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The Greencore Way Greencore The Annual Report and Accounts 2014 Accounts and Report Annual Greencore Group plc Annual Report and Accounts 2014 Greencore Group plc is a leading convenience food business with an annual turnover of approximately £1.3 billion. Our two markets are the United Kingdom and the Strategic Report Overview United States where we Highlights of the Year 1 At a Glance 2 provide a wide range of food Chairman’s Statement 4 Our Strategy Business Model and Strategy 6 to go products supplemented Strategy in Action 8 Business Environment 10 by other chilled, frozen and Financial Key Performance Indicators 12 Non-Financial Key Performance Indicators 13 ambient foods to major retail Risks and Risk Management 14 Chief Executive’s Review 18 Corporate Social Responsibility and food service customers. Report 2014 22 Performance Review Operating and Financial Review 28 Group Executive Board 31 Directors’ Report Board of Directors 32 Directors’ Report 34 Corporate Governance Report 37 7 Report on Directors’ Remuneration 42 Number of US convenience Report of the Audit Committee 60 Report of the Nomination Committee 64 foods facilities. Statement of Directors’ Responsibilities 66 Financial Statements Independent Auditor’s Report 68 15 Group Statement of Accounting Policies 71 Group Income Statement 80 Number of UK convenience Group Statement of Recognised Income and Expense 81 foods facilities. Group Balance Sheet 82 Group Cash Flow Statement 83 Group Statement of Changes in Equity 84 Notes to the Group Financial Statements 86 10,000+ Company Statement of Accounting Policies 129 Number of employees across Company Balance Sheet 131 the UK, the US and Ireland. Notes to the Company Balance Sheet 132 Shareholder and Other Information 137 Strategic Report Directors' Report Financial Statements Highlights of the Year* Revenue Operating Profit Adjusted EPS £1,273.5m £82.9m 15.9p +6.4% +11.4% +13.6% £1,273.5m £82.9m 15.9p £1,197.1m £74.4m 14.0p FY13 FY14 FY13 FY14 FY13 FY14 People at the Core Great Food Business Cost Efficiency We are a highly people-intensive To be a leading food company Effectiveness Being cost efficient is aligned to business and we believe that we need to stand out when our business model as a leading Operating the business in we ultimately differentiate as it comes to our food by private label manufacturer. the most effective way possible a company through our people. providing great, safe, is how we can differentiate tasty and nutritious food. ourselves and ultimately deliver for all our stakeholders. 22 Read more about The Greencore Way on page 22 * Definitions of financial key performance indicators are provided on page 12. These are non IFRS measures. IFRS measures are provided from page 80 onwards. Greencore Group plc Annual Report and Accounts 2014 1 Overview At a Glance Food to Go Fast Fact: Greencore’s Food to Go business in the UK is one of the world’s leading manufacturers of pre-packed sandwiches, producing in excess of 510m food to go products each year. In addition to sandwiches, 510m Greencore produced over baguettes and wraps, our range of products also includes broader food to go items such as salads and 510m food to go products sushi. We have six Food to Go facilities in the UK situated in Bow, Crosby, Manton Wood, Northampton, in the UK in FY14 Park Royal and Spalding. The business also operates a radial distribution network which covers the length and breadth of Britain. Prepared Meals Fast Fact: Greencore’s Prepared Meals business produces chilled ready meals, chilled sauces, chilled soup and quiche for the major retailers in the UK. The business, like most of the categories in which it operates, 214m Greencore produced is largely private label, although Greencore also produces under license for the Weight Watchers 214m prepared meals, brand. The business operates out of five facilities, based at Bristol, Consett, Kiveton, Warrington quiches and packs and Wisbech. It holds strong market positions across all the categories in which it operates. of chilled soup in FY14 2 Greencore Group plc Annual Report and Accounts 2014 Strategic Report Directors' Report Financial Statements Grocery Fast Fact: The Grocery business manufactures ambient cooking sauces, table sauces, pickles and Yorkshire Puddings, as well as cakes and desserts for most of the major retailers. It is 215m Greencore produced distinctive to other manufacturers in that it focuses on manufacturing under the private 215m jars of cooking sauce, label of customers rather than its own brand. The division operates out of four facilities pickles and condiments in Selby, Leeds, Hull and Evercreech. in FY14 US Fast Fact: Greencore entered the US market in 2008 and now, following a series of acquisitions, operates out of seven manufacturing facilities in the six states of Massachusetts, Virginia, 136m Greencore produced Illinois, Florida, Minnesota and Utah. Its primary business in the US is the manufacture 136m