Annual report & review 2015
Growing good business for 140 years Contents
Introduction 5 Statement from the Chairman 6 Statement from the Group CEO 8 Key performance indicators 2015 16 Big numbers 2015 18 Sustainability 22 Food leadership 28 Building better brands 34 Partnership 40 People 46 Summary financial statements 52 Introduction Introduction
2016 is a landmark year for Musgrave
We are a family business with strong values, bold ideas and a good track record for balancing profitability with doing the right thing.
Today with our retail and wholesale brands we make it possible for communities to thrive, for entrepreneurs to succeed, and for people to access quality, healthy and 4 inspiring food – and we do it following principles that are as relevant today as they were 5 to our founders.
What makes us different is a team of extraordinary retailers, great retail and wholesale brands that are online and around the corner, and colleagues who invest in our business because we invest in them. We are growing because we are trusted and we believe that we can make our brands work harder to deliver new and exciting opportunities.
Evolving the Musgrave brand is part of our DNA – we have done it since 1876. As a leader, what drives us is the ambition to build a better future. We have a track record of building great brands and we are focused on growth and developing new partnership opportunities. We think for the long term and we are committed to enterprise that has the potential for financial growth and to positively impact everyday lives. Our ambition is to build a stronger, more diverse Musgrave that delivers sustainable returns for all.
That is why we are in the business of growing good business
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Statement from the Chairman Statement from the Chairman
2015 was a year of achievement with a welcome and necessary return to profitability – a result of the hard work and dedication of colleagues across the business. We look to 2016, our 140th anniversary, as the leading Irish‑owned family business with pride in our history and confidence in our future.
During 2015 we sold our business in each market. Moreover, our business is one of its most in Great Britain, a difficult but customers have never been remarkable achievements. Most 6 necessary decision, and one more discerning. So we are clear family businesses don’t last 7 which has impacted positively, that maintaining and enhancing beyond the third generation. creating new opportunities for our market position will require Musgrave is now into its sixth development and growth. identification of and dedication to generation of family shareholders our customers’ changing needs, and the family structure has In the Republic of Ireland our innovation and investment, made possible many of the brands are leading the market together with maintaining an investment decisions that have and in Northern Ireland we have eagle eye on value. sustained the business during begun to implement ambitious the downturn and enabled it to plans to develop our retail and As a family business supported by emerge as a market leader as the wholesale brands. We have also shareholders who are prepared economy improved. made improvements in our to take the long term view, we Spanish operations. are committed to investing in On behalf of the Board I would our brands and to supporting our like to thank all our employees for All of these developments are retail partners and local suppliers. their tremendous commitment made possible because we We will invest at pace in our which was instrumental in our work with outstanding people brands throughout 2016. return to profitability in 2015. I and committed, talented and would also like to acknowledge entrepreneurial retail partners. In 2016 we also aim to develop the unstinting endeavour and flair While the outlook is positive we new business ventures, building of our retail partners in delivering remain aware that economic on our core expertise. brands that are different and Peter Lacy, recovery is quite uneven across better for shoppers. I look forward Chairman, Musgrave Group the Republic and the competitive In many respects, Musgrave’s to 2016 and the challenges and environment remains intense durability as a successful family successes it will bring.
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Statement from the Group CEO Statement from the Group CEO
A return to profit
2015 marked a year in which we transformed our business, 8 brought it back to profit, and positioned it on a path to 9 We are in a good position sustainable growth. We now have a direction for delivering an ambitious agenda, focused on driving growth in our core to build a more prosperous business as well as developing new business with high growth potential. , , Musgrave and in turn In 2015, Musgrave delivered sales of recorded sales growth of 1 per cent in €4.4 billion. Turnover includes sales quarter four on a comparable basis. from our Great Britain business which Group profit before tax was €67.5 we sold in September 2015. Sales million compared with a loss of €9.6 contribute to building a from continuing operations amounted million in 2014, profit from continuing to €3.7 billion, a decrease of 1 per business was €52.8 million and the cent on a constant currency, constant Group finished the financial year on days basis. Sales trended positively 2 January 2016 with net cash of more prosperous Ireland during the year and the Group €23.4 million.
