The Greggs Pledge
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GREGGS PLC Annual Report & Accounts 2020 20 20 BRINGING OUT THE BEST IN US STRATEGIC REPORT DIRECTORS’ REPORT ACCOUNTS INTRODUCTION Strategic Report In a year like no other, 2020 Highlights 2 At a glance 3 the Covid-19 crisis Year in review 6 Business model 8 Chairman’s statement 9 has, in many ways Chief Executive’s report 12 Key performance indicators 18 Non-financial key Annual Report and Accounts 2020 demonstrated the performance indicators 20 Gender of workforce 23 strength of Greggs. Our strategy in action 24 Supporting our local communities 32 The Greggs Pledge 34 It has shown the resilience of our business model, Financial Review 41 but most of all the strength of our people who have Risk management 45 worked hard throughout to maintain an essential service Viability statement 46 providing takeaway food to customers unable to work Principal risks and uncertainties 47 from home, many of whom were themselves key workers. Stakeholder engagement 51 I would like to take this opportunity to thank all of our people, who can be proud of the part we played in our Directors’ Report nation’s time of need. Board of Directors and Secretary 54 Greggs is well placed to participate in the recovery from Governance report 57 the pandemic and has demonstrated its resilience and Audit Committee report 71 capability to operate under such challenging conditions. Directors’ remuneration report 79 With good liquidity and growing digital capabilities Greggs Statement of Directors’ is an attractive proposition that can grow further in new responsibilities 102 locations, channels and dayparts. These opportunities will benefit all of our stakeholders in the years to come. Accounts Independent auditor’s report 104 Consolidated income statement 112 Consolidated statement of comprehensive income 112 Balance sheets 113 Statements of changes in equity 114 Statements of cashflows 118 Notes to the consolidated accounts 120 Greggs plc Greggs Roger Whiteside OBE, Chief Executive Continued on the next page 16 March 2021 Ten-year history 167 1 Secretary and advisers 169 STRATEGIC REPORT DIRECTORS’ REPORT ACCOUNTS 2020 HIGHLIGHTS Covid-secure operating Key financial highlights model established. Total sales Shop and supply chain operations adapted to safeguard team members and customers while operating during Covid-19. £811.3m READ MORE ON PAGES 13-14 -30.5% 2019: £1,167.9m Annual Report and Accounts 2020 Company-managed shop like-for-like (LFL) sales growth -36.2% Multi-channel development 2019: 9.2% strategy accelerated. Pre-tax loss Delivery and wholesale channels providing alternative routes to access Greggs products, with delivery contributing £13.7m an increasing proportion of total sales. 2019: profit before tax £108.3m Click + Collect rolled out across entire estate and delivery made available in Diluted loss per share more than 600 shops. READ MORE ON PAGES 24-27 12.9p 2019: earnings per share 85.0p The Greggs Pledge launched. Return on capital employed Ten sustainability commitments to continue to develop the business in a responsible -2.4% manner over the next five years and beyond. 2019: 19.0% READ MORE ON PAGES 34-40 Detailed calculations of Alternative Performance Measures, not otherwise shown in the income statements and related notes, Greggs plc Greggs Continued on the next page are shown on page 168. 2 STRATEGIC REPORT DIRECTORS’ REPORT ACCOUNTS AT A GLANCE OUR STRATEGIC PILLARS With ownership of our supply chain, multiple service Great tasting, freshly prepared food channels for our customers, and over 2,000 shops You cannot beat freshly baked, freshly prepared nationwide, we are in a unique position to make great food. With our great flavours, responsibly-sourced tasting, freshly prepared food accessible to everyone. ingredients, consistent quality and outstanding Staying open to serve under Covid-secure conditions value – our food-to-go leads the way. showed the important role we play in providing READ MORE ON PAGES 24-25 food-on-the-go to all types of people, as they go about Annual Report and Accounts 2020 their daily lives as best they can, in difficult circumstances. Best customer experience Our purpose Fast and friendly service is a key reason why customers choose Greggs. Great service is not an easy thing to deliver under pressure, and our shop teams do an amazing job. To make great tasting, Through Greggs Rewards, we are able to build long-lasting relationships with our customers and reward their loyalty. freshly prepared food READ MORE ON PAGES 26-28 accessible to everyone. Competitive supply chain Our vision By owning our supply chain, we can make great tasting, freshly prepared food To be the customers’ accessible to everyone. favourite for food-on- READ MORE ON PAGES 29-30 the-go. First class support teams We’ve invested heavily in leading-edge systems. They equip our support teams to provide the best service