has been no change to how the CODM reviews the performance
of this segment and allocates resources to it.

Convenience Foods UK & Ireland is the Group’s operating segment, which represents its reporting segment. The segment
incorporates many UK convenience food categories including sandwiches, salads, sushi, chilled snacking, chilled ready meals,
chilled soups and sauces, chilled quiche, ambient sauces and pickles and frozen Yorkshire Puddings as well as the Irish
ingredients trading businesses. The prior year includes the cakes and desserts categories which were disposed of in FY18.

Revenue earned individually from four customers in Convenience Foods UK & Ireland of £304.0m, £247.5m, £163.3m and £146.9m
respectively represent more than 10% of the Group’s revenue (2018: Revenue earned individually from two customers in
Convenience Foods UK & Ireland of £283.0m and £240.1m respectively represented more than 10% of the Group’s revenue).

Annual Report and Financial Statements 2019

129

Financial Statements
Notes to the Group Financial Statements continued
year ended 27 September 2019

2. Segment Information continued

Revenue

Group operating profit before exceptional items and amortisation
of acquisition related intangible assets
Amortisation of acquisition related intangible assets
Exceptional items

Group operating profit
Finance income
Finance costs
Share of profit of associates after tax
Taxation
Results from discontinued operations

Profit for the period

Convenience Foods
UK & Ireland

2019
£m

2018
£m

1,446.1

1,498.5

105.5
(0.9)
(4.8)

99.8
0.8
(45.1)
0.9
(13.0)
64.8

108.2

104.6
(2.6)
(52.2)

49.8
0.2
(33.1)
0.9
(5.2)
23.9

36.5

In line with the new disclosure requirements in IFRS 15 Revenue from Contracts with Customers, the following table disaggregates
revenue by product categories in the Convenience Foods UK and Ireland reporting segment.

Revenue
Food to go categories
Other convenience categories

Total revenue for Convenience Foods UK & Ireland

2019
£m

2018
£m

962.5
483.6

929.4
569.1

1,446.1

1,498.5

Food to go categories include sandwiches, salads, sushi and chilled snacking while the other convenience categories include
chilled ready meals, chilled soups and sauces, chilled quiche, ambient sauces and pickles, and frozen Yorkshire Puddings as
well as Irish ingredients trading businesses. The prior year includes the cakes and desserts categories which were disposed
of in FY18.

Segment Assets and Liabilities
All assets and liabilities are allocated to the Convenience Foods UK and Ireland segment. As such, an analysis of assets and
liabilities has not been included in this disclosure.

Other Segment Information

Capital expenditure

Depreciation

Amortisation of computer software and other intangibles

Amortisation of acquisition related intangible assets – customer related

Non-current assets (excluding derivative financial instruments,
retirement benefit assets and deferred tax assets)

Convenience Foods
UK & Ireland

2019
£m

43.9

32.9

3.6

0.9

2018
£m

51.6

31.2

4.2

2.6

822.8

755.9

Geographical Analysis

Revenue

Capital expenditure

Non-current assets

130 Greencore Group plc

Ireland

2019
£m

65.9

0.1

14.4

2018
£m

68.7

0.1

14.7

2019
£m

Convenience Foods
UK & Ireland

2018
£m

2019
£m

2018
£m

1,380.2

1,429.8

1,446.1

1,498.5

43.8

808.4

51.5

741.2

43.9

822.8

51.6

755.9

4. Result for the Financial Year
The result for the Group for the financial year has been arrived at after charging/(crediting) the following amounts:

3. Operating Costs, Net

Continuing operations
Distribution costs
Administrative expenses
Research and development
Other operating costs
Other operating income

Total operating costs pre-exceptional, net
Exceptional charge (Note 7)

Total operating costs, net

Depreciation:

Owned assets
Assets held under finance lease

Amortisation of intangible assets

Operating lease rentals:

Premises, plant and equipment*

Rental income from investment properties

Auditor’s remuneration
Fees paid to the statutory audit firm:

Audit of the Group financial statements
Other assurance services
Other non-audit services

Total

2019
£m

2018
£m

69.4
295.3
2.4
1.6
(0.5)

368.2
4.8

373.0

2019
£m

32.9
–

32.9

68.0
299.2
3.0
1.2
(0.5)

370.9
52.2

423.1

2018
£m

47.2
0.1

47.3

4.5

25.3

13.9

25.5

(0.1)

£’000

750
–
–

750

819
53
471

1,343

* The operating lease rentals for the year ended 27 September 2019 include two months of operating lease rental costs for the US Business.

Directors’ remuneration is shown in the Report on Directors’ Remuneration and in Note 34.

In the current year there were no non-audit fees. The prior year non-audit service fee of £0.5m related to consultancy fees
in association with the disposal of the US business, paid to the previous auditor.

Annual Report and Financial Statements 2019

131

Financial StatementsNotes to the Group Financial Statements continued
year ended 27 September 2019

5. Employment
The average monthly number of persons (including Executive Directors) employed by the Group for both continuing and
discontinued operations during the year was:

Production
Distribution
Administration

The staff costs for the year for the above employees were:

Wages and salaries
Social insurance costs
Employee share-based payment expense (Note 6)
Pension costs – defined contribution plans (Note 26)

Legacy defined benefit interest cost (Note 26)

2019
Number

8,226
1,158
2,298

11,682

2018
Number

10,718
1,178
2,738

14,634

2019
£m

264.5
22.7
3.6
9.6

300.4
2.5

302.9

2018
£m

372.5
32.2
1.6
9.6

415.9
3.4

419.3

Total staff costs of continuing operations capitalised during the year were £4.7m (2018: £4.0m).

Actuarial gain on Group legacy defined benefit schemes recognised in the Group Statement of Comprehensive Income:

Return on plan assets (Note 26)
Actuarial (loss)/gains arising on scheme liabilities (Note 26)

Total (loss)/gain included in the Statement of Comprehensive Income

2019
£m

51.6
(64.9)

(13.3)

2018
£m

2.5
21.8

24.3

6. Share-Based Payments
The Group operates a number of employee share award schemes which are equity settled share-based payments as defined in
IFRS 2 Share-based payments. A recognised valuation methodology is employed to determine the fair value of awards granted
as set out in the standard. The charge incurred relating to these awards is recognised within operating costs. Detail of each of
the employee share schemes operated by the Group are set out below.

Annual Bonus Plan
Senior executives participate in the Annual Bonus Plan as outlined in the Report on Directors’ Remuneration. In accordance with
this plan, a deferred share award equal to a proportion of the cash bonus is awarded to the participating executives, the number
of shares 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 conditions other than three years of service. The shares vest after three years but are
forfeited should an executive voluntarily leave the Group within the three year time period, subject to normal ‘good leaver’
provisions. The charge recognised in the Group Income Statement was £0.8m (2018: £0.8m). The fair value of the award is equal to
the share price on the grant date. The share price on the grant date, for awards granted in December 2018 was £1.81 (2018: £2.05).

535,760 and 652,571 share awards were granted to senior executives of the Group under the Annual Bonus Plan on 1 December
2018 and 1 December 2017 respectively.

132 Greencore Group plc

The following table illustrates the number of, and movements in, share awards during the year under the plan:

At beginning of year
Granted
Vested
Forfeited

At end of year

Exercisable at end of year

2019
Number
outstanding

1,543,189
535,760
(325,655)
(412,796)

2018
Number
outstanding

1,612,706
652,571
(573,045)
(149,043)

1,340,498

1,543,189

–

During the year, the Group cash settled a number of deferred share awards following the disposal of the US business for £0.3m.
These shares have been classified as forfeited.

Awards will be granted to senior executives of the Group under the Annual Bonus Plan in respect of the year ended 27 September
2019. A charge amounting to £0.2m (2018: £0.1m) relating to awards to Executive Directors and £0.1m (2018: £0.2m) relating to awards
to other senior executives has been included in the Group Income Statement in respect of the estimated 2019 charge. The total fair
value of the awards will be taken as a charge to the Group Income Statement over the vesting period of the awards.

Performance Share Plan
Certain employees participate in a long term incentive scheme, the Performance Share Plan. In accordance with this scheme,
participants are awarded an allotment of shares which will vest over three years subject to vesting conditions based on growth
in Adjusted Earnings per Share and Return on Invested Capital. In December 2017 the Group introduced an additional vesting
condition for relative Total Shareholder Return (TSR) for all awards granted from this date. These measures will be equally
weighted when assessing vesting conditions. An additional two year future service period will apply to Executive Directors’
vested shares before they are released.

The number of shares granted is calculated based on the market value on the date of allocation. Share awards are forfeited
should an executive voluntarily leave the Group prior to the vesting date, subject to normal ‘good leaver’ provisions. The fair
value of the award has attributed a value to each vesting condition and these measures will be equally weighted when assessing
vesting conditions. Two thirds of the awards have a value that is equal to the share price on the grant date and the remaining
one third relating to the TSR has been fair valued using a Monte Carlo simulation as described further in this note. A further
description of the scheme can be found in the Report on Directors’ Remuneration. A charge amounting to £2.2m (2018: £0.1m)
was included in the Group Income Statement in the year ended 27 September 2019 relating to these awards for all Performance
Share Plan awards granted from December 2016 onwards.

The grant price of shares awarded in December 2018 was a weighted average price of £1.81 (granted in December 2017: £2.16).

The following table illustrates the number of, and movements in, share awards during the year under the plan:

At beginning of year
Granted
Vested
Expired
Forfeited

At end of year

Exercisable at end of year

2019
Number
outstanding

8,553,037
2,871,462
(12,451)
(1,631,708)
(3,438,126)

2018
Number
outstanding

5,406,319
4,234,819
(473,887)
–
(614,214)

6,342,214

8,553,037

–

During the year the Group cash settled a number of performance share awards following the disposal of the US business for
£0.3m. These shares have been classified as forfeited.

Annual Report and Financial Statements 2019

133

Financial StatementsNotes to the Group Financial Statements continued
year ended 27 September 2019

6. Share-Based Payments continued
Sharesave Schemes
The Group operates savings-related share option schemes in both the UK and Ireland. Options are granted at a discount of
between 20% and 25% of the market price at the date of invitation over three year savings contracts and awards are exercisable
during the six month period following completion of the savings contract. The charge recognised in the Group Income Statement
in respect of these awards was £0.6m (2018: £0.7m). Grant date fair value was arrived at by applying a trinomial model, which
is a lattice option-pricing model.

During the year ended 27 September 2019, Sharesave Scheme awards were granted over 2,126,954 shares (UK) and 44,224
shares (Ireland), which will ordinarily be exercisable at an exercise price of £1.67 and €1.75 per share respectively, during the
period 1 September 2022 to 28 February 2023. The weighted average fair value of share awards granted during the year ended
27 September 2019 was £0.57 (UK) and €0.68 (Ireland).

During the year ended 28 September 2018, Sharesave Scheme awards were granted over 3,408,536 shares (UK) and 107,568
shares (Ireland), which will ordinarily be exercisable at an exercise price of £1.48 and €1.57 per share respectively, during the
period 1 September 2021 to 28 February 2022. The weighted average fair value of share awards granted during the year ended
28 September 2018 was £0.49 (UK) and €0.57 (Ireland).

Number and Weighted Average Exercise Price for the UK Sharesave Scheme (Expressed in Sterling)
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:

2019

2018

Number
outstanding

4,948,146
3,408,536
(117,632)
(726,281)
(2,113,457)

5,399,312

236,266

Number
exercisable

–
378,971

378,971

–
236,266

236,266

Weighted
average
exercise
price
£

2.04
1.48
1.87
2.05
2.04

1.69

2.08

Weighted
average
exercise

price
£

–
2.17

2.17

–
2.08

2.08

At beginning of year
Granted
Exercised
Expired
Forfeited

At end of year

Exercisable at end of year

Number
outstanding

5,399,312
2,126,954
(53,806)
(785,567)
(562,734)

6,124,159

378,971

Weighted
average
exercise

price
£

1.69
1.67
1.87
1.76
1.81

1.66

2.17

Range of Exercise Prices for the UK Sharesave Scheme (Expressed in Sterling)

Weighted
average
contract life
years

Weighted
average
exercise

price
£

2.48
0.26

2.34

3.02
0.97

2.71

1.63
2.17

1.66

1.61
2.15

1.69

Number
outstanding

5,745,188
378,971

6,124,159

4,573,088
826,224

5,399,312

At 27 September 2019
£1.01 – £2.00
£2.01 – £3.00

At 28 September 2018
£1.01 – £2.00
£2.01 – £3.00

134 Greencore Group plc

Number and Weighted Average Exercise Prices for the Irish Sharesave Scheme (Expressed in Euro)
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:

2019

2018

At beginning of year
Granted
Exercised
Expired
Forfeited

At end of year

Exercisable at end of year

Number
outstanding

140,233
44,224
–
(25,094)
(21,381)

137,982

7,006

Range of Exercise Prices for the Irish Sharesave Scheme (Expressed in Euro)

At 27 September 2019
€1.01 – €2.00
€2.01 – €3.00

At 28 September 2018
€1.01 – €2.00
€2.01 – €3.00

Number
outstanding

Weighted
average
contract life
years

128,748
9,234

137,982

96,046
44,187

140,233

2.62
0.51

2.48

3.27
0.97

2.55

Weighted
average
exercise
price
€

1.88
1.75
–
2.74
1.82

1.69

2.58

Weighted
average
exercise

price
€

1.63
2.47

1.69

1.57
2.54

1.88

Number
outstanding

90,596
107,568
(3,318)
(8,299)
(46,314)

140,233

25,094

Number
exercisable

–
7,006

7,006

–
25,094

25,094

Weighted
average
exercise
price
€

2.43
1.57
2.18
2.18
2.16

1.88

2.74

Weighted
average
exercise

price
€

–
2.58

2.58

–
2.74

2.74

Executive Share Option Scheme
The Executive Share Option Scheme expired in 2011 and no further options have been granted under this scheme. During the
prior year, all outstanding options were exercised.

The following table illustrates the number and weighted average exercise prices (expressed in euro) of, and movements in,
share options under the plan:

At beginning of year
Exercised

At end of year

2019

2018

Number
outstanding

–
–

–

Weighted
average
exercise
price
€

–
–

–

Number
outstanding

160,061
(160,061)

–

Weighted
average
exercise
price
€

0.69
0.69

–

Annual Report and Financial Statements 2019

135

Financial StatementsNotes to the Group Financial Statements continued
year ended 27 September 2019

6. Share-Based Payments continued
Weighted Average Assumptions Used to Value the Share Schemes
Annual Bonus Plan
The fair value of awards granted under the Annual Bonus Plan is equal to the share price on the grant date.

Performance Share Plan
All awards granted under the Performance Share Plans up to and including December 2016 are valued at a fair value equal to the
share price on the grant date.

Awards granted from December 2017, have an additional vesting condition for relative Total Shareholder Return (‘TSR’). All vesting
conditions relating to the awards will be equally weighted when assessing the fair value at grant date. As such two thirds of the
award has a fair value equal to the share price on the grant date and the remaining one third relating to the TSR has been fair
valued using a different methodology. The TSR component has been valued using a Monte Carlo simulation model which also
incorporates the relative volatility of the identified peer group with whom the Group are compared to assess the TSR vesting
condition. The following table shows the weighted average assumptions used to fair value the equity settled awards granted.

Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Share price at grant (£)
Fair value (£)

2019
PSP TSR

2.84%
35.12%
0.75%
3
£1.81
£0.22

2018
PSP TSR

2.98%
29.42%
0.48%
3
£2.05
£0.22

ShareSave Schemes
The ShareSave Schemes equity settled options are also valued at the fair value on grant date in July 2019 and are calculated by
applying a trinomial model. The following table shows the weighted average assumptions used to fair value the equity settled
options granted.

Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Share price at grant (£/€)
Exercise price (£/€)
Fair value (£/€)

2019

2018

UK
ShareSave

Ireland
ShareSave

UK
ShareSave

Ireland
ShareSave

2.83%
35.18%
0.50%
3
£2.08
£1.67
£0.57

2.83%
35.18%
(0.51%)
3
€2.33
€1.75
€0.68

2.98%
32.29%
0.76%
3
£1.87
£1.48
£0.49

2.98%
32.29%
(0.24%)
3
€2.09
€1.57
€0.57

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 £1.61–£2.32 (2018: £1.27–£2.30). The average share price during the
2019 financial year was £2.04 (2018: £1.83).