Chris Martin, CEO, Musgrave Group
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Statement from the Group CEO Statement from the Group CEO
Transformed business returns for all. The first step is to Along with with a focus on growth strengthen the leadership position of our 2016 sees us celebrate 140 years in brands by taking what they are doing well strengthening business. We have a clear direction and doing it even better. I would like to thank our people for their relentless support for the future and our ambitions for our core business, growth are stronger than ever. We are In the Republic of Ireland, the market and exceptional hard work in returning the business to a family business that is determined to leadership of SuperValu, Centra and we also aim to profitability. I would also like to recognise and acknowledge leave a positive and lasting legacy for Marketplace is a great position to future generations. Throughout 2015, build on, but there is absolutely no grow through the unstinting support of our shareholders and their we invested heavily in our people and room for complacency. ongoing commitment to investing in the business, in our are working to transform our culture developing new to enable us to achieve our ambitions. We continue to see serious challenges brands, and to supporting entrepreneurs. It is very satisfying We have continued to interrogate every ahead, with the growing competition business aspect of the business to make it faster, from the multiples, the discounters and that the commitment of our people and our shareholders simpler, more consistent and always the advent of online and subscription- has been rewarded with a return to profitability. delivering better value. based foodservice. The patchy nature of the economic recovery is also As a business that creates different and something to monitor, as retail growth Over the seven years of the recession, long term investment in the Northern better brands, we are bringing depth outside of Dublin remains sluggish, we have continued to invest in our stores, Ireland market, we will continue to and innovation to our food leadership, with consumers cautious and many brands, people and innovation. Now evolve our brands and operations to leveraging technology and the local entrepreneurs struggling to revitalise that the economy is turning a corner, enhance our visibility and footprint in knowledge of our retail partners to stay businesses still grappling with years this investment means we are in a good this market. In Spain, we continued to ahead of the consumer. This enhances of challenge and downturn. While the 10 position to build a more prosperous strengthen the Dialprix offer and brand our competitiveness, energises our Irish economy is expected to grow in 11 Musgrave and, in turn, contribute to through the new convenience store people, and contributes to 2016/17, the European Commission has building a more prosperous Ireland. concept called Dialprix El Súper de la sustainable growth. cautioned that it remains vulnerable to Frescura. In the course of 2015, eight rises in interest rates and that levels of Throughout 2015, we continued to more stores adopted the concept and Our partnerships with local debt remain uncomfortably high. We are focus on transforming our business, experienced an average of 15 per cent entrepreneurial retailers remain at the therefore under no illusions about the bringing it back to profit, and positioning uplift in sales. Six new Dialprix stores heart of what we do. We have worked scale of the challenge. Today’s grocery it on a path to sustainable growth. Our opened in the course of the year, three in with them to evolve our offer to meet market is transforming and there is only commitment to getting ourselves back the Alicante region and three in Tenerife. the local needs they understand so well, a wafer thin line between being winners into profit and on a growth trajectory strengthening their businesses in tough and runners up in this sector. Our strategy meant difficult decisions as we adjusted It is a source of pride for all of us in times with practical and financial support, aims to widen that gap through growth, our agenda and divested ourselves of Musgrave that, as we enter our 140th and with sustained investment to build innovation and continuous improvement. our operations in GB to Booker. This year in business in Ireland, all of our As a family even stronger, more successful brands. was not only the right decision for our Irish brands are in leadership positions We know that although the economy may So right now we are transforming our business but also the right decision for in each of their respective markets. business we are have turned a corner, the legacy of the business at pace. Through consolidating our colleagues, retailers and suppliers SuperValu is now Ireland’s number downturn continues to impact many local our leadership position we are growing in GB. one supermarket; Centra the number proud of the fact businesses and communities. As ever, our our market share. Investment in our one convenience retailer and Daybreak support is there for the long term. brands is ongoing because although At the same time, we brought together the number one symbol brand; and that this is our consumers recognise and trust them, our retail and wholesale operations in MarketPlace leads the wholesale and Strengthening our core business we continue to innovate and experiment Northern Ireland and invested in brand foodservice market. This gives us the 140th year Looking ahead, we are committed to to keep our offer fresh, stretching our development by re-imagining, tailoring, confidence to set a clear direction and building a stronger and more diverse brands to ensure they achieve their and ramping up our offer. As part of our build on our plans for future growth. in business Musgrave that delivers sustainable full potential.