to their colleagues and ultimately, our customers. Greggs plc Greggs Continued on the next page READ MORE ON PAGE 31 3 STRATEGIC REPORT DIRECTORS’ REPORT ACCOUNTS AT A GLANCE CONTINUED Our sustainability commitments Our culture and values It’s our duty as a responsible business to stand for more than just Our people are what makes our business successful. We aim to provide them with a profit. Launched in February 2021, our first, full sustainability great place to work, where they feel valued. Our values commit us to being friendly, report, The Greggs Pledge, is about how we can do more to inclusive, honest, respectful, hard-working and appreciative. help people, protect the planet, and work with our partners to It’s our culture and values that set us apart. And while summarising our unique culture change the world for the better. Based on the UN’s Sustainable ‘Being Greggs’ is no easy task, simply put – we love what we do, we have fun and we Annual Report and Accounts 2020 Development Goals, The Greggs Pledge commits us to achieving welcome everyone. We’re hard-working, but above all else we’re family; and it doesn’t the following goals by 2025: matter who you are, where you’re from or what your favourite bake is… once you walk into one of our shops, you’re family too. 1. We will support 1,000 school Breakfast Clubs providing some 70,000 meals each school day. 2. We will create 25 per cent less food waste than in 2018 and will continue to work towards 100 per cent of surplus food going to those most in need. 3. We will have 50 Greggs Outlet shops providing affordable food in areas of social deprivation, with a share of profits given to local community organisations. 4. 30 per cent of the items on our shelves will be healthier choices and we will attract customers through education and promotions. 5. We will be on our way to achieving carbon neutrality by using 100 per cent renewable energy across all of our operations. 6. 25 per cent of our shops will feature elements from our Eco-Shop, ‘shop of the future’ design. 7. We will use 25 per cent less packaging, by weight, than in 2019, and any remaining packaging will be made from material that is widely recycled. 8. Our workforce will reflect the communities we serve. 9. We will have a robust Responsible Sourcing Strategy in place and will report annually on progress towards our targets. 10. We will secure and maintain Tier 1 in the BBFAW Animal Welfare standard. MORE ABOUT THE GREGGS PLEDGE ON PAGES 34-40. TO VIEW FULL REPORT, HTTPS://CORPORATE.GREGGS.CO.UK/RESPONSIBILITY/THE-GREGGS-PLEDGE. Greggs plc Greggs Continued on the next page 4 STRATEGIC REPORT DIRECTORS’ REPORT ACCOUNTS AT A GLANCE CONTINUED Our stakeholders How we measure our performance Maintaining good relationships with our essential stakeholders is key to what we Constant monitoring of how we meet our objectives and challenges is vital to do. Our stakeholder family includes customers, colleagues, investors, suppliers, success. Naturally, we look at financial performance through our principal KPIs, and of course, the communities that we serve. but doing business in the right way is measured too, with wide-ranging balanced scorecards examining every aspect of what we do. READ MORE ON PAGES 18-23 Annual Report and Accounts 2020 CUSTOMERS COLLEAGUES SUPPLIERS SHAREHOLDERS LENDERS COMMUNITIES Greggs plc Greggs Continued on the next page 5 STRATEGIC REPORT DIRECTORS’ REPORT ACCOUNTS YEAR IN REVIEW 2020’s challenges brought out the Annual Report and Accounts 2020 best in our Full steam ahead with Next Generation Greggs January Following successful trials in 2019, we launched our multi- channel, digital transformation programme in January: people, our ‘Next Generation Greggs’ – not knowing that it was about teams and to become even more important. our business. Our partnership with Just Eat July We rolled out our partnership with Just Eat at breakneck speed to over From shop openings and award-winning product launches, the roll out of 600 shops nationwide, meaning more Greggs plc Greggs delivery services and Click + Collect to record-breaking sales with Iceland, and more customers can enjoy Greggs Continued on the next page 6 there is a lot to be proud of. from the comfort of their own homes. STRATEGIC REPORT DIRECTORS’ REPORT ACCOUNTS YEAR IN REVIEW CONTINUED Vegan Victory! October Hot on the heels of the success of our award-winning Vegan Sausage Roll, hailed PETA’s ‘Product Launch of the Year’ in 2019, we launched our Vegan Steak Bake in 2020. It’s proving a welcome addition to our growing vegan range, so much so that PETA declared Annual Report and Accounts 2020 it the ‘Best Vegan Pasty’ 2020. New Shops September We reignited our shop opening programme later in the year; focusing mainly on areas where we can provide easy access for customers in cars, including new concessions in Asda and Tesco, in addition to retail parks and petrol forecourts with our franchise partners.