136 Greencore Group plc

7. Exceptional Items
Exceptional items are those which, in management’s judgement, should be disclosed separately by virtue of their nature or
amount. Such items are included within the Group 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:

Guaranteed Minimum Pension (‘GMP’) equalisation
Transaction costs
Network rationalisation and optimisation
Debt restructuring post disposal of Greencore’s US business
Profit on disposal of Greencore’s US business

Tax on exceptional items

Total exceptional items

Network rationalisation and optimisation
Exit from Cakes and Desserts
Reorganisation and integration costs
Pre-commissioning and start up costs
Transaction costs

Tax on exceptional items
Tax credit

Total exceptional items

2019

Continuing
operations
£m

Discontinued
operations
£m

(3.0)
(1.8)
0.0
(25.4)
–

(30.2)
0.2

(30.0)

–
–
–
–
55.9

55.9
–

55.9

Continuing
operations
£m

2018

Discontinued
operations
£m

(21.2)
(13.9)
(15.9)
(1.2)
–

(52.2)
7.8
–

(44.4)

(23.6)
–
(3.0)
–
(1.3)

(27.9)
–
20.6

(7.3)

(A)
(B)
(C)
(D)
(E)

(F)
(G)
(H)
(I)
(J)

(K)

Total
£m

(3.0)
(1.8)
0.0
(25.4)
55.9

25.7
0.2

25.9

Total
£m

(44.8)
(13.9)
(18.9)
(1.2)
(1.3)

(80.1)
7.8
20.6

(51.7)

Year Ended 27 September 2019
(A) GMP equalisation
Continuing Operations
Due to a ruling in the High Court of Justice of England and Wales in October 2018, pension schemes are under a duty to
equalise benefits for all members, regardless of gender, in relation to minimum pension benefits. At 29 March 2019, an estimate
was made of the impact of equalisation for the Group, which increased the legacy defined benefit pension scheme liabilities
in the UK by £3.0m with a corresponding charge to exceptional items. Whilst guidance has been issued by the Department
of Work and Pensions, legislative provisions regarding the change are still being finalised. Therefore in the continued absence
of guidance, the Group has maintained the estimate of £3.0m as at 27 September 2019.

(B) Transaction Costs
Continuing Operations
In the year, the Group recognised a charge of £1.8m, comprising of transaction costs in relation to the acquisition of Freshtime
UK Limited. Details of the acquisition are set out in Note 9.

(C) Network Rationalisation and Optimisation
Continuing Operations
Following the completion of the rationalisation and optimisation of the Group’s ready meals network in the UK, the Group
assessed the recoverability of related assets at the year end 27 September 2019. The impairment testing indicated a reversal
of an impairment which had been recognised in the prior year relating to land and buildings and plant and machinery totalling
£1.1m and £3.4m respectively. In addition the Group recognised an impairment of plant and equipment in the network with a total
value of £4.5m (Note 15).

Annual Report and Financial Statements 2019

137

Financial StatementsNotes to the Group Financial Statements continued
year ended 27 September 2019

7. Exceptional Items continued
(D) Debt Restructuring Post Disposal of Greencore’s US Business
Continuing Operations
Following the disposal of Greencore’s US business in November 2018, the Group reshaped its debt and associated derivative
portfolio to reflect the removal of US dollar assets from the business. This resulted in a £25.4m exceptional charge in the period
comprising the recycling of the net investment hedge of £22.3m including foreign exchange differences arising on debt and
derivatives relating to US dollar exposure, and the cash cost of terminating a US dollar related swap. It also includes the recycling
of interest rate swaps of £1.0m which became ineffective during the period from the date of disposal of Greencore’s US business
and the date of the capital return via the tender offer. In addition, the charge includes the write off of capitalised finance fees
on debt facilities of £2.1m following the cancellation and refinancing of debt facilities following the disposal.

(E) Profit on Disposal of Greencore’s US Business
Discontinued Operations
During the year, the Group completed the disposal of Greencore’s US business to Hearthside Food Solutions LLC. A profit of
£55.9m was recognised which included transaction and separation costs of £17.9m. Details of the disposal are set out in Note 33.

Year Ended 28 September 2018
(F) Network Rationalisation and Optimisation
Continuing Operations
In the prior year, the Group recognised a charge of £21.2m relating to the rationalisation and optimisation of its ready meals
manufacturing network in the UK, following the Group’s announcement in July 2018 to phase out of manufacturing of longer
life ready meals at its Kiveton facility. The charge comprised an impairment of property, plant and equipment of £15.6m, an
impairment of goodwill of £1.4m (Note 14) and a provision for other costs associated with the exit.

Discontinued Operations
In the prior year, the Group recognised a charge of £23.6m relating to the optimisation of its manufacturing network in its
US operations. The Group recognised an impairment charge of £20.6m in relation to the exit from the Rhode Island business
and subsequent disposal, and in relation to the repurposing of its Jacksonville manufacturing facility. The charge also includes
other onetime costs associated with the closure of the Rhode Island facility.

(G) Exit from Cakes and Desserts
Continuing Operations
In February 2018, the Group disposed of its cakes and desserts business in Hull to Bright Blue Foods Ltd and subsequently
disposed of its dessert manufacturing facility at Evercreech in July 2018, following its closure as announced in 2017 leading to
a net loss of £13.9m. The sale of the business in Hull and the exit from dessert manufacturing at Evercreech marks Greencore’s
complete exit from the UK cakes and desserts sector.

(H) Reorganisation and Integration Costs
Continuing Operations
In the prior year, the Group recognised a charge of £15.9m relating to the implementation of its streamlining and efficiency
programme across Convenience Foods UK & Ireland.

Discontinued Operations
In the prior year, the Group recognised a charge of £3.0m in relation to the restructure of the US leadership team and ongoing
integration costs associated with the Peacock Foods acquisition.

(I) Pre-Commissioning and Start Up Costs
Continuing Operations
In the prior year, the Group recognised a charge of £1.2m in relation to pre-commissioning and start-up activities on the
expansion of its facility in Warrington.

(J) Transaction Costs
Discontinued Operations
In the prior year, the Group recognised a £1.3m charge comprising of transactions costs associated with the disposal of
Greencore US which completed in November 2018.

(K) Tax Credit
Discontinued Operations
In the prior year, the Group recognised a tax credit of £20.6m on the revaluation of tax assets and liabilities as a result of the
taxation rate change in the US.

Cash Flow on Exceptional Items
The total net cash outflow during the year in respect of exceptional items was £9.6m (2018: £15.0m), of which £8.7m was in respect
of prior year exceptional charges. The remaining current year exceptional cash flow includes the transaction costs on the
acquisition of Freshtime UK Limited.

138 Greencore Group plc

8. Finance Costs and Finance Income

Continuing operations
Finance Income
Interest on bank deposits

Total finance income recognised in the Income Statement

Continuing operations
Finance Costs
Net finance costs on interest bearing cash and cash equivalents, borrowings and other financing costs
Net pension financing charge (Note 26)
Interest on obligations under finance leases
Unwind of discount on liabilities
Change in fair value of derivatives and related debt adjustment
Foreign exchange on inter-company and external balances where hedge accounting is not applied

Total finance expense recognised in the Income Statement

Total net finance expense recognised in the Income Statement

Continuing operations
Exceptional costs
Debt restructuring post disposal of Greencore’s US business

Total exceptional finance expense recognised in the Income Statement

Total finance expense recognised in the Income Statement

Recognised Directly in Equity for continuing operations
Currency translation adjustment
Hedge of net investment in foreign operations
Effective portion of changes in fair value of cash flow hedges

2019
£m

(0.8)

15.0
2.5
–
0.1
0.9
1.2

19.7

18.9

25.4

44.3

10.3
–
0.2

10.5

2018
£m

(0.2)

26.3
3.4
0.1
–
3.4
(0.1)

33.1

32.9

–

32.9

15.4
(10.6)
4.1

8.9

Interest costs capitalised in the year were £0.0m (2018: £0.4m).

9. Acquisition of Undertakings
On 3 September 2019, the Group acquired 100% of Freshtime UK Limited (‘Freshtime’). Freshtime is a well-established supplier
of meal salads, chilled snacking and prepared produce in the UK. Its products are distributed primarily in the grocery and
convenience channels and the business operates from a single facility in Boston, Lincolnshire.

The principal factors contributing to the recognition of goodwill on the acquisition of Freshtime is the expected realisation
of future growth potential with new and existing customers in fast growing categories, the synergies that will be achieved
by the enlarged group, and a highly skilled management team. The goodwill is not deductible for tax purposes. The acquisition
resulted in the recognition of a customer related intangible asset of £17.5m and goodwill of £38.7m. The intangible asset relates
to key customer relationships and is considered to have a remaining useful life of not more than 7 years.

As part of the acquisition the Group acquired trade receivables with a fair value of £11.7m (which includes £5.9m of intercompany
trade receivables with Group undertakings). Management estimate that acquired receivables will be collected in full. Acquisition
related costs of £1.8m were charged to exceptional items in the Income Statement for the year ended 27 September 2019.

The post acquisition impact of the Freshtime acquisition on the Group was to increase revenue by £2.3m and Group profit by
£0.3m. If the acquisition had occurred at the beginning of the Group’s financial year, revenue (excluding intercompany revenue
with Group undertakings) would have been £36.0m higher and the profit for the year would have been £4.7m higher.

Annual Report and Financial Statements 2019

139

Financial Statements
Notes to the Group Financial Statements continued
year ended 27 September 2019

9. Acquisition of Undertakings continued
The provisional fair value of the assets acquired, determined in accordance with IFRS, were as follows:

Assets
Intangible assets
Property, plant and equipment
Inventory
Current tax receivable
Trade and other receivables

Total assets

Liabilities
Provisions
Deferred tax liabilities
Trade and other payables
Current tax payable

Total liabilities

Net assets acquired

Goodwill

Total enterprise value

Satisfied by:
Cash payments
Cash and cash equivalents acquired
Working capital consideration

Net cash outflow

2019
£m

17.5
5.3
1.2
0.5
11.7

36.2

(0.1)
(3.1)
(14.2)
(1.3)

(18.7)

17.5

38.7

56.2

65.2
(9.2)
0.2

56.2

The fair values of the acquired net assets have been determined provisionally as at 27 September 2019 and are subject to
change, as the Group has yet to finalise the fair value of all the identifiable assets and liabilities acquired due to the timing
of the completion of the acquisition.

10. Investment in Associates
The following table summarises the financial information of the Group’s associates as included in their own financial statements:

Associates’ Income Statement
Revenue

Profit before taxation
Taxation

Profit after taxation

Group’s share of profit after tax (50%)

Associates’ Statement of Financial Position
Current assets
Non-current assets
Current liabilities
Non-current liabilities

Net assets

Group’s share of net assets (50%)

140 Greencore Group plc

2019
£m

9.0

2.2
(0.4)

1.8

0.9

2019
£m

2.9
0.1
(0.3)
(0.2)

2.5

1.2

2018
£m

9.3

2.3
(0.5)

1.8

0.9

2018
£m

3.2
0.1
(0.5)
(0.2)

2.6

1.3

The following table reconciles the summarised financial position to the carrying amount of the Group’s interest in its associates:

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 associate are shown in Note 35.

11. Taxation

Continuing and discontinued operations
Current tax
Corporation tax charge
Overseas tax charge
Adjustment in respect of prior years

Total current tax charge (pre-exceptional)

Deferred tax
Origination and reversal of temporary differences
Legacy defined benefit pension obligations
Effect of tax rate change
Employee share-based payments
Increase in asset recognised
Adjustment in respect of prior years

Total deferred tax charge

Income tax expense (pre-exceptional)

The total income tax expense (pre-exceptional) for the financial year is analysed as follows:
Continuing operations
Discontinued operations

Income tax expense (pre-exceptional)

Tax on exceptional items
Current tax credit
Deferred tax credit
Adjustment in respect of prior years

Tax credit on exceptional items

The total exceptional tax expense for the financial year is analysed as follows:
Continuing operations
Discontinued operations

Tax credit on exceptional items

Total tax charge/(credit) for the year

Tax relating to items taken directly to equity

Deferred tax relating to items taken directly to equity
Actuarial gain on Group legacy defined benefit pension schemes
Employee share-based payments

2019
£m

1.3
0.9
(1.0)

1.2

2019
£m

3.8
3.2
(1.7)

5.3

6.2
1.8
(0.2)
(0.4)
–
0.5

7.9

13.2

13.2
–

13.2

(0.1)
(0.5)
0.4

(0.2)

(0.2)
–

(0.2)

13.0

2.9
0.3

3.2

Annual Report and Financial Statements 2019

2018
£m

1.2
0.9
(0.8)

1.3

2018
£m

2.5
5.6
(1.3)

6.8

3.4
1.5
1.2
0.4
(1.8)
(0.3)

4.4

11.2

13.0
(1.8)

11.2

(4.5)
(23.9)
–

(28.4)

(7.8)
(20.6)

(28.4)

(17.2)

4.5
–

4.5

141

Financial Statements
Notes to the Group Financial Statements continued
year ended 27 September 2019

11. Taxation continued
Reconciliation of Total Tax Charge continued
The tax charge for the year can be reconciled to the profit per the Income Statement as follows:

Profit for the financial year
Adjusted for:
Discontinuing operations after tax
Tax charge for the year
Share of profit of associates after tax

Profit before tax

Tax charge at Irish corporation tax rate of 12.5% (2018: 12.5%)
Effects of:
Expenses not deductible for tax purposes
Differences in effective tax rates on overseas earnings
Effect of current year losses not recognised
Utilisation of losses not previously recognised
Recognition of previously unrecognised deferred tax asset
Effect of rate change in the UK
Exceptional items – continuing
Effect of rate change in the US
Adjustment in respect of prior years
Other

Total tax charge for the year

No tax charge or credit arose on the disposal of Greencore’s US business.

2019
£m

108.2
(64.8)
13.0
(0.9)

55.5

6.9

4.4
1.5
3.2
(3.6)
–
(0.1)
1.4
–
(0.8)
0.1

13.0

2018
£m

36.5
–
(17.2)
(0.9)

18.4

2.3

4.1
(5.3)
5.1
(2.7)
(1.8)
1.2
1.8
(20.6)
(1.7)
0.4

(17.2)

142 Greencore Group plc

Deferred Taxation
The Group’s deferred tax assets and liabilities are analysed as follows:

Year ended 27 September 2019
At beginning of year
Income Statement (charge)/credit
Tax credited to equity
Arising on acquisition
Exceptional
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)

Year ended 28 September 2018
At beginning of year
Income Statement (charge)/credit
Tax credited to equity
Currency translation adjustment and other

At end of year

Deferred tax assets (deductible
temporary differences)
Deferred tax assets (discontinued
operations)
Deferred tax liabilities (taxable
temporary differences)
Deferred tax liabilities (discontinued
operations)

Net deferred tax asset/(liability)

The net deferred tax asset/(liability)
is analysed as follows:
Continuing operations
Discontinued operations

Net deferred tax asset/(liability)

Property,
plant and
equipment
£m

Acquisition
related
intangibles
£m

Retirement
benefit
obligations
£m

Derivative
financial
instruments
£m

0.9
(3.0)
–
–
–
0.1

(2.0)

0.9

(2.9)

(2.0)

(1.1)
0.3
–
(3.1)
–
–

(3.9)

–

(3.9)

15.7
(1.8)
2.9
–
0.5
–

17.3

–

17.3

(0.1)
–
–
–
–
0.1

(0.0)

–

Property,
plant and
equipment
£m

Acquisition
related
intangibles
£m

Retirement
benefit
obligations
£m

Derivative
financial
instruments
£m

(13.8)
7.4
–
(0.2)

(6.6)

3.9

–

(3.0)

(7.5)

(6.6)

0.9
(7.5)

(6.6)

(91.5)
30.6
–
(1.4)

(62.3)

–

(1.1)

(61.2)

(62.3)

(1.1)
(61.2)

(62.3)

21.7
(1.5)
(4.5)
–

15.7

–

15.7

15.7
–

15.7

(0.1)
–
–
–

(0.1)

–

(0.1)

–

(0.1)

(0.1)
–

(0.1)

Employee
share-
based
payment
£m

Other
£m

Total
£m

0.3
0.4
0.3
–
–
(0.1)

0.9

–

0.9

Employee
share-
based
payment
£m

0.7
(0.4)
–
–

0.3

1.2
0.2
–
–
–
(0.1)

1.3

1.4

(0.1)

1.3

37.5
(7.9)
3.2
(3.1)
0.5
0.0

30.2

37.1

(6.9)

30.2

Other
£m

Total
£m

15.2
(4.5)
–
0.1

10.8

(18.0)
19.5
(4.5)
(1.1)

(4.1)

Tax
losses
£m

20.6
(4.0)
–
–
–
–

16.6

–

16.6

Tax
losses
£m

49.8
(12.1)
–
0.4

38.1

20.6

0.3

1.2

41.7

17.5

–

38.1

0.3

10.5

28.0

–

(4.2)

(0.9)

10.8

(69.6)

(4.1)

20.6
17.5

38.1

0.3
–

0.3

1.2
9.6

10.8

37.5
(41.6)

(4.1)

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 joint ventures in the jurisdictions in which the Group operates, the
aggregate amount of any unrecognised deferred tax liability arising in respect of temporary differences would be immaterial.
No provision has been recognised in respect of deferred tax relating to unremitted earnings of subsidiaries as there is no
commitment to remit earnings.