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Statement from the Group CEO Statement from the Group CEO
There are four key areas in which we aim to excel and through so we are currently trialling technology We are genuinely proud of what we and that makes shopping with Centra easier our retail partners have accomplished which we can continue to grow. and smarter. with our next generation stores like Garvey’s SuperValu in Dingle. This store Great quality and inspiring food Building profitable, The big revolution in retail is digital – design makes a strong statement about Delivering a consistently great quality omnichannel brands it is as big a revolution as the change the future of grocery retail in Europe and inspiring food offer ensures that We continue to delight and surprise that came from computerisation. How and a strong statement about our consumers continue to seek out our shoppers by building profitable, the consumer accesses our brands determination to continue to invest in brands and resist the temptation to shop omnichannel brands. We believe that has fundamentally changed. With the even our strongest brands to keep them elsewhere. Quality is key but not at the we have to earn consumer loyalty anew increase in the number of devices, fresh and relevant. expense of good value. We also know every day, finding new and compelling the new consumer is in control and from shoppers that local and transparent ways to make our brands as relevant everything is targeted to meet what In our wholesale business, we sourcing matters to them. We have more and accessible as possible. Take how they want and their personal needs. The continue to add range and depth to relationships with better local suppliers we are turning Centra into Ireland’s first digital revolution represents a major our MarketPlace foodservices brand. than any of our competitors. With genuinely omnichannel convenience growth opportunity for the business We are getting closer to customers SuperValu alone we source from over brand by focusing on making shopping and one in which we aim to take a through special events, tastings and 1,800 Irish suppliers – more than any with Centra easier and faster. leadership role by making technology targeted communications. We have other grocery retailer in the Irish market simple, relevant and supportive of our also extended the role of the business – equating to an economic contribution What we are finding is that the best brands. We have significant investment development chefs who have helped of €2.19 billion. From 100% fresh Irish technologies are those built on solid programmes underway to support develop and profile our award winning The digital beef, pork and lamb, scratch bakeries customer feedback – identifying where our digital ambition and in 2015 we Musgrave Excellence own brand. By in-store, locally sourced fruit and shoppers have problems and then successfully implemented one of the using experienced, high profile chefs revolution vegetables and specialist fish counters, building technology that helps. We did largest IT infrastructure projects in to support customers in designing 12 we continue to leverage these long term some of the groundwork for this when Ireland. We are also enabling a more menus and meal options, we not only represents a 13 relationships to give shoppers the very we launched our digital vouchers on the flexible working environment for our strengthen the MarketPlace brand but best locally sourced food. Centra app, giving us the flexibility to colleagues, with the introduction of also deepen our relationships with our major growth fine tune and target our offers and deals. a unified communications strategy clients and their businesses. In addition, today’s consumers are more This drove thousands of redemptions throughout the business. opportunity for concerned about health and well- of the offers we did for the Rugby In Northern Ireland, we have worked being than ever before. We strongly World Cup, but more importantly, it has While technology is vital, it is also with consumer insight and our retail the business and believe that healthy lifestyles don’t started to build an entirely different important to keep in mind that store partners to evolve and adapt our Centra have to be expensive. We want to be kind of shopper engagement with design and format remains a critical and SuperValu offers to better meet the one in which seen as leaders in health, offering a our event marketing and the Centra component of the omnichannel mix. demands of convenience shoppers in this