food to go products and distribution of sandwiches and other food to go products to convenience stores and in the US in FY14 food service outlets across the US. Greencore Group plc Annual Report and Accounts 2014 3 Overview Chairman’s Statement Gary Kennedy Dear Shareholder Strategic Development FY14 has proved to be another year of We continue to lay the foundations for strong business performance and further future growth by commencing a significant strategic development in line with our capacity investment programme in both vision of being a focused, fast growing the UK and US to enable us to service international convenience food leader. known customer initiatives. In the UK, this programme includes a £30m Financial Performance* capacity investment in the Northampton Whilst the UK food retail environment food to go facility to facilitate a new overall remains challenging, our portfolio business win and to service committed of products continues to benefit from the growth initiatives with that customer. high rate of opening of convenience stores, combined with increasing employment In the US, we are building a national food to levels. Weather patterns were also go business of real scale. To facilitate this, we favourable overall with a mild winter and are undertaking a significant and complex a reasonable summer. In the US, we saw programme of development. During the year, continued headline growth as we developed we undertook a £7m capacity investment in sustaining relationships with key customers. the Jacksonville facility to manufacture frozen food to go products for a key Reported Group revenue increased by customer. In February 2014, we acquired 6.4% to £1,273.5m with like for like revenue Lettieri’s, a leading manufacturer of frozen growth in Convenience Foods of 8.4%. The food to go products for the US convenience Convenience Foods like for like performance market, with significant surplus production was driven by outstanding revenue growth in capacity. In March 2014, we announced the food to go products of over 15%. Operating construction of a new facility in Rhode Island profit conversion was good with Group at a cost of approximately £20m which will operating profit up by 11.4% leading to a 30 facilitate the closure of two leased sites in basis points increase in operating margin. Massachusetts and generate annualised Adjusted earnings per share were 13.6% savings, once fully realised, estimated at higher as a result of the growth in operating £5m. profit combined with lower financing costs. Today, we are announcing the development Despite the increase in capital expenditure, of our first West Coast facility in Washington the Group again delivered a strong State. This facility will provide both performance on cash generation. Net debt production capacity and a development unit decreased by £20.7m to £212.1m. Net debt: and will enable us to service a contract, which EBITDA leverage stands comfortably below we are acquiring, with a key customer from 2.0 times as a result. H2 FY16. The total cost of the initiative is expected to be approximately £20m. “ Reported Group revenue increased by 6.4% to £1,273.5m with like for like revenue growth in Convenience Foods of 8.4%.” * Definitions of financial key performance indicators are provided on page 12. These are non IFRS measures. IFRS measures are provided from page 80 onwards. 4 Greencore Group plc Annual Report and Accounts 2014 Strategic Report Directors' Report Financial Statements The US business is experiencing rapid growth but is not yet operating at Group average Management operating margin levels. This is due both to and Employees “ Greencore has the learning curve and ramp-up costs on the I have again visited many of the Group’s various growth initiatives as well as site specific facilities during FY14 and remain struck by strong market challenges in Newburyport and Brockton. the sheer dedication and focus of all of my The delivery and integration of confirmed colleagues in the business. They share a real positions and new business together with the successful sense of purpose and a commitment to doing implementation of these large projects their best every day of the year on behalf of a clear strategy.” should enable us to bring the US business our customers. I thank them on your behalf up to Group average operating margin in for their continued commitment and delivery. due course. Having sold the Minsterley chilled desserts Outlook facility in January 2013, we focused the Greencore has strong market positions portfolio further with the disposal of the and a clear strategy. While the outlook for foodservice desserts business, Ministry of the UK grocery retail market is uncertain, Cake, in May 2014. we remain confident in our ability to deliver profitable growth across our well-focused portfolio with confirmed new business Dividends awards and exposure to the rapidly The Board of Directors is recommending expanding convenience channel.

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