Annual Report and Financial Statements 2019

143

Financial Statements
Notes to the Group Financial Statements continued
year ended 27 September 2019

11. Taxation continued
Deferred Taxation continued
No deferred tax asset is recognised in respect of certain tax losses and other attributes 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 2019
was £35.6m (2018: £50.7m) which has been calculated based on the tax rate applicable to the jurisdiction to which the losses
relate and have been translated to the reporting currency (sterling) at the closing Financial Position rate on 27 September 2019.

The total gross unrecognised tax losses are £208.5m (2018: £241.5m). There is no expiry date for losses in any jurisdiction.
Deferred tax assets, to the extent that the Directors consider they are recoverable, have been recognised. The unrecognised
deferred tax asset at 27 September 2019 in respect of capital losses was £10.9m (2018: £11.4m), which has been translated to
sterling calculated at the Financial Position rate at 27 September 2019 and which corresponds to gross unrecognised tax losses
of £56.4m (2018: £58.8m). There is no expiry date for these losses in any jurisdiction. Recognition of deferred tax assets is
a key judgement in the Group Financial Statements as disclosed in Note 1.

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. There is a degree of uncertainty over the level of the future tax rate, due to a combination
of factors including BEPS (Base Erosion and Profit Shifting) actions and the impact of Brexit on levels of UK taxation.

The main rate of UK corporation tax will reduce to 17% with effect from 1 April 2020. The rate reduction was enacted during
a prior period and therefore has been taken into account in the calculation of the UK-related deferred tax balances.

The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the Group’s
provision for income taxes and deferred 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 deferred tax provisions in the
period in which such determination is made. Adjustments in respect of prior periods arose largely on the settlement of tax
authority enquiries and/or closure of open periods.

12. 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 period, excluding Ordinary Shares purchased by the Company
and held in trust in respect of the Annual Bonus Scheme and the Performance Share Plan.

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.

The numerator for the adjusted earnings per share calculation for both basic and diluted earnings per Ordinary Share is
calculated as profit attributable to equity holders of the Company adjusted to exclude exceptional items (net of tax), 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 (net of tax) and the effect of interest expense relating to legacy defined benefit pension liabilities (net of tax).

The Group returned £509.0m to shareholders by way of a tender offer, executed on 31 January 2019. The Group acquired
261,025,641 Ordinary Shares in the Company on the London Stock Exchange, at the Offer Price of £1.95 per Ordinary Share and
the shares were subsequently cancelled. The Ordinary Shares acquired represented approximately 36.92% of the voting rights
attributable to the Ordinary Shares immediately prior to acquisition. The total Ordinary Shares in issue as at 28 September 2018
was 706,978,416, the total Ordinary Shares in issue at 27 September 2019 is 446,006,581. The effect of the tender offer on the
weighted average number of Ordinary Shares was a reduction of 171,633,298 shares.

144 Greencore Group plc

Numerator for Earnings Per Share Calculations

2019

2018

Continuing
operations
£m

Discontinued
operations
£m

Total
£m

Continuing
operations
£m

Discontinued
operations
£m

Profit attributable to equity holders of the Company
(numerator for earnings per share calculations)

Exceptional items (net of tax)
Movement on fair value of derivative financial instruments and
related debt adjustments
FX effect 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 calculations

41.2

30.0

0.9

1.2
0.7
2.0

76.0

64.8

106.0

(55.9)

(25.9)

–

–
–
–

0.9

1.2
0.7
2.0

9.9

44.4

3.4

(0.1)
2.1
2.7

8.9

84.9

62.4

Denominator for Basic Earnings Per Share Calculations

Total
£m

33.8

51.7

23.9

7.3

–

3.4

–
12.3
–

43.5

(0.1)
14.4
2.7

105.9

Shares in issue at the beginning of the year
Effect of shares held by Employee Benefit Trust
Effect of shares issued during the year
Effect of share reduction due to tender offer

Weighted average number of Ordinary Shares in issue during the year

2019
‘000

706,978
(3,389)
15
(171,633)

531,971

2018
‘000

705,647
(3,389)
1,054
–

703,312

Denominator for Diluted Earnings Per Share Calculations
Employee Performance Share Plan awards, 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.

A total of 6,809,266 (2018: 12,886,062) unvested shares across the Group’s share schemes were excluded from the diluted
earnings per share calculation as they were either antidilutive or contingently issuable Ordinary Shares which had not satisfied
the performance conditions attaching at the end of the 2019 financial year.

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:

Weighted average number of Ordinary Shares in issue during the year
Dilutive effect of share awards

Weighted average number of Ordinary Shares for diluted earnings per share

2019
‘000

531,971
1,587

533,558

2018
‘000

703,312
747

704,059

Annual Report and Financial Statements 2019

145

Financial Statements
Notes to the Group Financial Statements continued
year ended 27 September 2019

12. Earnings Per Ordinary Share continued
Earnings Per Share Calculations

Basic earnings per Ordinary Share

Adjusted earnings per Ordinary Share

Diluted earnings per Ordinary Share

Adjusted diluted earnings per Ordinary Share

13. Dividends Paid and Proposed

2019

Continuing
operations
pence

Discontinued
operations
pence

7.7

12.2

2019

Continuing
operations
pence

Discontinued
operations
pence

7.7

12.2

2018

Continuing
operations
pence

Discontinued
operations
pence

1.4

3.4

2018

Continuing
operations
pence

Discontinued
operations
pence

1.4

3.4

Total
pence

19.9

16.0

Total
pence

19.9

15.9

Amounts recognised as distributions to equity holders in the year:
Equity dividends on Ordinary Shares:

Final dividend of 3.37 pence for the year ended 28 September 2018 (2017: 3.37 pence)
Interim dividend of 2.45 pence for the year ended 27 September 2019 (2018: 2.20 pence)

Total

Proposed for approval at AGM:
Equity dividends on Ordinary Shares:

2019
£m

23.8
10.9

34.8

Total
pence

4.8

15.1

Total
pence

4.8

15.1

2018
£m

23.8
15.6

39.4

Final dividend of 3.75 pence for the year ended 27 September 2019 (2018: 3.37 pence)

16.7

23.8

In the prior year 1,210,655 shares were issued in respect of the Scrip Dividend Scheme. The weighted average share price
in the prior year was £1.83 per share.

The proposed final dividend for the year ended 27 September 2019 will be payable on 28 February 2020 to shareholders
on the Register of Members at 3 January 2020.

14. Goodwill and Intangible Assets

Computer
software and
other intangibles
£m

Goodwill
£m

Acquisition
related
intangible assets
– customer
related
£m

409.7
38.7
–
–
–

448.4

459.0
(10.6)

448.4

9.7
–
6.5
(3.6)
(0.2)

12.4

67.6
(55.2)

12.4

5.9
17.5
–
(0.9)
–

22.5

52.3
(29.8)

22.5

Total
£m

425.3
56.2
6.5
(4.5)
(0.2)

483.3

578.9
(95.6)

483.3

Year ended 27 September 2019
Opening net book amount
Acquisitions through business combinations (Note 9)
Additions
Amortisation charge
Impairment charge

Closing carrying amount

At 27 September 2019
Cost
Accumulated impairment/amortisation

Carrying amount

146 Greencore Group plc

Year ended 28 September 2018
Opening net book amount
Additions
Disposals
Currency translation adjustment
Amortisation charge
Impairment Charge
Assets transferred to assets held for sale (Note 33)

Closing carrying amount

At 28 September 2018
Cost
Accumulated impairment/amortisation

Carrying amount

Computer
software and
other intangibles
£m

Goodwill
£m

Acquisition
related
intangible assets
– customer
related
£m

797.1
–
–
11.3
–
(1.4)
(397.3)

409.7

420.3
(10.6)

409.7

17.3
3.0
(0.2)
–
(5.1)
(0.8)
(4.5)

9.7

64.1
(54.4)

9.7

263.2
–
–
6.2
(20.2)
(0.2)
(243.1)

5.9

34.8
(28.9)

5.9

Total
£m

1,077.6
3.0
(0.2)
17.5
(25.3)
(2.4)
(644.9)

425.3

519.2
(93.9)

425.3

In September 2019 the Group completed the acquisition of Freshtime UK Limited, resulting in the recognition of a customer
related intangible asset of £17.5m and goodwill of £38.7m. The intangible asset relates to key customer relationships acquired
as part of the acquisition and are considered to have a remaining useful life of more than 7 years.

During the year the Group recognised an impairment charge of £0.2m to computer software.

During the prior year the Group recognised an impairment charge of £2.4m, which included the impairment of goodwill
of £1.4m relating to the prepared meals business following the rationalisation and optimisation of its longer life ready meals
manufacturing network.

Goodwill Impairment Testing
Goodwill acquired in business combinations is allocated, at acquisition, to the cash generating units (‘CGU’s) that are expected
to benefit from that business combination. The Group has allocated goodwill to its two CGUs, Convenience Foods UK and
Irish ingredients trading businesses. The CGUs represent the lowest level within the Group at which the associated goodwill
is assessed for internal management purposes and are not larger than the operating segment determined in accordance
with IFRS 8 Operating Segments. A summary of the allocation of the carrying value of goodwill by CGU is as follows:

Convenience Foods UK
Irish ingredients trading businesses

2019
£m

446.3
2.1

448.4

2018
£m

407.6
2.1

409.7

The recoverable amount of the Group’s CGUs has been determined based on a value in use calculation. The calculation uses
cash flow projections of CGUs based on the 2020 budget and the four year strategic plan formally approved by the Board
of Directors and specifically exclude incremental profits and other cash flows stemming from any potential future acquisitions.
Cash flows beyond the five year budget period have been calculated by extrapolating the year five forecast cash flows using
a steady 2% (2018: 2%) rate (reflecting inflation but no other growth) for a further period of 25 years and discounting these back
to present values. The application of a valuation period of 30 years to the cash flows has been arrived at after taking account
of the Group’s strong financial position, its established history of earnings growth and cash flow generation, its proven ability
to pursue and integrate value enhancing acquisitions and the nature of the consumer foods market.

Applying these techniques, no impairment arose in either 2019 or 2018.

Annual Report and Financial Statements 2019

147

Financial Statements
Notes to the Group Financial Statements continued
year ended 27 September 2019

14. Goodwill and Intangible Assets continued
Goodwill Impairment Testing continued
Estimation of the carrying value of goodwill is a key judgement in the preparation of the Group Financial Statements.

A present value of the future cash flows of the Convenience Foods UK CGU and the Irish ingredients trading businesses CGU
is calculated using a discount rate of 7.3% (2018: 8.3%). The discount rate used is the Group’s weighted average cost of capital
calculated using the Capital Asset Pricing Model adjusted for the Group’s specific beta coefficient together with a country
risk premium.

The table below is a description of the approach used to determine the values assigned to each key assumption for the purpose
of impairment testing for the Convenience Foods UK CGU and the Irish ingredients trading businesses CGU:

Key assumptions

Basis for determining values assigned to key assumptions

In any areas of
significant uncertainty
management seek
to take a conservative
approach to
attributing values
to key assumptions.

The value assigned to
profitability reflects modest
revenue growth and
increased average future
profitability growth rates.
Revenue and profitability
estimates are consistent
with external sources of
information pertaining
to estimated growth of
the UK convenience food
market and profitability
is consistent with past
experience of the Group.

Profitability
growth

Future profitability is
based on a four year
plan and takes past
experience into account
as management places
value on this key
assumption based on
the Group’s established
history of sales and
earnings growth.

Capital
expenditure

Capital expenditure is
budgeted and forecast
by assigning values to
the investment required
to deliver the estimated
future profitability growth
of the category and
to deliver cost savings.

Working capital Working capital

requirements are based
on historical trends and
past experience taking
the budgeted future
profitability into account.

Management considers
the UK and Ireland
inflation rate.

Inflation

Management also
considers external sources
of information, such as
Nielsen market data and
IGD research, pertaining
to the estimated growth
of the UK market as well as
the edible oil and molasses
food business, customer
behaviour, consumer
behaviour, competitor
activity, long and short
term customer growth
targets, contract wins
and customer attrition.

Management assigns
this value based on past
experience of the Group’s
capital expenditure
requirements as well
as external sources
such as quotes from
suppliers/contractors.

The Group assumes a
modest level of working
movement in the budget
and minimal change in the
outer years. This is borne
out by past experience.

Values assigned to
the inflation rate are
consistent with external
sources of information
such as government
and analyst predictions.

The prior year assumptions were prepared on the same basis.

Sensitivity Analysis
Sensitivity analysis has been carried out on each of the key assumptions used in the value in use calculation for each CGU which
has been performed on a valuation period of 30 years. Changes in the assumptions would lead to an impairment where there
is a decline of 55% in projected cash flows, a reduction in the inflationary linked long term growth rate by 18% or an increase in
the discount rate to 17%. Notwithstanding this analysis the Group believes that any reasonable change in the assumptions applied
would not give rise to the carrying value of goodwill exceeding the recoverable amount of each CGU.

148 Greencore Group plc

15. Property, Plant and Equipment

Year ended 27 September 2019
Opening net book amount
Acquisitions through business combinations (Note 9)
Additions
Disposals
Impairments
Reclassifications
Depreciation charge

Closing net book value

At 27 September 2019
Cost
Accumulated depreciation

Closing net book value

Year ended 28 September 2018
Opening net book amount
Additions
Disposals
Impairments
Reclassifications
Currency translation adjustment
Depreciation charge
Assets transferred to held for sale (Note 33)

Closing net book value

At 28 September 2018
Cost
Accumulated depreciation

Closing net book value

Land and
buildings
£m

Plant and
machinery
£m

Fixtures and
fittings
£m

Capital work in
progress
£m

128.2
3.1
7.7
(0.1)
1.1
27.5
(9.3)

158.2

233.6
(75.4)

158.2

231.3
5.1
(11.8)
(18.3)
9.6
1.7
(16.1)
(73.3)

128.2

192.4
(64.2)

128.2

105.3
2.2
18.8
(0.2)
(1.1)
16.0
(18.7)

122.3

383.9
(261.6)

122.3

171.5
12.0
(8.3)
(17.2)
14.1
0.6
(25.7)
(41.7)

105.3

345.0
(239.7)

105.3

35.1
–
4.2
–
–
2.1
(4.9)

36.5

64.0
(27.5)

36.5

37.4
4.4
(0.3)
(0.7)
2.5
0.2
(5.5)
(2.9)

35.1

57.4
(22.3)

35.1

54.4
–
6.7
–
–
(45.6)
–

15.5

15.5
–

15.5

45.5
40.7
(1.0)
–
(26.2)
0.2
–
(4.8)

54.4

54.4
–

54.4

Total
£m

323.0
5.3
37.4
(0.3)
0.0
(0.0)
(32.9)

332.5

697.0
(364.5)

332.5

485.7
62.2
(21.4)
(36.2)
–
2.7
(47.3)
(122.7)

323.0

649.2
(326.2)

323.0

Following the completion of the rationalisation and optimisation of the Group’s ready meals network in the UK, the Group
assessed the recoverability of related assets at the year end 27 September 2019. The impairment testing indicated a reversal
of an impairment which had been recognised in the prior year relating to land and buildings and plant and machinery totalling
£1.1m and £3.4m respectively. In addition the Group recognised an impairment of plant and equipment in the network with a total
value of £4.5m.

During the prior year the Group recognised a £36.2m charge comprising of a £15.6m charge relating to its ready meals
manufacturing network in the UK, and a £20.6m impairment charge in relation to ceasing production at its Rhode Island facility
and the repurposing of its Jacksonsville facility.