holistic approach, which resonates with brand. Innovation continues apace with We believe the stores associated with market. Watson’s Centra in Portaferry is we aim to take shoppers. The priorities for all of our Centra currently trialling the Centra our brands should become destinations, the first store to showcase a completely brands in 2016 are about making healthy Beat the Queue app. Shoppers told us, designed so that they are a pleasure different offer from Centra in NI, with a leadership choices easier and more affordable. Our particularly in busy city centre locations, to spend time in, with services that food to go, food for now and fresh at the Centra Live Well range and SuperValu’s that the queue at deli counters at customers can access at the time, place forefront. Alongside a refreshed and role by making Good Food Karma campaign, have lunchtime is a problem. They’ve only an or in the way that suits them. This means transformed in-store experience, we both proved a great success with health hour for lunch and don’t want to spend expanding and improving the existing have also introduced a completely new technology conscious consumers. Furthermore, it in a queue. So we are trialling an app estate and creating new stores associated range of ready to heat and ready to cook Musgrave MarketPlace is helping chefs that allows the shopper to pre-order with each of our leading brands. In 2015, meal solutions under a new own brand simple, relevant and small business owners to comply their sandwich, how they want it, and we completed over 200 store revamps called Fresh for You, with a particular with calories on menus legislation, as collect it in-store from a dedicated fridge and added an extra 1,000 jobs in local focus on local NI sourcing. Shoppers and supportive of well as designing healthy and low calorie near the till – they grab it, pay and off communities across the island of Ireland. in Fintona, Omagh have experienced menus and recipe alternatives. they go. The customer had a problem, We aspire to do the same in 2016. a similar transformation at Hegartys’ our brands
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Statement from the Group CEO Statement from the Group CEO
SuperValu. This new concept store leads of retailers. Food Academy currently to do and because a change of acquisitions of Allied Foods and family businesses and we will with a significantly enhanced fresh food supports more than 600 small producers culture was an absolute priority C.J. O’Loughlin Quality Foods continue to support the brilliant offer, a much improved bakery and throughout Ireland. Likewise, through our for the business. To help us drive are examples of an excellent local entrepreneurs who have upgraded deli. Once again, the emphasis Retail Excellence Academy for SuperValu this cultural change, we engaged strategic fit. C.J. O’Loughlin’s is an helped Ireland to get back on is on developing, refining and extending and Centra retailers and colleagues, we Breakthrough Global which has outstanding family business that its feet. to keep ahead of consumer needs. We support training and share best practice. worked with many international will strengthen our foodservice are working with our partners to roll More than 2,500 retailers and staff have companies to help them build high business in the south-west We judge ourselves on doing the out these new concept stores across worked to raise standards, with still more performance, innovative corporate of Ireland while delivering an right thing and living by our values Northern Ireland over the next year. participating via a complementary online cultures. Now it is partnering improved range and availability to – values of honesty, achievement, training initiative. Musgrave to help us re-energise existing Quality Foods customers. not being greedy, long term Supporting retailers, local the business. stable relationships, and working suppliers and communities At a grassroots level, we continue And as part of our new hard. Using these values as the Supporting retailers, local suppliers and to support numerous community In working with Breakthrough Breakthrough culture, we are also foundation, we have developed a communities remains a priority because initiatives, including our sponsorship we have invested heavily in our looking for new opportunities. spirit of enterprise among teams partnerships are the foundation of our of TidyTowns – at 25 years, one of the people, giving them the space they We aim to develop new business that are resourceful, high on success. In tough trading