Disposals of property, plant and equipment of £21.4m during the prior year related to the disposal of the Group’s cakes and
desserts operating sites and the Rhode Island facility.

Assets Held Under Finance Leases
During the year all assets held under finances leases were disposed off (see Note 33).

Annual Report and Financial Statements 2019

149

Financial Statements
Notes to the Group Financial Statements continued
year ended 27 September 2019

16. Investment Property

Opening net book amount
Disposal

Closing net book amount

Analysed as:
Cost
Accumulated depreciation

Net book amount

2019
£m

6.3
(0.5)

5.8

5.8
–

5.8

2018
£m

6.3
–

6.3

6.3
–

6.3

The majority of the Group’s investment property is land and therefore not depreciated.

During the year the Group disposed of part of a site that it held in Littlehampton, West Sussex for carrying value. The proceeds
included recovery of the Group’s contribution to development costs of £1.6m.

The fair value of the Group’s investment properties at 27 September 2019 was £5.8m (2018: £6.3m) which reflects its current use.
The valuation was carried out by the Group using an external independent valuer and was arrived at by reference to location,
market conditions and status of planning applications. The fair values of investment properties are considered a Level 3 fair
value measurement.

An increase or decrease in the price per hectare of 5% would result in a 5% increase or decrease in the fair value of the land.

17. Inventories

Raw materials and consumables
Work in progress
Finished goods and goods for resale

None of the above carrying amounts have been pledged as security for liabilities entered into by the Group.

Inventory recognised within cost of sales for continuing operations

The amount recognised as an expense for inventory write-downs for the year, was £1.1m (2018: £2.2m).

18. Trade and Other Receivables

Current
Trade receivables
Prepayments
VAT
Other receivables

Total

2019
£m

22.1
0.3
23.5

45.9

2018
£m

20.6
0.3
18.2

39.1

2019
£m

690.8

2018
£m

748.4

2019
£m

118.5
16.9
9.0
29.4

173.8

2018
£m

129.6
13.0
8.1
30.3

181.0

The fair value of current receivables approximates book value due to their size and short term nature.

The Group’s exposure to credit and currency risk and impairment losses related to trade and other receivables is set out in
Note 24.

150 Greencore Group plc

19. Trade and Other Payables

Current
Trade payables
Employment related taxes
Other payables and accrued expenses
Declared interim dividend

Subtotal – current

Non-current
Other payables

Total

The 2019 interim dividend was paid in July 2019.

The Group’s exposure to liquidity and currency risk is disclosed in Note 24.

20. Cash and Cash Equivalents

Cash at bank and in hand, being cash and cash equivalents

2019
£m

241.2
6.6
110.6
–

358.4

3.7

362.1

2018
£m

242.6
6.6
113.1
15.6

377.9

3.7

381.6

2019
£m

41.6

2018
£m

37.0

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 22 includes
details of the Group’s net debt at 27 September 2019.

21. Borrowings

Current
Finance leases

Subtotal – current

Non-current
Bank borrowings
Private Placement Notes
Non-bank borrowings
Finance leases

Sub-total – non-current borrowings

Total borrowings

The maturity of non-current borrowings is as follows:

Between 1 and 2 years
Between 2 and 5 years
Over 5 years

2019
£m

–

213.9
116.2
–
–

330.1

2019
£m

–
298.4
31.7

330.1

2018
£m

0.2

350.5
124.8
62.3
0.3

537.9

538.1

2018
£m

112.6
369.0
56.3

537.9

Annual Report and Financial Statements 2019

151

Financial StatementsNotes to the Group Financial Statements continued
year ended 27 September 2019

21. Borrowings continued
The exposure of the Group’s borrowings to interest rate changes and the contractual repricing dates at the Financial Position
date are as follows:

6 months or less
1–5 years
Over 5 years

2019
£m

213.9
84.5
31.7

330.1

2018
£m

350.9
130.9
56.3

538.1

The average spread that the Group paid on its financing facilities in the year ended 27 September 2019 was 2.24% (2018: 2.29%).

Following the disposal of the US business, the Group fully reset its capital structure, reshaping its debt and associated
derivative portfolio to reflect the removal of US dollar assets from the business and also refinanced its primary sterling bank
debt agreements.

Bank Borrowings
The Group’s bank borrowings are denominated in sterling. Interest is set at commercial rates based on a spread above LIBOR.

In January 2019 the Group completed the refinancing of its £300m revolving credit bank facility with a new five year facility at
similar terms. In addition, the Group also refinanced its £50m bank bilateral loan with a new three year facility at similar terms.

In September 2019, under the terms of the existing revolving credit facility, the Group entered into a new £40m revolving
credit bank facility, with a matching maturity date to the primary £300m facility.

At 27 September 2019, the Group’s bank borrowings, net of finance fees comprised of £213.9m (2018: £350.9m, denominated
as £148m, $261m, €5m), with maturities ranging from January 2022 to January 2024. In addition, the Group had available
£175.0m (2018: £188.3m) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met.
Uncommitted facilities undrawn at 27 September 2019 amounted to £7.0m (2018: £12.2m).

Private Placement Notes
The Group’s outstanding Private Placement Notes net of finance fees comprised of £116.2m (denominated as $120.9m and £18m)
at 27 September 2019 (2018: £124.8m, denominated as $139.5m and £18m). These were issued as fixed rate debt in October 2013
($65m) and June 2016 ($74.5m and £18m) with maturities ranging between October 2021 and June 2026.

In December 2018 the Group repaid $18.6m of its $139.5m US Private Placement Notes at par and swapped the remaining balance
of $120.9m from fixed rate US dollar to fixed rate sterling (using cross currency interest rate swaps designated as cash flow
hedges). The applicable fixed rates on the Private Placement Notes as at 27 September 2019 ranged from 4.14% to 6.15%.

Non-Bank Borrowing
In December 2018 the Group repaid its €70m non-bank borrowings and terminated the associated cross currency interest
rate swaps, which had converted the €70m loan to a fixed rate US dollar debt instrument.

Guarantees
The Group’s financing facilities 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.

152 Greencore Group plc

22. 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 less net cash and cash equivalents.

The reconciliation of opening to closing net debt for the year ended 27 September 2019 is as follows:

Cash and cash equivalents
Bank borrowings
Private Placement Notes
Non-bank borrowings
Finance leases

Total

Cash and cash equivalents
Bank borrowings
Private Placement Notes
Non-bank borrowings
Finance leases

Total

At
28 September
2018
£m

37.0
(350.5)
(124.8)
(62.3)
(0.5)

(501.1)

At
29 September
2017
£m

19.8
(353.7)
(121.9)
(61.6)
(1.8)

(519.2)

Acquisitions
£m

Cash flow
£m

Translation and
non-cash
adjustments
£m

At
27 September
2019
£m

9.2
–
–
–
–

9.2

(5.2)
143.0
14.6
63.1
0.4

215.9

0.6
(6.4)
(6.0)
(0.8)
0.1

(12.5)

41.6
(213.9)
(116.2)
–
–

(288.5)

Acquisitions
£m

Cash flow
£m

Translation and
non-cash
adjustments
£m

At
28 September
2018
£m

–
–
–
–
–

–

17.2
9.6
–
–
1.3

28.1

Currency Profile
The currency profile of net debt and derivative financial instruments at 27 September 2019 was as follows:

Cash and cash equivalents
Borrowings

Net Debt

Other derivative financial instruments

Total

US dollar
£m

–
(98.2)

(98.2)

–

(98.2)

Euro
£m

6.5
–

6.5

–

6.5

The currency profile of net debt and derivative financial instruments at 28 September 2018 was as follows:

Cash and cash equivalents
Borrowings

Net Debt

Other derivative financial instruments

Total

US dollar

13.0
(306.2)

(293.2)

(11.2)

(304.4)

Euro

9.7
(66.7)

(57.0)

–

(57.0)

Sterling

14.3
(165.2)

(150.9)

(1.5)

(152.4)

Total

37.0
(538.1)

(501.1)

(12.7)

(513.8)

Annual Report and Financial Statements 2019

153

–
(6.4)
(2.9)
(0.7)
–

(10.0)

Sterling
£m

35.1
(231.9)

(196.8)

1.9

37.0
(350.5)
(124.8)
(62.3)
(0.5)

(501.1)

Total
£m

41.6
(330.1)

(288.5)

1.9

(194.9)

(286.6)

Financial StatementsNotes to the Group Financial Statements continued
year ended 27 September 2019

22. Analysis of Net Debt continued
Interest Rate Profile
The interest rate profile of net debt at 27 September 2019 was as follows:

Floating rate net debt
Fixed rate net debt

Total

The interest rate profile of net debt at 28 September 2018 was as follows:

Floating rate net debt
Fixed rate net debt

Total

US dollar
£m

–
(98.2)

(98.2)

US dollar
£m

(163.0)
(130.2)

(293.2)

Euro
£m

6.5
–

6.5

Euro
£m

5.3
(62.3)

(57.0)

Sterling
£m

(89.4)
(107.4)

(196.8)

Sterling
£m

(43.2)
(107.7)

(150.9)

Total
£m

(82.9)
(205.6)

(288.5)

Total
£m

(200.9)
(300.2)

(501.1)

23. Derivative Financial Instruments
Derivative financial instruments recognised as assets and liabilities in the Statement of Financial Position are analysed as follows:

Current
Forward foreign exchange contracts – not designated as hedges

Non-current
Forward foreign exchange contracts – not designated as hedges
Cross-currency interest rate swaps – cash flow hedges
Interest rate swaps – cash flow hedges

Total

Current
Forward foreign exchange contracts – not designated as hedges

Non-current
Cross-currency interest rate swaps – cash flow hedges
Interest rate swaps – cash flow hedges
Interest rate swaps – not designated as hedges

Total

Assets
£m

2019

Liabilities
£m

–

–
5.5
–

5.5

(0.3)

(0.4)
–
(2.9)

(3.3)

(3.6)

Assets
£m

2018

Liabilities
£m

0.3

–
–
0.5

0.5

0.8

(0.1)

(11.8)
(1.5)
(0.1)

(13.4)

(13.5)

Net
£m

(0.3)

(0.4)
5.5
(2.9)

2.2

1.9

Net
£m

0.2

(11.8)
(1.5)
0.4

(12.9)

(12.7)

154 Greencore Group plc

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 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.

IFRS 9 Financial Instruments was effective for the Group from the 29 September 2018 and replaces IAS 39 Financial Instruments:
Recognition and Measurement. The hedge accounting requirements under IFRS 9 are optional. The Group has chosen not to
apply the new hedge accounting rules under IFRS 9 and will continue to apply IAS 39. The decision has not impacted on how
the Group accounts for effective hedges.

Cross-currency Interest Rate Swaps
The Group utilises cross currency interest rate swaps to convert fixed rate dollar Private Placement Notes into fixed rate
sterling liabilities.

Following the repayment of $18.6m of its $139.5m US Private Placement Notes at par, the Group swapped the remaining balance
of $120.9m from fixed rate US dollar to fixed rate sterling. The fixed rate US dollar to fixed rate sterling swaps are designated
as cash flow hedges under IAS 39 Financial Instruments: Recognition and Measurement.

In December 2018, the Group terminated its euro/US dollar cross currency interest rate swap as part of its reshaping of its debt
and derivative portfolio. This resulted in a cash outflow of £13.0m.

Interest Rate Swaps
The Group utilises interest rate swaps to convert floating rate sterling into fixed rate debt liabilities.

The principal amount of the Group’s borrowings which are swapped at 27 September 2019 total £90m (2018: £90m and $30m).
In addition, the Group has entered into forward starting interest rate swaps of £50m, split into two tranches of £25m. These
commenced in October 2019 respectively with maturities in October 2021.

The total value of sterling interest rate swaps designated as cash flow hedges under lAS 39 Financial Instruments: Recognition
and Measurement at 27 September 2019 was £140m inclusive of forward starting derivatives (2018: £140m). At 27 September 2019,
the fixed interest rates varied from 0.558% to 2.095% (2018: 0.558% to 2.095%) with maturities ranging from February 2020
to October 2021 (2018: October 2018 to October 2021).

In November 2018 the Group terminated US dollar interest rate swaps of a total nominal value of $70m, resulting in a cash receipt
of £0.4m. In addition US dollar interest rate swaps of a total nominal value of $30m matured in October 2018.

Forward Foreign Exchange Contracts
The notional principal amounts of outstanding forward foreign exchange contracts at 27 September 2019 total £25.8m (2018:
£39.0m). No outstanding forward foreign exchange contracts are designated as cash flow hedges as at the 27 September 2019.

24. Financial Risk Management
Financial Risk Management Objectives and Policies
The Group’s activities expose it to a variety of financial risks that include interest rate risk, foreign currency risk, liquidity risk,
credit risk and price risk. These financial risks are actively managed by the Group’s treasury and purchasing departments 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 instruments are carried at fair value, using different valuation methods. The different levels have been defined
as follows:

Level 1:
Level 2:

Level 3:

Quoted prices (unadjusted) in active markets for identical assets and liabilities.
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).
Inputs for the asset or liability that are not observable market data (un-oberservable inputs).

Annual Report and Financial Statements 2019

155

Financial StatementsNotes to the Group Financial Statements continued
year ended 27 September 2019

24. Financial Risk Management continued
Financial Risk Management Objectives and Policies continued
The fair value of the financial liabilities held at amortised cost and the financial liabilities in fair value hedges are within Level 2
of the fair value hierarchy and have been calculated by discounting the expected future cash flows at prevailing interest rates
and by applying period end exchange rates.

Loans and
receivables
£m

FV through
income
statement
£m

Cash flow
hedges
£m

Financial
liabilities at
amortised cost
£m

2019

156.9
41.6
–
–
–
–

–
–
(0.7)
–
–
–

–
–
–
(213.9)
(116.2)
355.5

–
–
2.6
–
–
–

2018

Loans and
receivables
£m

FV through
income
statement
£m

Cash flow
hedges
£m

Financial
liabilities at
amortised cost
£m

168.0
37.0
–
–
–
–
–
–

–
–
(11.2)
–
–
–
–
(2.8)

–
–
(1.5)
–
–
–
–
–

–
–
–
(350.5)
(124.8)
(62.3)
(0.5)
(372.2)

Carrying
value
£m

156.9
41.6
1.9
(213.9)
(116.2)
355.5

Carrying
value
£m

168.0
37.0
(12.7)
(350.5)
(124.8)
(62.3)
(0.5)
(375.0)

Fair

value
£m

156.9
41.6
1.9
(216.5)
(120.2)
355.5

Fair

value
£m

168.0
37.0
(12.7)
(349.4)
(127.2)
(62.6)
(0.5)
(375.0)

Trade and other receivables
Cash and cash equivalents*
Derivative financial instruments*
Bank borrowings*
Private Placement Notes*
Trade and other payables

Level 2 denoted by *.

Trade and other receivables
Cash and cash equivalents*
Derivative financial instruments*
Bank borrowings*
Private Placement Notes*
Non-bank borrowings*
Finance lease*
Trade and other payables

Level 2 denoted by *.

The carrying value of trade and other receivables and trade and other payables are considered a reasonable approximation
of fair value. 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 manage the level of floating interest rate exposure.

Following the disposal of the Group’s US business the exposure to fluctuations in US dollar has been substantially reduced. The
Group holds private placement notes in US dollars which have been swapped to sterling using cross currency interest rate swaps.

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
Effect of an upward movement of 100 basis points

negative = cost, positive = gain

On profit after tax

On equity

2019
£m

1.0
(1.2)

2018
£m

2.2
(2.4)

2019
£m

(1.1)
0.8

2018
£m

(2.4)
2.1

156 Greencore Group plc

Foreign Currency Risk
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.

The Group’s trading entity exposures to foreign currency risk for amounts not denominated in the functional currency of the
relevant entity at the date were as follows (excluding derivative financial instruments):

Denominated in:

Trade receivables and other receivables
Trade payables and other payables
Cash and cash equivalents

Gross exposure

Euro
£m

–
(0.7)
0.0

(0.7)

2019

US dollars
£m

0.9
(0.3)
(0.3)

0.3

Sterling
£m

1.8
(1.1)
(0.0)

0.7

Euro
£m

0.1
(1.3)
1.4

0.2

2018

US dollars
£m

1.3
(0.7)
0.4

1.0

Sterling
£m

1.1
(0.8)
0.5

0.8

Following the disposal of the Group’s US business in November 2018 the exposure to fluctuations in US dollar has been
substantially reduced. Prior to this, the effect on equity of a movement between sterling and US dollar was offset by the
translation of the net assets of the subsidiaries against which the US dollar and euro borrowings were 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.

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 impact 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/(loss)
Impact of 10% strengthening of sterling vs dollar gain/(loss)

On profit after tax

On equity

2019
£m

(0.5)
(0.9)

2018
£m

(0.8)
0.3

2019
£m

5.1
–

2018
£m

2.7
67.9

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.

Annual Report and Financial Statements 2019

157

Financial StatementsNotes to the Group Financial Statements continued
year ended 27 September 2019

24. Financial Risk Management continued
Liquidity Risk continued
The following are the carrying amounts and contractual liabilities of financial liabilities (including interest payments):

27 September 2019

Non-Derivative Financial Instruments
Bank borrowings
Private Placement Notes
Trade and other payables
Derivative Financial Instruments
Interest rate swaps – cash flow hedges

Inflow/(outflow)
(Outflow)

Cross-currency interest rate swaps – cash flow hedges

Inflow
(Outflow)

Forward foreign exchange contracts

Inflow
(Outflow)

28 September 2018

Non-Derivative Financial Instruments
Bank borrowings
Private Placement Notes
Non-bank borrowings
Finance leases
Trade and other payables
Other financial liabilities
Derivative Financial Instruments
Interest rate swaps – cash flow hedges

Inflow/(outflow)

Interest rate swaps – not designated as hedges

Inflow/(outflow)

Cross-currency interest rate swaps – not designated
as hedges
Inflow
(Outflow)

Forward foreign exchange contracts

Inflow
(Outflow)

Carrying
amount
£m

Contractual
amount
£m

Period
1-6 months
£m

Period
6-12 months
£m

Period
1-5 years
£m

Period
> 5 years
£m

(213.9)
(116.2)
(355.5)

(2.9)
–
–
5.5
–
–
(0.7)

(230.2)
(138.3)
(355.5)

–
(3.1)
–
–
113.4
(107.5)

25.8
(26.5)

(2.3)
(3.1)
(355.5)

–
(0.2)
–
–
2.7
(2.0)

11.6
(11.8)

(2.2)
(3.1)
–

–
(1.2)
–
–
2.7
(2.0)

7.4
(7.6)

(225.7)
(82.9)
–

–
(1.7)
–
–
75.1
(69.1)

6.8
(7.1)

–
(49.2)
–

–
–
–
–
32.9
(34.4)

–
–

Carrying
amount
£m

Contractual
amount
£m

Period
1-6 months
£m

Period
6-12 months
£m

Period
1-5 years
£m

Period
> 5 years
£m

(350.5)
(124.8)
(62.3)
(0.5)
(372.2)
(2.8)

(1.5)
–
0.4
–

(11.8)
–
–
0.2
–
–

(378.0)
(156.1)
(65.3)
(0.5)
(372.2)
(2.8)

–
(1.9)

0.4

–
65.3
(80.5)
–
34.0
(33.7)

(3.5)
(3.3)
(1.0)
(0.1)
(372.2)
–

–
0.3

–

–
1.0
(2.2)
–
28.3
(28.2)

(3.5)
(3.3)
(1.0)
(0.1)
–
(1.1)

–
(0.9)

–

–
1.0
(2.2)
–
5.1
(5.1)

(371.0)
(88.6)
(63.3)
(0.3)
–
(2.7)

–
(1.3)

0.4

–
63.3
(76.1)
–
0.6
(0.4)

–
(60.9)
–
–
–
–

–
–

–

–
–
–
–
–
–

158 Greencore Group plc

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.

Trade receivables
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 and reviewing outstanding balances for indicators of
impairment. There have been no significant changes to the Group’s credit risk parameters or to the composition of the Group’s
trade receivables during the financial year.

The Group also manages credit risk in the UK 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, £39.1m (2018: £40.3m) has been derecognised at year end.

The aged analysis of trade receivables for the year ended 27 September 2019 and 28 September 2018 is summarised in the
table below.

Receivable within 1 month of the Balance Sheet date
Receivable between 1 and 3 months of the Balance Sheet date
Receivable greater than 3 months of the Balance Sheet date

Total trade receivables

2019
£m

111.9
4.9
1.7

118.5

2018
£m

123.9
3.9
1.8

129.6

Trade receivables are in general receivable within 90 days of the date, are unsecured and are not interest bearing. The figures
disclosed above are stated net of allowances for impairment.

The Group applies the simplified approach to providing for expected credit losses (‘ECL’) permitted by IFRS 9 Financial
Instruments, which requires expected lifetime losses to be recognised from initial recognition of the trade receivables.
The adjustment in relation to the adoption of IFRS 9 and the ECL model at 29 September 2018 was £0.9 million. The Group
uses an allowance matrix to measure the ECL’s of trade receivables based on its credit loss rates. Expected loss rates are based
on historical payment profiles of sales and the corresponding historical credit loss experience. The historical loss rates are
adjusted to reflect current and forward economic factors if there is evidence to suggest these factors will affect the ability
of the customer to settle receivables. The Group has determined the ECL default rate using market default risk probabilities
with regards its key customers.

The movements in the allowance for impairment of receivables are as follows:

At the beginning of the year
IFRS 9 transition adjustment

Opening balance (restated)
Provided during year
Written off during the year
Reclassed to assets held for sale

At end of year

2019
£m

(1.6)
(0.9)

(2.5)
(0.1)
0.6
–

(2.0)

2018
£m

(1.1)
–

(1.1)
(1.7)
0.8
0.4

(1.6)

Annual Report and Financial Statements 2019

159

Financial Statements
Notes to the Group Financial Statements continued
year ended 27 September 2019

24. Financial Risk Management continued
Credit Risk continued
Cash and cash equivalents
Exposure to credit risk on cash and derivative financial instruments is actively monitored by the Group’s treasury department.
Risk of counterparty default arising on cash and cash equivalents is controlled by dealing with high quality institutions and
by policy, limiting the amount of credit exposure to any one bank or institution. The Group transacts with a variety of high
credit quality financial institutions for the purpose of placing deposit. The Group actively monitors its credit exposure to each
counterparty to ensure compliance with the counterparty risk limits of the Board approved treasury policy.

Of the total cash and cash equivalent at 27 September 2019, the cash was predominantly held by financial institutions with
minimum short term ratings of A-1 (Standard and Poor’s) or P-1 (Moody’s). The Group accordingly does not expect any loss
in relation to its cash and cash equivalents at 27 September 2019.

The maximum exposure to credit risk for cash and cash equivalents by geographic location of financial institution was as follows:

UK
US
Ireland

Carrying amount

2019
£m

35.6
–
6.0

41.6

2018
£m

15.2
12.6
9.2

37.0

Price Risk
The Group purchases a variety of commodities which can be subject to significant price volatility. The price risk on these
commodities is managed by the Group’s purchasing function by closely monitoring markets. The Group’s policy is to minimise
its exposure to volatility by adopting an appropriate forward purchase strategy by providing forward price forecasts to the
business. This forecast enables the Group to both predict and manage inflation.

Capital Management
The Group manages its capital to ensure that entities in the Group will be able to trade on a going concern basis while
maximising the return to stakeholders through the optimisation of the debt and equity balance. The change in debt capital
structure in the year is set out in Note 21 and the change in equity is set out in Note 27. 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 invested capital of the Group at 27 September 2019 is £667.2m. The Group
monitors the return on invested capital of the Group as a key performance indicator; the calculation is set out in the Alternative
Performance Measures.

25. Provisions

At beginning of year
Provided in year
Acquisitions through business combinations (Note 9)
Utilised in year
Released in year
Unwind of discount to present value in the year
Currency translation adjustment

At end of year

Analysed as:

Non-current liabilities
Current liabilities

Leases
£m

Remediation
and closure
£m

3.8
–
0.1
(0.3)
(0.5)
0.1
–

3.2

6.0
–
–
(4.1)
–
–
–

1.9

Other
£m

5.8
1.2
–
–
–
–
0.1

7.1

2019
£m

6.7
5.5

12.2

Total
£m

15.6
1.2
0.1
(4.4)
(0.5)
0.1
0.1

12.2

2018
£m

8.9
6.7

15.6

The estimation of provisions is a key judgement in the preparation of the Financial Statements.

160 Greencore Group plc

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 ten years.

Provisions utilised in the year relate to onerous leases and the provision released in the year resulted from the purchase of
a freehold title of one of the Group’s UK manufacturing facilities.

Remediation and Closure
Remediation and closure obligations were established to cover either a statutory, contractual or constructive obligation of the
Group. The majority of the obligation will unwind in one to three years. Remediation and closure obligations utilised in the year
primarily relate to the optimisation of longer life ready meals manufacturing in the UK.

Other
Other provisions consist of warranty claims relating to disposed businesses and provisions for legal costs and onerous IT
contracts relating to the US business disposed of in November 2018. It is anticipated that these provision will unwind in one
to five years.

26. Retirement Benefit Obligations
The Group operates defined contribution pension schemes in all of its main operating locations. The Group also has legacy
defined benefit pension schemes, which were closed to future accrual on 31 December 2009.

Defined Contribution Pension Schemes
The total cost charged to the income statement of £9.3m (2018: £7.8m) represents employer contributions payable to the defined
contribution pension schemes at rates specified in the rules of the schemes. At year end, £1.1m (2018: £1.0m) was included in other
accruals in respect of defined contribution pension accruals.

Legacy Defined Benefit Pension Schemes
The Group operates three legacy defined benefit pension schemes in the Republic of Ireland (the ‘Irish schemes’) and two legacy
defined benefit pension schemes and one legacy defined benefit commitment 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 pension obligation,
the related current service cost and, where applicable, past service cost.

All of the legacy defined benefit pension 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 pension payments. Scheme assets are held in separate
trustee administered funds.

These plans have broadly similar regulatory frameworks. Responsibility for governance of the plans, including investment
decisions and contribution schedules, lies with the Company and the respective boards of trustees.

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 Employee Benefits. 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 Employee Benefits 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. Full actuarial valuations were carried out between
31 March 2017 and 31 March 2019. The Group has agreed funding valuations in respect of all its relevant obligations including the
UK Defined Benefit Scheme, the Groups primary scheme in the UK in March 2017. In general, actuarial valuations are not available
for public inspection, however, the results of valuations are advised to the members of the various schemes. Based on current
discussions with the trustees of the scheme cash contributions are expected to remain broadly unchanged at approximately £15m
in FY20. All of the schemes are operating under the terms of funding proposals agreed with the relevant pension authorities.

The Group continues to seek ways to reduce its liabilities through various restructuring initiatives in co-operation with the
respective schemes which if implemented could modestly increase the annual cash funding requirements. In the period the
trustees of one of the smaller legacy defined benefit pension schemes in the UK agreed to the purchase of an insurance policy
over the scheme liabilities which is accounted for as a plan asset under IAS 19 Employee Benefits.

Annual Report and Financial Statements 2019

161

Financial StatementsNotes to the Group Financial Statements continued
year ended 27 September 2019

26. Retirement Benefit Obligations continued
Legacy Defined Benefit Pension Assets and Liabilities

Fair value of plan assets
Present value of scheme liabilities

(Deficit)/surplus in schemes
Deferred tax asset (Note 11)

Net (liability)/asset at end of year

Presented as:
Retirement benefit asset*
Retirement benefit obligation

UK
Schemes
£m

Irish
Schemes
£m

251.3
(378.8)

(127.5)
21.6

(105.9)

273.4
(237.9)

35.5
(4.4)

31.1

Total

2019
£m

524.7
(616.7)

(92.0)
17.2

(74.8)

2018
£m

473.4
(562.7)

(89.3)
15.7

(73.6)

36.4
(128.4)

15.3
(104.6)

* The value of a net pension benefit asset is the value of any amount the Group reasonably expects to recover by way of refund of a surplus from

the remaining assets of a plan at the end of the plan’s life.

Ruling 14 of the International Financial Reporting Standards Interpretations Committee (IFRIC 14) clarifies how the asset ceiling
should be applied, particularly how it interacts with local minimum funding rules. The Group has determined that it has an
unconditional right to a refund of surplus assets if the schemes are run off until all members have left the plan.

Movement in the Fair Value of Plan Assets

Change in plan assets
Fair value of plan assets at beginning of year
Interest income on plan assets
Actuarial gain
Administrative expenses paid from plan assets
Employer contributions
Benefit payments
Effect of exchange rate changes

Fair value of plan assets at end of year

Movement in the Present Value of Legacy Defined Benefit Obligations

Change in benefit obligation
Benefit obligation at beginning of year
Interest expense
Past service cost
Actuarial loss/(gain) on financial assumptions
Actuarial (gain) on demographic assumptions
Actuarial (gain) on experience
Benefit payments
Effect of exchange rate changes

Liability recognised in at end of year

162 Greencore Group plc

2019
£m

2018
£m

473.4
10.3
51.6
(0.7)
16.7
(26.5)
(0.1)

524.7

478.6
10.1
2.5
(0.7)
15.1
(34.7)
2.5

473.4

2019
£m

2018
£m

562.7
12.8
3.0
83.4
(11.7)
(6.8)
(26.5)
(0.2)

616.7

603.4
13.6
–
(3.1)
(2.5)
(16.2)
(34.8)
2.3

562.7

Risks and Assumptions
The legacy defined employee benefit plans expose the Group to a number of risks, the most significant of which are:

Asset volatility: The plan liabilities are calculated using a discount rate set with reference to corporate bond yields. If assets
underperform this yield this will create a deficit. The plans hold equities which, though expected to outperform corporate bonds
in the long term, create volatility and risk in the short term. The allocation to equities is monitored to ensure that it remains
appropriate given the plans’ long term objectives.

Discount rates: The discount rates employed in determining the present value of the schemes’ liabilities are determined by
reference to market yields at the date on high-quality corporate bonds of a currency and term consistent with the currency
and term of the associated post-employment benefit obligations. Changes in discount rates impact the quantum of the liabilities.

Inflation risk: Some of the Group’s pension obligations are linked to inflation; higher inflation will lead to higher liabilities
(although in most cases, caps on the level of inflationary increases are in place to protect the plan against extreme inflation).
The rate of inflation is derived from the Retail Price Index (RPI) in the UK. The Irish inflation assumption has been set based
on a combination of various methods including Irish Government and ECB inflation targets.

Longevity risk: In the majority of cases, the Group’s legacy defined benefit pension schemes provide benefits for the life
of the member, so increases in life expectancy will give rise to higher liabilities.

The size of the obligation is sensitive to judgemental actuarial assumptions. These include demographic assumptions covering
mortality, economic assumptions covering price inflation and benefit increases, together with the discount rate.

The principal actuarial assumptions are as follows:

Rate of increase in pension payments*
Discount rate
Inflation rate**

UK Schemes

Irish Schemes

2019

2018

2019

2018

2.95%
1.80%
3.05%

3.10%
2.90%
3.20%

0.00%
0.85%
1.50%

0.00%
1.60%
1.60%

* The rate of increase in pension payments applies to the majority of the liability base, however there are certain categories within the Group’s Irish

Schemes that have an entitlement to pension indexation.

** Inflation is RPI for UK schemes, for reference Consumer Price Index (CPI) is assumed to be 1% less than RPI.

On 26 October 2018, the High Court of Justice of England and Wales issued a judgement on a claim regarding the rights of
members to equality in defined benefit pension schemes. The ruling concluded that schemes are under a duty to equalise
benefits for all members, regardless of gender, in relation to Guaranteed Minimum Pension (‘GMP’) benefits. The court ruling
impacts the majority of companies with a UK defined benefit pension plan that was in existence before 1997. For the Group,
an estimate was made of the impact of GMP equalisation, which increased the pension scheme liabilities by £3.0m with a
corresponding charge to exceptional operating items. Whilst guidance has been issued by the Department of Work and
Pensions, legislative provisions regarding the change are still being finalised. Therefore in the continued absence of guidance,
the Group has maintained the estimate of £3.0m as at 27 September 2019.