conditions, longest running sponsorships in Ireland. need to dream up the impossible through applying our existing initiative and motivated to deliver we ramped up support for local In 2015, more than 400 people took part – to delight shoppers and improve skill sets to new areas. This might profit with principle. entrepreneurs while strengthening our in the Musgrave Triathlon to raise money our brands. The results have mean extending our existing investment in our brands. The recession for Breakthrough Cancer Research and delivered a new energy and pace brands into complementary We continue to foster this spirit may be behind us now, but the banks Our Lady’s Children’s Hospital Crumlin. across our teams. products and services. It is also of enterprise, integrity and are still lagging behind in delivering the And to complement Centra’s Live Well about diversifying our business innovation that has characterised support local entrepreneurs need to campaign, in October we launched It is clear that attracting, retaining, to extend our reach through our business for the last 140 develop and grow their businesses. the Let’s Walk initiative, which saw nurturing, and developing talent new ventures. Right now, we are years. We know that we cannot 14 thousands of people walking in their local is the only way our business can actively looking at food export afford to take our foot off 15 As in the past, Musgrave is open and communities to raise much needed funds become more successful. I am opportunities in the Middle the accelerator. To be able to willing to support its retail partners and for the Irish Cancer Society’s Action proud to say that we are one of East where we see a growing compete successfully, we need local suppliers, because as Ireland’s Breast Cancer. the top 100 graduate companies demand for Western food. We to be nimble. We need to be able leading family business we believe in Watson’s Centra, in Ireland and, for the eighth year are also actively pursuing a new to respond quickly and effectively supporting other family businesses to We are continuing our commitment to Portaferry in a row, Deloitte has again named foodservice franchise opportunity to market conditions and to help drive the enterprise that underpins minimise the impact of our business on us one of Ireland’s best-managed in Ireland. It is still early days but implement innovation at pace. the vibrant local communities on which the environment that has seen us over companies. We are continuing we are excited by the prospects Our culture is confident, brave our own business depends. the past 10 years reduce our carbon A change of to invest in our people while and opportunities to grow our and hungry for success. footprint by more than 50 per cent in engendering a culture in which business in new areas. For example, our Food Academy absolute terms, while our business has culture colleagues have the freedom to I am excited about Building a stronger programme provides a platform for new continued to grow. We are proud to create, permission to fail and the our prospects and and early-stage food businesses to learn, have won the NACS Insight European will to succeed to build a better, Musgrave grow and develop commercially. The Sustainability Retailer of the Year Award, more prosperous business. 2016 is a landmark year for with the continued aim of the programme is to support food for leadership in sustainable resource Musgrave. As a family business, support of our family start-ups and to give advice on all aspects strategies and for inspiring other Developing new business we are proud of the fact that this of the food business, from branding businesses to implement sustainability Along with strengthening our core is our 140th year in business. shareholders, I look and marketing to finance and market initiatives of their own. business, we also aim to grow Family businesses are an forward to working research. Food Academy provides local through developing new business. important part of the Irish food businesses with a solid foundation Destination place to work economy and account for more with colleagues and to work from, to gain confidence in 2015 was the year in which we ramped We are growing through acquisition than 80% of economic activity. partners to grow good their business and ideas and help them up our investment in our people. We when the right opportunities We see ourselves as a family secure valuable space on the shelves have done so because it is the right thing present themselves. Our recent business working with other business in 2016.