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 reflecting the characteristics of the membership using the demographic tables from
Club Vita research combined with the CMI 2019 model for future improvements in mortality. The average life expectancy, in years,
of a pensioner retiring at 65 is as follows:

Male
Female

UK Schemes

Irish Schemes

2019
years

22
24

2018
years

23-24
23-24

2019
years

23
24

2018
years

23
24

Annual Report and Financial Statements 2019

163

Financial StatementsNotes to the Group Financial Statements continued
year ended 27 September 2019

26. Retirement Benefit Obligations continued
Sensitivity of Pension Liability to Judgemental Assumptions

Assumption

Change in assumption

Discount rate
Discount rate
Rate of inflation
Rate of inflation
Rate of mortality

Decrease by 0.5%
Increase by 0.5%
Decrease by 0.5%
Increase by 0.5%
Members assumed to live 1 year longer

Sensitivity of Pension Scheme Assets to Yield Movements

Assumption

Change in assumption

Change in bond yields

Decrease by 0.5%

Impact on Scheme Liabilities

UK
Schemes

↑£36.4m
↓£33.8m
↓£18.1m
↑£19.4m
↑£12.4m

Irish
Schemes

↑£16.1m
↓£15.0m
↓£5.3m
↑£5.5m
↑£10.0m

Total

↑£52.5m
↓£48.8m
↓£23.4m
↑£24.9m
↑£22.4m

Impact on Scheme Assets

UK
Schemes

↑£26.0m

Irish
Schemes

↑£14.1m

Total

↑£40.1m

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. The
sensitivity analysis intends to provide assistance in understanding the sensitivity of the valuation of pension liabilities to market
movements on discount rates, inflation rates and mortality assumptions for scheme beneficiaries.

Hedging Strategy
The Trustees invest the funds in a range of assets with the objective of maximising the fund return with a view to containing
the cost of funding the scheme whilst at the same time maintaining an acceptable risk profile. In assessing the risk profile,
the trustees take account of the nature and duration of the liabilities.

Plan assets are comprised as follows:

Cash
Equity instruments
Debt instruments
Real estate
Derivatives
Investment funds
Insurance contracts

Fair value of plan assets

2019

Quoted
£m

Unquoted
£m

12.2
63.7
251.5
21.4
69.9
86.2
–

504.9

–
–
–
–
–
–
19.8

19.8

Total
£m

12.2
63.7
251.5
21.4
69.9
86.2
19.8

524.7

2018

Quoted
£m

Unquoted
£m

6.7
76.3
199.7
21.2
57.2
112.0
–

473.1

–
–
–
–
–
–
0.3

0.3

Total
£m

6.7
76.3
199.7
21.2
57.2
112.0
0.3

473.4

The primary Irish and UK Schemes have Liability Driven Investment (‘LDI’) for 76% (2018: 76%) of the Irish funds and 32%
(2018: 32%) of the UK funds which hedge over 80% of the interest rate and c.80% inflation risk in the schemes (when measured
relative to the economic value of the liabilities). The hedging strategy is designed to reduce the schemes’ exposure to changes
in interest rates and inflation expectations, therefore, reducing funding level risk and volatility. The trustees review investment
strategy regularly.

The hedging on the Irish Schemes is provided via a mix of interest rate and inflation swaps and a buy and hold credit portfolio.
The interest rate and inflation swaps held are an exchange of cash flows where the initial market value of the bond portfolio
on one side of the swap equals the present value of the pre-defined payments on the other side of the swap. A limited amount
of leverage is used to enable a greater reduction in liability risk. The hedging on the UK Schemes is provided via pooled fund
manager funds which have specified limits on leverage.

164 Greencore Group plc

Maturity Analysis
The expected maturity analysis is set out in the table below:

Expected benefit payments:
Within 5 years
Between 6 and 10 years
Between 11 and 15 years
Between 16 and 20 years
Between 21 and 25 years
Over 25 years

UK Schemes
% of benefits

Irish Schemes
% of benefits

Total % of
benefits

8%
10%
12%
14%
14%
42%

24%
22%
18%
13%
9%
14%

14%
14%
14%
14%
12%
32%

The weighted average duration of the UK and Irish legacy defined benefit obligations are 18.8 years and 13.5 years respectively.

Greencore Group Pension Scheme Contingent Asset
The primary scheme in Ireland, Greencore Group Pension Scheme has a mortgage and charge relating to certain property assets
of the Group with a carrying value of £5.2m (2018: £5.2m) 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 certain requirements, 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.

Pension Funding Partnership
In 2013, the Group entered into arrangements with the Greencore UK Legacy Defined Benefit Scheme (‘the UK Scheme’) to
address £40.0m of the actuarial deficit in the UK 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 UK Scheme
members’ benefits.

On 10 May 2013, the Group made a contribution to the UK Scheme of £32.8m. On the same day, the UK Scheme’s trustees
invested £32.8m 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 2019, SLP held properties with a carrying value of £16.5m (2018: £16.5m) and trade
receivables with a carrying value of £36.0m (2018: £36.0m) in the Group Financial Statements. The properties are leased to other
Group undertakings. As a partner in the 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 IFRS 10 Consolidated Financial Statements. 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.

Annual Report and Financial Statements 2019

165

Financial Statements
Notes to the Group Financial Statements continued
year ended 27 September 2019

27. Share Capital

Authorised

1,000,000,000 Ordinary Shares of £0.01 each (2018: 1,000,000,000 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

446,006,581 (2018: 706,978,416) Ordinary Shares of £0.01 each
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)
tender offer (C)
Scrip dividends (D)

2019
£m

10.0
4.3
160.1
–

174.4

2019
£m

4.5
–

4.5

2019
£’000

7,058
1
(2,610)
–

4,449

2018
£m

10.0
4.3
160.1
–

174.4

2018
£m

7.1
–

7.1

2018
£’000

7,057
1
–
12

7,070

(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 and the Marine or some other person appointed by the Minister. In 2011, many of the rights
attaching to the Special Share were abolished.

(B) 53,806 share options (2018: 120,950) granted under the Sharesave Scheme were exercised in the year at a nominal value of £0.001m (2018: £0.001m).

See Note 6.

(C) The Group returned £509.0m to shareholders by way of a tender offer, executed on 31 January 2019. The Group acquired 261,025,641 Ordinary Shares

in the Company on the London Stock Exchange, at the Offer Price of £1.95 per Ordinary Share and the shares were subsequently cancelled. The Ordinary
Shares acquired represented approximately 36.92% of the voting rights attributable to the Ordinary Shares immediately prior to acquisition. The total
Ordinary Shares in issue at 27 September 2019 was 445,967,327.

(D) During the prior year 1,210,655 shares were issued in respect of the Scrip Dividend Scheme for £2.8m. The scrip dividend scheme was not available

to shareholders in the current financial year.

All shares, with the exception of the Special Rights Preference Share, carry equal voting rights and rank for dividends to the
extent to which the total amount payable in each share is paid up.

Own Share Reserve

Opening balance

Shares acquired by the trust
Acquired by the trust through utilisation of dividends
Transferred to beneficiaries of the Share Schemes

Closing balance

28. Non-Controlling Interests

At beginning of year
Profit after tax
Dividends paid to non-controlling interests

At end of year

166 Greencore Group plc

Number of shares

Nominal value of shares

Value of reserve

2019
000

2018
000

3,386,641

3,593,144

318,247
104,620
(412,717)

984,678
56,858
(1,248,039)

3,396,791

3,386,641

2019
£

0.034

0.003
0.001
(0.004)

0.034

2018
£

0.036

0.010
0.001
(0.013)

0.034

2019
£m

8.1

0.6
0.3
(0.8)

8.2

2019
£m

6.4
2.2
(2.2)

6.4

2018
£m

8.6

2.0
0.2
(2.7)

8.1

2018
£m

5.2
2.7
(1.5)

6.4

29. Working Capital Movement
The following represents the Group’s working capital movement:

Inventories
Trade and other receivables
Trade and other payables

2019
£m

(4.6)
23.3
(41.5)

(22.8)

2018
£m

5.1
(33.9)
12.9

(15.9)

30. Commitments Under Operating and Finance Leases
Operating Leases
Future minimum rentals payable under non-cancellable operating leases at year end in respect of continuing operations
are as follows:

Within one year
After one year but not more than five years
More than five years

2019
£m

13.3
24.3
11.0

48.6

2018
£m

9.3
22.2
12.9

44.4

Operating lease commitments relate to property, plant and machinery and fixtures and fittings.

Finance Leases
The future minimum lease payments under finance leases at 27 September 2019, together with the present value of the
net minimum lease payments were as follows:

2019

2018

Minimum
payments
£m

Present
value of
payments
£m

Minimum
payments
£m

Present
value of
payments
£m

Within one year
After one year but not more than five years

Total minimum lease payments

Present value of minimum lease payments

–
–

–

–
–

–

31. Capital Expenditure Commitments
The table below includes the capital commitments for the Group as at year ended 27 September 2019.

Capital expenditure that has been contracted but not been provided for
Capital expenditure that has been authorised by the Directors but not yet contracted

0.2
0.3

0.5

2019
£m

4.8
6.3

11.1

0.2
0.3

0.5

2018
£m

4.7
6.1

10.8

Annual Report and Financial Statements 2019

167

Financial Statements
Notes to the Group Financial Statements continued
year ended 27 September 2019

32. 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 357, Companies Act 2014, the Company has guaranteed the liabilities of certain subsidiary
undertakings in the Republic of Ireland for the financial year ended 27 September 2019 and as a result, such subsidiary
undertakings have been exempted from the filing provisions of Companies Act 2014.

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 bank guarantees to third parties in relation to continuing operations for amounts of £7.7m (2018: £5.4m).

The Group has a contingent asset in relation to an insurance claim on a legacy US legal matter. The maximum amount payable
to the Group is £4.4m. The asset has not been recognised in the Group’s Statement of Financial Position as at the 27 September
2019 as the outcome of the claim is not virtually certain. The claim is fully provided for and included in Group provisions (Note 25).

33. Discontinued Operations and Disposal of Undertakings
Greencore’s US Business
On 25 November 2018, the Group completed the disposal of its US business to Hearthside Food Solutions LLC. The disposal
met the recognition criteria for the year ended 28 September 2018 under IFRS 5 Non-current assets held for sale and
discontinued operations and so the results of the business are presented as discontinued and are shown separately from
continuing operations.

Results of Discontinued Operations

Revenue
Cost of sales

Gross profit
Operating costs, net

Group Operating Profit before acquisition related amortisation and exceptional items
Amortisation of acquisition related intangibles

Group Operating Profit before exceptional items
Exceptional item
Finance costs
Taxation

Profit for the year from discontinued operations

The profit from discontinued operations of £64.8m (2018: profit of £23.9m) is attributable entirely to the owners
of the Company.

Cash Inflows/(Outflows) from Discontinued Operations

Discontinued Operating Profit
Working Capital Movement
Other Movements

Cash flows from operating activities
Cash flows from investing activities
Cash flows for financing activities

Net cash (outflow)/inflow for the year

168 Greencore Group plc

2019
£m

172.8
(136.4)

36.4
(27.3)

9.1
–

9.1
55.9
(0.2)
–

64.8

2019
£m

9.1
(21.2)
(0.1)

(12.2)
(1.2)
–

(13.4)

2018
£m

1,061.8
(836.2)

225.6
(177.6)

48.0
(17.6)

30.4
(27.9)
(1.0)
22.4

23.9

2018
£m

30.4
(7.3)
32.7

55.8
(11.9)
(0.5)

43.4

Effect of Disposal on the Financial Statements

Goodwill and intangible assets
Property, plant and equipment
Deferred tax assets
Inventory
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Provisions for liabilities
Deferred tax liabilities

Net assets and liabilities disposed of

Disposal consideration
Total consideration*
Working capital adjustments
Provision for legal costs and onerous contracts
Transaction and separation related costs

Total net consideration

Translation reserve classification to Income Statement on disposal

Profit on disposal

* This includes a £15.1m loss relating to a foreign currency exchange contract put in place to hedge proceeds.

Reconciliation of consideration to Cash Received

Total consideration
Cash received in respect of working capital adjustments
Transaction and separation costs paid

Net consideration received on completion

Cash and cash equivalents disposed of

Net cash inflow arising on disposal

Assets and Liabilities of Disposal Group Held for Sale
At 28 September 2018, the following assets and liabilities were classified as held for sale:

Goodwill and intangible assets
Property, plant and equipment
Deferred tax assets
Inventory
Trade and other receivables

Assets held for sale

Trade and other payables
Provisions for liabilities
Deferred tax liabilities

Liabilities directly associated with the assets held for sale

2019
£m

(658.7)
(126.3)
(28.6)
(38.7)
(104.8)
(10.0)
84.5
22.5
71.1

(789.0)

827.5
12.4
(1.6)
(17.9)

820.4

24.5

55.9

2019
£m

827.5
12.4
(19.0)

820.9

(10.0)

810.9

2018
£m

644.9
122.7
28.0
38.7
110.4

944.7

111.4
22.0
69.6

203.0

2019
£m

–
–
–
–
–

–

–
–
–

–

Annual Report and Financial Statements 2019

169

Financial Statements
Notes to the Group Financial Statements continued
year ended 27 September 2019

33. Discontinued Operations and Disposal of Undertakings continued
Hull
In February 2018, the Group disposed of its Cakes and Desserts business at Hull (‘Hull’) to Bright Blue Foods Limited. Under the
terms of the agreement the trade and assets of the business were transferred to the purchaser for a deferred cash consideration
of £1.0m which was received in February 2019.

Reconciliation of Total Cash Inflow from Disposal of Undertakings

Greencore’s US business
Hull

Net cash inflow arising from disposal of undertakings

£m

810.9
1.0

811.9

34. 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,
as well as 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 35 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 IFRS 10 Consolidated Financial Statements. Amounts receivable
from and payable to associates as at the 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 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 associates’ 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),
comprise the Board of Directors which manages the business and affairs of the Group. As identified in the Report on Directors’
Remuneration, the Directors who served during the period, other than the Non-Executive Directors, serve as executive officers
of the Group.

Key management personnel compensation was as follows:

Salaries and other short term employee benefits
Post-employment benefits – defined contribution costs
Share-based payments**

2019
£m

2.1
0.4
1.7

4.2

2018*
£m

2.1
0.4
0.3

2.8

** This is the Income Statement charge for the year which represents the fair value of the share-based payments, relating to Executive Directors.

Details of the Group’s share-based payments and the basis of calculation are set out in Note 6. This differs from the amount included in the single
total figure for remuneration included in the Directors’ Report which is not an IFRS metric.

The aggregate gain of awards that vested in the year for key management personnel was £0.3m (FY18: £0.9m).

170 Greencore Group plc

35. Principal Subsidiaries and Associated Undertakings

Name of undertaking

Nature of business

Percentage of
ordinary shares

Registered office

Freshtime UK Limited

Food Processor

100

Greencore Advances
Designated Activity Company

Finance Company

100

Greencore Beechwood Limited*

Holding Company

100

Greencore Convenience Foods
Limited Partnership*

Pension Funding

Greencore Convenience Foods I Limited
Liability Partnership*

Pension Funding

100

Greencore Developments
Designated Activity Company

Property Company

100

Greencore Finance
Designated Activity Company

Greencore Foods Limited*

Finance Company

100

Holding and Management
Services Company

100

Greencore Food to Go Limited*

Food Processor

100

Greencore Funding Limited**

Finance Company

100

Greencore Grocery Limited*

Food Processor

100

Greencore Group
UK Centre
Midland Way
Barlborough Links Business Park
Barlborough
Chesterfield S43 4XA

No. 2 Northwood Avenue
Northwood Business Park, Santry
Dublin 9, D09 X5N9

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, D09 X5N9

Greencore Group
UK Centre
Midland Way
Barlborough Links Business Park
Barlborough
Chesterfield S43 4XA

13 Castle Street
St. Helier
Jersey JE4 5UT

Greencore Group
UK Centre
Midland Way
Barlborough Links Business Park
Barlborough
Chesterfield S43 4XA

Annual Report and Financial Statements 2019

171

Financial StatementsNotes to the Group Financial Statements continued
year ended 27 September 2019

35. Principal Subsidiaries and Associated Undertakings continued

Name of undertaking

Nature of business

Percentage of
ordinary shares

Registered office

Greencore Prepared Meals Limited*

Food Processor

100

Greencore UK Holdings Limited*

Holding Company

100

Hazlewood (Blackditch) Limited*

Property Company

100

Hazlewood Foods Limited*

Holding Company

100

Irish Sugar Designated Activity Company

General Trading Company

100

Premier Molasses Company Limited

Molasses Trading

Trilby Trading Limited

Food Industry Supplier

100

United Molasses (Ireland) Limited*

Molasses Trading

Greencore Group
UK Centre
Midland Way
Barlborough Links Business Park
Barlborough
Chesterfield S43 4XA

No. 2 Northwood Avenue
Northwood Business Park, Santry
Dublin 9, D09 X5N9

Harbour Road
Foynes
Co. Limerick

No. 2 Northwood Avenue
Northwood Business Park, Santry
Dublin 9, D09 X5N9

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 UK and that marked with ** which
is registered in Jersey.

All companies registered in the Republic of Ireland are covered by s357 of the Companies Act 2014.

36. Subsequent Events
There were no significant subsequent events after the Balance Sheet date.

37. Board Approval
The Group Financial Statements, together with the Company Financial Statements, for the year ended 27 September 2019 were
approved by the Board of Directors and authorised for issue on 25 November 2019.

172 Greencore Group plc

Company Statement of Financial Position
at 27 September 2019

ASSETS
Non-current assets
Property, Plant and Equipment
Intangible assets
Financial assets

Total non-current assets

Current assets
Trade and other receivables

Total current assets

Total assets

EQUITY
Capital and reserves
Share capital
Share premium
Undenominated capital reserve
Other reserves
Retained earnings

Total equity

LIABILITIES
Non Current liabilities
Provisions

Total non current liabilities

Current liabilities
Trade and Other payables
Provisions

Total current liabilities

Total liabilities

Total equity and liabilities

The company only profit for the year was £93.5m (FY18 £94.5m).

Gary Kennedy
Director

Eoin Tonge
Director

Notes

2019
£m

2018
£m

2
3
4

6
7

0.6
1.1
176.8

178.5

0.7
1.8
176.8

179.3

927.3

1,314.0

927.3

1,314.0

1,105.8

1,493.3

4.5
0.1
120.4
(3.4)
380.0

501.6

7.1
650.8
117.8
(3.9)
177.7

949.5

2.1

–

597.6
4.5

602.1

604.2

543.8
–

543.8

1,105.8

1,493.3

Annual Report and Financial Statements 2019

173

Financial Statements

Company Statement of Changes in Equity
year ended 27 September 2019

At 28 September 2018
Items of income and expense taken directly to equity
Profit for the financial year

Total recognised income and expense
for the financial year

Employee share-based payment expense
Exercise, forfeit or lapse of share-based payments
Shares acquired by Employee Benefit Trust (A)
Transfer to retained earnings on grant of shares
to beneficiaries of the Employee Benefit Trust (B)
Share Capital Reduction(C)
Capital Return Via tender offer(D)
Dividends

At 27 September 2019

Share
capital
£m

Share
premium
£m

7.1

650.8

–

–
–
–

–

–
0.1
–

–
–
(2.6)
–

4.5

–
(650.8)
–
–

0.1

Undenominated
capital
reserve(E)

Share-
based
payment

Own share

reserve(F)

reserve(G)

£m

117.8

–

–
–
–

–
–
2.6
–

£m

4.2

–

3.6
(3.0)
–

–
–
–
–

£m

(8.1)

–

–
–
(0.9)

0.8
–
–
–

Retained
earnings
£m

Total
equity
£m

177.7

949.5

93.5

–
2.3
0.3

3.6
(0.6)
(0.6)

(0.8)
650.8
(509.0)
(34.8)

–
–
(509.0)
(34.8)

120.4

4.8

(8.2)

380.0

501.6

Share
capital
£m

Share
premium
£m

7.1

647.8

Undenominated
capital
reserve(C)

£m

117.8

Share-
based
payment

reserve(D)

£m

6.6

At 29 September 2017
Items of income and expense taken directly to equity
Profit for the financial year

Total recognised income and expense
for the financial year

–

–
–
–

–
–

–

–
0.2
–

–
2.8

–

–
–
–

–
–

At 28 September 2018

7.1

650.8

117.8

Own share

reserve(E)

£m

(8.6)

–

–
–
(2.2)

2.7
–

(8.1)

Retained
earnings
£m

Total
equity
£m

121.1

891.8

94.5

–
4.0
0.2

1.6
0.2
(2.0)

(2.7)
(39.4)

–
(36.6)

177.7

949.5

–

1.6
(4.0)
–

–
–

4.2

(A) The Employee Benefit Trust acquired 104,620 (2018: 56,858) shares in the Group with a combined value of £0.3m (2018: £0.2m) and a nominal value at

the date of purchase of £0.001m (2018: £0.0006m) through the Scrip Dividend Scheme and utilisation of dividend income. Pursuant to the terms of the
Employee Benefit Trust 318,247 (2018: 984,678) shares were purchased during the financial year ended 27 September 2019 at a cost of £0.6m (2018: £2.0m).
The nominal value of these shares, on which dividends have not been waived by the Employee Benefit Trust was £0.003m (2018: £0.01m) at the date
of purchase.

(B) During the year 412,717 (2018:1,248,039) shares with a nominal value at the date of transfer of £0.004m (2018: £0.01m ) were transferred to beneficiaries

of the Deferred Bonus Plan.

(C) In November 2018, the High Court approved a capital reduction for the amount equal to the Share Premium of the Company of £650.8m which has been

recycled to retained earnings.

(D) Greencore Group plc returned £509.0m to shareholders by way of a tender offer, executed on 31 January 2019. The Group acquired 261,025,641 Ordinary Shares
in the Company on the London Stock Exchange, at the Offer Price of £1.95 per Ordinary Share and the shares were subsequently cancelled. The Ordinary Shares
acquired represented approximately 36.92% of the voting rights attributable to the Ordinary Shares immediately prior to acquisition. The total Ordinary Shares
in issue at 28 September 2019 was 445,967,327.

(E) The undenominated capital reserve represents the nominal cost of cancelled shares and the amount transferred to reserves as a result of renominalising

the share capital of Greencore Group plc on conversion to the euro.

(F) The share-based payment reserve relates to equity settled share-based payments made to employees through the Performance Share Plan,

the Deferred Bonus Plan and the Employee ShareSave Scheme. Further information in relation to this share-based payment is set out in Note 6
of the Group Financial Statements.

(G) The amount included as own shares relates to Ordinary Shares in Greencore Group plc which are held in trust. The shares held in trust are granted

to beneficiaries of the Group’s share-based payment schemes when the relevant conditions are satisfied.

174 Greencore Group plc

Notes to the Company Financial Statements
year ended 27 September 2019

1. Company Statement of Accounting Policies
Basis of Preparation
The Company Financial Statements of Greencore Group plc (‘the Company’) were prepared under the historical cost convention,
in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (‘FRS 101’). In preparing these Financial
Statements, the Company applies the recognition, measurement and disclosure requirements of International Financial Reporting
Standards as adopted by the EU (‘Adopted IFRSs’), but makes amendments where necessary in order to comply with the
Companies Acts 2014 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.

In these financial statements, the company has applied the exemptions available under FRS 101 in respect of the
following disclosures:

• A Cash Flow Statement and related notes;
• Comparative period reconciliations for tangible fixed assets and share capital;
• Disclosures in respect of transactions with wholly owned subsidiaries;
• Disclosures in respect of capital management;
• The effects of new but not yet effective IFRSs; and
• Disclosures in respect of the compensation of Key Management Personnel.

As the Consolidated Financial Statements of the Group are prepared in accordance with IFRS as adopted by the EU and
include the equivalent disclosures, the Company has also taken the exemptions under FRS 101 available in respect of the
following disclosures:

• Certain disclosures required by IFRS 2 Share-based Payments;
• Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7 Financial

Instruments: disclosures.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these
financial statements.

The financial statements have been prepared in sterling and are rounded to the nearest million.

Profit and Loss
The profit attributable to equity shareholders dealt with in the Financial Statements of the Company was £93.5m (2018: £94.5m).
In accordance with section 304 of the Companies Act 2014, the Company is availing of the exemption from presenting its
individual Income Statement to the Annual General Meeting and from filing it with the Registrar of Companies.

Foreign Currencies
Transactions in foreign currencies are translated to the Company’s functional currency at the foreign exchange rate ruling
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the Financial Position date
are retranslated to the functional currency at the foreign exchange rate ruling at that date. Non-monetary assets and liabilities
that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the
transaction. Foreign exchange differences arising on translation are recognised in the Income Statement.

Trade and Other Receivables
Trade and other receivables are initially recognised at fair value and subsequently carried at amortised cost net of allowance for
expected credit losses. An allowance 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. The company’s intercompany
receivables at 27 September 2019 amounted to £931.0m (2018: £1,313.3m). None of these balances include an allowance for
expected credit losses and all amounts are expected to be recoverable in full.

Any trade and other receivables included in non-current assets are carried at amortised cost in accordance with the effective
interest rate method.

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 initially recorded at fair value and subsequently carried
at amortised cost.

Annual Report and Financial Statements 2019

175

Financial StatementsNotes to the Company Financial Statements continued
year ended 27 September 2019

1. Company Statement of Accounting Policies continued
Intra-Group Guarantees
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its
group, the Company considers these to be insurance arrangements and accounts for them as such. In this respect, the Company
treats the guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required
to make a payment under the guarantee.

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.

Property, Plant and Equipment
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, equipment. Fixtures and fittings

3–5 years

No depreciation is provided on freehold land.

Intangible Assets
Costs incurred on the acquisition of computer software and software licences are capitalised. Other costs directly associated with
developing and upgrading computer software programs are capitalised once the recognition criteria set out in IAS 38 Intangible
Assets are met.

Computer software is amortised over 5–7 years.

Employee Share-Based Payments
The Group grants equity settled share-based payments to employees (through the Performance Share Plan, the Deferred Bonus
Plan and the Employee Sharesave Scheme). The fair value of these is determined at the date of grant and is expensed to the
profit or loss with a corresponding increase in equity on a straight-line basis over the vesting period. The fair value is determined
using an appropriate 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
financial position date, the Group revises its estimates of the number of options or awards that are expected to vest, recognising
any adjustment in the profit or loss, with a corresponding adjustment to equity.

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
Statement of Financial Position 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 profit or loss. To the extent that the deductible difference exceeds the
cumulative charge to the profit or loss, it is recorded in equity.

When the exercise of share options results in the issuance of shares, the proceeds received are credited to the share capital
and share premium accounts.

Taxation
The expense charge for the year comprises current and deferred tax. Tax is recognised in the Income Statement except to the
extent that it relates to items recognised in the Statement of Other Comprehensive Income or directly in equity, in which case
the tax is also recognised in the Statement of Comprehensive Income or directly in equity.

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 financial position date along with any adjustment to tax payable in respect of previous years.

The Company 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.

176 Greencore Group plc

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 financial position 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
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
Pension benefits are funded over the employees’ years of service by way of contributions to a legacy defined benefit scheme
operated by a fellow group company. Defined benefit schemes are funded, with the assets of the scheme held separately from
those of the company, in separate trustee administered funds. Pension scheme assets are measured at fair value and liabilities
are measured on an actuarial basis using the projected unit method and discounted at a rate equivalent to the current rate
of return on a high quality corporate bond of equivalent currency and term to the scheme liabilities. The actuarial valuations
are obtained at least triennially and are updated at each financial position date.

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 101 not to prepare a statement of cash flows.

2. Property, Plant and Equipment

Cost
At 28 September 2018

At 27 September 2019

Depreciation
At 28 September 2018

At 27 September 2019

Net book value

At 27 September 2019

At 28 September 2018

Fixtures
and fittings
£m

1.3

0.6

0.7

Total
£m

1.3

0.6

0.7

0.6

0.7

Annual Report and Financial Statements 2019

177

Financial StatementsNotes to the Company Financial Statements continued
year ended 27 September 2019

3. Intangible Assets

Cost
At 28 September 2018

At 27 September 2019

Amortisation
At 28 September 2018
Charge for the year

At 27 September 2019

Net book value

At 27 September 2019

At 28 September 2018

4. Financial Assets

Interest in subsidiary undertakings

At beginning and end of the year

Computer
Software
£m

2.1

0.3
0.7

1.0

1.1

1.8

Total
£m

2.1

0.3
0.7

1.0

1.1

1.8

2019
£m

2018
£m

176.8

Name of Subsidiary

Principal Activity

Class of Shares Held

% of shares

Country of Incorporation

Irish Sugar DAC
Greencore Holdings DAC
Essenta Foods DAC

General Trading
Holding Company
Holding Company

Ordinary
80%
100%

100%
80%
100%

5. Trade and Other Receivables

Amounts falling due within one year

Amounts owed by subsidiary undertakings*
Other debtors
Prepayments and accrued income

Ireland
Ireland
Ireland

2018
£m

1,313.3
0.3
0.4

1,314.0

2019
£m

925.4
1.1
0.8

927.3

* Amounts due from subsidiary undertakings are classified as current, as all inter-company receivables and payables are repayable on demand.

6. Trade and Other Payables

Amounts falling due within one year

Amounts owed to subsidiary undertakings*
Declared interim dividend
Trade and other creditors
Accruals
Bank Overdraft

2019
£m

584.0
–
2.0
9.1
2.5

597.6

2018
£m

514.8
15.6
2.5
10.2
0.7

543.8

* Amounts due to subsidiary undertakings are classified as current, as all inter-company receivables and payables are repayable on demand.

7. Provisions

At beginning of year
Created in year

At end of year

178 Greencore Group plc

£m

–
6.6

6.6

Analysed as:

Non-current liabilities
Current liabilities

2019
£m

2.1
4.5

6.6

2018
£m

–
–

–

Provisions consist of warranty claims relating to provisions for legal costs and onerous IT contracts relating to the US business
disposed of in November 2018. It is anticipated that these provision will unwind in one to five years.

8. Share Capital
Details in respect of called-up share capital are presented in Note 27 of the Group Financial Statements.

9. Employee Benefits
A fellow group company, Irish Sugar DAC, operates a funded defined benefit pension scheme for employees, including certain
employees of the Company. The scheme assets are held in separate Trustee administered funds. Contributions to these funds,
which are charged against profits, are based on independent actuarial advice following the most recent valuation of such funds.

Full actuarial valuations were carried out on the 31 March 2019. In general, actuarial valuations are not available for public
inspection, however, the results of valuations are advised to the members of the various schemes. This scheme had a net surplus
at 27 September 2019 of £31.5m (2018: £7.6 million) as measured on a lAS 19 Employee Benefits basis. The contribution for the
period was £nil (2018: £nil). At year end, £nil (2018: £nil) was included in other accruals in respect of amounts owed to the scheme.
The scheme was closed to future benefit accrual on 31 December 2009.

The Company also contributes to a defined benefit contribution scheme for its employees. At year end, £nil (2018: £0.03m) was
included in other accruals in respect of amounts owed to the scheme. Disclosures in relation to this and all other Group legacy
defined benefit pension schemes are given in Note 26 to the Group Financial Statements.

The staff costs for the year for the above employees were:

Wages and salaries
Social insurance costs
Employee share-based payment expense
Pension costs – defined contribution plans

2019
£m

6.1
0.1
3.6
0.4

10.2

2018
£m

4.2
0.4
1.6
0.4

6.6

10. Share-based Payments
The Company grants share awards and options under various share schemes as detailed in the Report of the Directors. A charge
of £3.6m (2018: £1.7m) was recognised in the Income Statement of the Company in respect of the employees of the Company.
All disclosures relating to the plans are given in Note 6 to the Group Financial Statements.

11. Guarantees and Commitments
Pursuant to the provisions of Section 357, Companies Act 2014, the Company has guaranteed the liabilities and commitments of
certain subsidiary undertakings in the Republic of Ireland for the financial year ended 27 September 2019. 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.

12. Statutory Information
During the period the average number of persons employed by the Company (excluding Non-Executive Directors) was 29
(2018: 26).

Directors’ remuneration is disclosed in the Report on Directors’ Remuneration and in Note 33 to the Group Financial Statements.
Auditor’s remuneration for the year was as follows:

Audit of the Company Financial Statements

2019
£’000

35.0

2018
£’000

39.0

The Company has annual commitments under operating leases expiring between two and five years of £0.8m (2018: £0.9m) and
after five years of £1.2m (2018: £0.1m).

Annual Report and Financial Statements 2019

179

Financial Statements
Alternative Performance Measures

The Group uses the following Alternative Performance Measures (‘APMs’) which are non-IFRS measures to monitor the
performance of its operations and of the Group as a whole: Pro Forma Revenue Growth, Adjusted EBITDA, Adjusted
Operating Profit, Adjusted Operating Margin, Adjusted Profit before Tax (‘PBT’), Adjusted Earnings, Adjusted Earnings
per Share, Maintenance and Strategic Capital Expenditure, Free Cash Flow, Free Cash Flow Conversion, Net Debt and Return
on Invested Capital (‘ROIC’).

The Group believes that these APMs provide useful historical information to help investors evaluate the performance of the
underlying business and are measures commonly used by certain investors and security analysts for evaluating the performance
of the Group. In addition, the Group uses certain APMs which reflect the underlying performance on the basis that this provides
a more relevant focus on the core business performance of the Group. The APMs are not covered by the Independent
Auditors Report.

Pro Forma Revenue Growth
The Group uses Pro Forma Revenue Growth as a supplemental measure of its performance. The Group believes that Pro Forma
Revenue Growth provides a more accurate guide to underlying revenue performance.

Pro Forma Revenue Growth adjusts FY19 reported revenue to exclude the impact on transition to IFRS 15 Revenue from Contracts
with Customers on the Group’s Irish Ingredients trading business and to exclude the impact of the Freshtime acquisition in the
year. It also presents the numbers on a constant currency basis.

FY18 reported revenue excludes revenue from the Group’s cakes and desserts businesses which were disposed of in the prior
year and to reflect the impact of exiting manufacturing of longer life ready meals at the Kiveton facility.

Reported revenue
Impact of disposals and exits
Impact of acquisitions
Impact of IFRS 15
Impact of currency

Pro Forma Revenue Growth (%)

2019

Convenience
Foods UK &
Ireland

(3.5%)
5.8%
(0.2%)
0.5%
0.0%

2.6%

The table below shows the Pro Forma Revenue split by food to go categories and other convenience categories. This is in line
with the new disclosure requirements in IFRS 15 Revenue from Contracts with Customers requiring revenue to be disaggregated.

Reported revenue
Impact of disposals and exits
Impact of acquisitions
Impact of IFRS 15
Impact of currency

Pro Forma Revenue Growth (%)

Food to go categories

Other convenience categories

H1 FY19
%

H2 FY19
%

Full Year
%

7.0%
–
–
–
–

7.0%

0.8%
–
(0.5%)
–
–

0.3%

3.6%
–
(0.3%)
–
–

3.3%

H1 FY19
%

(19.8%)
21.4%
–
1.2%
0.0%

2.8%

H2 FY19
%

(9.0%)
7.4%
–
1.2%
0.0%

(0.4%)

Full Year
%

(15.0%)
15.0%
–
1.2%
0.0%

1.2%

Adjusted EBITDA, Adjusted Operating Profit and Adjusted Operating Margin
Adjusted EBITDA, Adjusted Operating Profit and Adjusted Operating Margin are used by the Group to measure the underlying
and ongoing operating performance of each business unit and of the Group as a whole.

The Group calculates Adjusted Operating Profit as operating profit before amortisation of acquisition related intangibles and
exceptional items. Adjusted EBITDA is calculated as Adjusted Operating Profit plus deprecation and amortisation of computer
software intangibles assets. Adjusted Operating Margin is calculated as Adjusted Operating Profit divided by reported revenue.

180 Greencore Group plc

The following table sets forth a reconciliation from the Group’s Profit for the financial year to Adjusted Operating Profit,
Adjusted EBITDA and Adjusted Operating Margin:

Profit for the financial year
Taxation (A)
Net finance costs (B)
Share of profit of associates after tax
Exceptional items
Amortisation of acquisition related
intangibles

Adjusted Operating Profit
Depreciation and amortisation (C)

Adjusted EBITDA

Adjusted Operating Margin (%)

2019

Convenience
Foods UK and
Ireland

Discontinued
operations

£m

43.4
13.0
18.9
(0.9)
30.2

0.9

105.5
36.5

142.0

7.3%

£m

64.8
–
0.2
–
(55.9)

–

9.1
–

9.1

5.3%

2018

Convenience
Foods UK and
Ireland

Discontinued
operations

£m

12.6
5.2
32.9
(0.9)
52.2

2.6

104.6
35.4

140.0

7.0%

£m

23.9
(22.4)
1.0
–
27.9

17.6

48.0
17.0

65.0

4.5%

Total
£m

108.2
13.0
19.1
(0.9)
(25.7)

0.9

114.6
36.5

151.1

7.1%

Total
£m

36.5
(17.2)
33.9
(0.9)
80.1

20.2

152.6
52.4

205.0

6.0%

(A) Includes tax credit on exceptional items for continuing operations of £0.2m (2018: £7.8m) and for discontinued operations £nil (2018: £20.6m).
(B) Finance costs less finance income.
(C) Excludes amortisation of acquisition related intangibles.

Adjusted Profit Before Tax (‘PBT’) for Continuing Operations
Adjusted PBT is used as a measure by the Group to measure overall performance before associated tax charge and
exceptional items.

The Group calculates Adjusted PBT as profit before taxation, excluding tax on share of profit of associate and before exceptional
items, pension finance items, amortisation of acquisition related intangibles, FX on inter-company and certain external balances
and the movement in the fair value of all derivative financial instruments and related debt adjustments.

The following table sets out the calculation of Adjusted PBT:

Profit before taxation for continuing operations
Taxation on share of profit of associates
Exceptional items
Pension finance items
Amortisation of acquisition related intangibles
FX and fair value movements(A)

Adjusted Profit Before Tax for continuing operations

2019
£m

56.4
0.2
30.2
2.5
0.9
2.1

92.3

2018
£m

17.8
0.3
52.2
3.4
2.6
3.3

79.6

(A) FX on inter-company and certain external balances and the movement in the fair value of all derivative financial instruments and related debt adjustments.

Adjusted Basic Earnings Per Share (‘EPS’)
The Group uses Adjusted Earnings and Adjusted EPS as key measures of the overall underlying performance of the Group and
returns generated for each share.

Adjusted Earnings is calculated as Profit attributable to equity holders (as shown on the Group Income Statement) adjusted to
exclude exceptional items (net of tax), the effect of foreign exchange (FX) on inter-company and 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 (net of tax) and the interest expense relating to legacy defined benefit
pension liabilities (net of tax). Adjusted EPS is calculated by dividing Adjusted Earnings by the weighted average number
of Ordinary Shares in issue during the year, excluding Ordinary Shares purchased by Greencore and held in trust in respect
of the Annual Bonus Plan and the Performance Share Plan. Adjusted EPS described as an APM here is Adjusted Basic EPS.

Annual Report and Financial Statements 2019

181

Other InformationAlternative Performance Measures continued

Adjusted Basic Earnings Per Share (‘EPS’) continued
The following table sets forth a reconciliation of the Group’s profit attributable to equity holders of the Group to its
Adjusted Earnings for the financial years indicated.

Profit attributable to equity holders of the Group
Exceptional items (net of tax)
FX effect on inter-company and external balances where hedge accounting is not applied
Movement in fair value of derivative financial instruments and related debt adjustments
Amortisation of acquisition related intangible assets (net of tax)
Pension financing (net of tax)

Adjusted earnings

2019
£m

106.0
(25.9)
1.2
0.9
0.7
2.0

84.9

2019
‘000

2018
£m

33.8
51.7
(0.1)
3.4
14.4
2.7

105.9

2018
‘000

Weighted average number of ordinary shares in issue during the year

531,971

703,312

Adjusted Basic Earnings Per Share

Pence

16.0

Pence

15.1

Capital Expenditure
Maintenance Capital Expenditure
The Group defines Maintenance Capital Expenditure as the expenditure required for the purpose of sustaining the operating
capacity and asset base of the Group, and of complying with applicable laws and regulations. It includes continuous improvement
projects of less than £1m that will generate additional returns for the Group.

Strategic Capital Expenditure
The Group defines Strategic Capital Expenditure as the expenditure required for the purpose of facilitating growth and
developing and enhancing relationships with existing and new customers. It includes continuous improvement projects of greater
than £1m that will generate additional returns for the Group. Strategic Capital Expenditure is generally expansionary expenditure
creating additional capacity beyond what is necessary to maintain the Group’s current competitive position and enables the
Group to service new customers and/or contracts or to enter into new categories and/or new manufacturing competencies.

The following table sets forth the breakdown of the Groups purchase of property, plant and equipment and purchase of
intangible assets between Strategic Capital Expenditure and Maintenance Capital Expenditure:

Purchase of property, plant and equipment
Purchase of intangible assets

Net cash outflow from capital expenditure

Strategic Capital Expenditure
Maintenance Capital Expenditure

Net cash outflow from capital expenditure

2019

Convenience
Foods UK and
Ireland

Discontinued
operations

£m

38.4
4.6

43.0

12.4
30.6

43.0

£m

1.2
–

1.2

1.2
–

1.2

2018

Convenience
Foods UK and
Ireland

Discontinued
operations

£m

48.8
2.8

51.6

24.6
27.0

51.6

£m

11.7
0.2

11.9

2.2
9.7

11.9

Total
£m

39.6
4.6

44.2

13.6
30.6

44.2

Total
£m

60.5
3.0

63.5

26.8
36.7

63.5

Free Cash Flow and Free Cash Flow Conversion
The Group uses Free Cash Flow to measure the amount of underlying cash generation and the cash available for distribution
and allocation.

The Group calculates the Free Cash Flow as the net cash inflow/outflow from operating and investing activities before
Strategic Capital Expenditure, acquisition and disposal of undertakings, disposal of investment property and adjusting for
dividends paid to non-controlling interests.

Free Cash Flow Conversion is a new APM introduced in the current financial year. The Group calculates Free Cash Flow
Conversion as Free Cash Flow divided by Adjusted EBITDA.

182 Greencore Group plc

The following table sets forth a reconciliation from the Group’s net cash inflow from operating activities and net cash outflow
from investing activities to Free Cash Flow:

Net cash inflow from operating activities
Net cash inflow/(outflow) from investing
activities

Net cash inflow/(outflow) from operating
and investing activities
Strategic Capital Expenditure
Acquisition of undertakings, net of cash
acquired
Disposal of undertakings
Disposal of Investment Property
Dividends paid to non-controlling interests

Free Cash Flow

Adjusted EBITDA

Free Cash Flow Conversion (%)

2019

Convenience
Foods UK and
Ireland

Discontinued
operations

£m

98.9

714.2

813.1
12.4

56.2
(811.9)
(0.5)
(2.2)

67.1

142.0

47.3

£m

(12.2)

(1.2)

(13.4)
1.2

–
–
–
–

(12.2)

9.1

(134.1)

2018

Convenience
Foods UK and
Ireland

Discontinued
operations

£m

74.0

(50.8)

23.2
24.6

–
–
–
(1.5)

46.3

140.0

33.1

£m

55.8

(11.9)

43.9
2.2

–
–
–
–

46.1

65.0

70.9

Total
£m

86.7

713.0

799.7
13.6

56.2
(811.9)
(0.5)
(2.2)

54.9

151.1

36.3

Net Debt
Net Debt is used by the Group to measure overall cash generation of the Group and to identify cash available to reduce
borrowings. Net Debt comprises current and non-current borrowings less net cash and cash equivalents.

The following table sets out the calculation of Net Debt:

Bank borrowings
Private Placement Notes
Non-bank borrowings
Finance leases

Total borrowings
Cash & cash equivalents

Net Debt

2019
£m

(213.9)
(116.2)
–
–

(330.1)
41.6

(288.5)

Total
£m

129.8

(62.7)

67.1
26.8

–
–
–
(1.5)

92.4

205.0

45.1

2018
£m

(350.5)
(124.8)
(62.3)
(0.5)

(538.1)
37.0

(501.1)

Return on Invested Capital (‘ROIC’)
The Group uses ROIC as a key measure to determine returns from each business unit, and for the Group as a whole and as
a key measure to determine potential new investments. With the significant change in the Group structure following the disposal
of Greencore’s US business, the Group only calculates ROIC relating to continuing operations.

The Group uses invested capital as a basis for this calculation as it reflects the tangible and intangible assets the Group has
added through its capital investment programme, the intangible assets the Group has added through acquisition, as well as
the working capital requirements of the business. Invested capital is calculated as net assets (total assets less total liabilities)
excluding Net Debt, the carrying value of derivatives not designated as fair value hedges, and retirement benefit obligations
(net of deferred tax assets). Average invested capital is calculated by adding the invested capital from the opening and closing
Statement of Financial Position and dividing by two.

The Group calculates ROIC as Net Adjusted Operating Profit After Tax (‘NOPAT’) divided by average invested capital for
continuing operations. NOPAT is calculated as Adjusted Operating Profit plus share of profit of associates before tax,
less tax at the effective rate in the Income Statement.

Annual Report and Financial Statements 2019

183

Other InformationAlternative Performance Measures continued

Return on Invested Capital (‘ROIC’) continued
The following table sets forth the calculation of Net Operating Profit After Tax (‘NOPAT’) and invested capital used in the
calculation of ROIC for the financial years.

Adjusted Operating Profit
Share of profit of associates before tax
Taxation at the effective tax rate(A)

Group NOPAT

Invested capital
Total assets
Total liabilities
Net Debt
Derivatives not designated as fair value hedges
Retirement benefit obligation (net of deferred tax asset)
Net assets of the disposal group held for sale

Invested capital for the Group(B)

Average invested capital for ROIC calculation for Group

ROIC (%) for the Group

2019
£m

105.5
1.1
(16.0)

90.6

2019
£m

1,163.8
(858.0)
288.5
(1.9)
74.8
–

667.2

2018
£m

104.6
1.1
(13.7)

92.0

2018
£m

2,015.5
(1,271.9)
501.1
12.7
73.6
(741.7)

589.3

628.3

590.4

14.4

15.6

(A) The effective tax rates for continuing operations for the financial year ended 27 September 2019 and 28 September 2018 were 15% and 13%, respectively.
(B) The invested capital for continued operations was £591.4m in 2017 which excludes £755.7m of invested capital in discontinued operations.

The reduction in ROIC is primarily driven by increased investment, in particular the timing of the acquisition of Freshtime and also
impacted by the increased tax rate.

184 Greencore Group plc

Shareholder and other information

Greencore Group plc is an Irish registered company registered under number 170116. Its Ordinary Shares are quoted on the
London Stock Exchange (Symbol: GNC). Greencore has a Level 1 American Depositary Receipts programme (Symbol: GNCGY).

Shareholding Statistics as at 25 November 2019

Range of units

0-1,000
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 500,000

Total

Total holders

Units

% of Issued Capital

5,154
3,262
759
462
227
88
51
100

1,677,228
7,782,789
5,316,504
7,090,012
10,612,372
14,330,844
18,243,113
380,988,110

10,103

446,040,972

0.38%
1.74%
1.19%
1.59%
2.38%
3.21%
4.09%
85.42%

100.00%

Financial Calendar
Record date for 2019 final dividend
Annual General Meeting
Payment date for 2019 final dividend
Half year financial report
2020 financial year end
Announcement of final results

Advisors and Registered Office

03 January 2020
28 January 2020
28 February 2020
19 May 2020
25 September 2020
24 November 2020

Company Secretary
Jolene Gacquin, FCG

Registered Office
No. 2 Northwood Avenue
Northwood Business Park
Santry
Dublin 9
D09 X5N9
Ireland

Auditor
Deloitte Ireland LLP
Earlsfort Terrace
Dublin 2
D02 AY28
Ireland

Registrar and
Transfer Office
Computershare Investor
Services (Ireland) Limited
3100 Lake Drive
Citywest Business Campus
Dublin 24
D24 AK82
Ireland

Solicitors
Arthur Cox
Ten Earlsfort Terrace
Dublin 2
D02 T380
Ireland

Eversheds
Bridgewater Place
Water Lane
Leeds
LS11 5DR
United Kingdom

Bryan Cave LLP
One Metropolitan Square
211 North Broadway,
Suite 3600
St. Louis MO 63102–2750
United States

American Depositary
Receipts
BNY Mellon
101 Barclay Street
22nd Floor – West
New York NY 10286
United States

Website
www.greencore.com

Follow Greencore on Twitter
@GreencoreGroup

Stockbrokers
Goodbody Stockbrokers
Ballsbridge Business Park
Ballsbridge
Dublin 4
D04 YW83
Ireland

HSBC Bank plc
8 Canada Square
London
E14 5HQ
United Kingdom

Shore Capital
Cassini House
57 St James’s Street
London
SW1A 1LD
United Kingdom

The outer cover of this report has been
laminated with a biodegradable film.
Around 20 months after composting,
an additive within the film will initiate
the process of oxidation.

GREENCORE GROUP PLC
No. 2 Northwood Avenue
Northwood Business Park
Santry, Dublin 9, DO9 X5N9

Tel: +353 (0) 1 605 1000

(1,158kg of material have been carbon neutralised).