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Key performance indicators 2015 Key performance indicators 2015
Key performance Retail brands Sustainability
Retail brand sales total €5.0 billion Total Group carbon footprint 75 indicators 2015 70 65 60 Daybreak €0.1bn Dialprix €0.1bn 55 50 (kilotonnes)
Daytoday €0.1bn Mace €0.1bn 2 45
CO 40 35 30 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Musgrave sales total €3.7 billion* 2015 financial highlights Centra SuperValu Musgrave sales of €3.7 billion* €1.8bn €2.8bn Spain €0.2 billion NI €0.5 billion Profit before tax of €68 million
Net cash of €23 million
35,000 45 ,000 Jobs jobs in ROI including Group employees, retail partner 16 Group turnover € billions businesses and wholesale operations 17
2015* 3.7 ROI €3.0 billion 2014* 3.6 Number of stores associated with the retail brands total 1,423
Republic of Northern Spain Ireland Ireland We have returned the Profit before tax € millions SUPERVALU 223 34 – CENTRA 461 76 – MACE – 117 – business to profitability 2015 68 DAYTODAY 140 92 – DAYBREAK 200 – – 2014 -10 DIALPRIX – – 80
Financial summary 2015 2014 In 2015 we were delighted to be recognised TURNOVER* €bn 3.7 3.6 Net cash € millions Our innovative store design has with 94 product awards across food and PROFIT BEFORE TAX €m 68 (10) recently been acknowledged at non-food lines across all our brands – NET CASH €m 23 110 2015 23 the prestigious international including 41 great taste awards and 28 * From continuing operations 2014 110 A. R. E. Design Awards Blas na h’Eireann
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 RunningBig numbers head 2015 Big numbers 2015
45,000+ Supporting local employment We are Ireland’s largest private sector employer. Together with people our retail partners we employ more than 45,000 people – 35,000 in ROI alone.
Supporting local entrepreneurs
We partner with entrepreneurial retailers operating 1,420+ more than 1,400 stores and work with seven brands across the island of Ireland. stores
Supporting local producers
SuperValu sources 100% of its fresh beef, pork and lamb 100% from local Irish producers. Every SuperValu store employs an in-house expert butcher. local
Total Triathlon funds raised 18 19 Musgrave Triathlon, which is now in its 15th year, has raised more than €4 million for Irish charities to date. Participants are made up of employees from Musgrave, SuperValu and Centra stores across Ireland and suppliers. €4m
Total raised by Centra and the Irish Cancer Society €2.8m In 2015, Centra and the Irish Cancer Society raised €730,000 for the Action Breast Cancer programme, bringing the total fundraising amount to date to €2.8million.
Supporting local producers
We are the leading supporters of local producers with €13 million worth of retail listings secured by 280 small food producers through the Food Academy programme. €13m
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Big numbers 2015 Big numbers 2015
SuperValu retail sales
SuperValu announced record retail sales in 2015, underlining its position as Ireland’s most popular grocery retailer. €2.6bn
SuperValu’s weekly footfall
Ireland’s leading grocery retailer drove strong growth throughout 2015, particularly in the fourth quarter as it out-performed the 2.5m market with 4.3% growth over the last 12 weeks of the year.
Centra’s weekly footfall
Centra’s new health strategy played a major role in the convenience brand’s 2015 performance with the 3.3m launch of Live Well in July, which helps people make healthier choices on the go.
Improving reach and offer
20 Our MarketPlace wholesale brand 12,000+ 21 offers 12,000+ retail and foodservice lines to 45,000+ pubs, restaurants, lines hotels and hospitality businesses across the island of Ireland.
All our facilities in Ireland are supplied with 100% green electricity
We have also extended the supply agreement to make green 100% power available to our retail partners and our people. Minimising impacts – waste recycled
In 2015 we recycled 97% of the waste generated by our business, up from 63% since 2006, and our total waste continues to fall through operational efficiencies. 97%
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 RunningSustainability head Sustainability
For us, sustainability is about looking after people, the planet and prosperity
Sustainability
Our long term approach to relationships and business 22 means that we place great emphasis on the core 23 responsibilities that any good business should have: to look after its people and customers, to minimise its environmental impact and to produce sustainable wealth for the benefit of all stakeholders in the long term – not just for short term financial gain. In 2015, we evolved our approach to sustainability in line with the recently published UN Sustainable Development Goals.
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Sustainability Sustainability
Aligning our sustainability strategy with the UN’s Sustainable Development Goals
Over the past 10 years, Fleet emissions 50.0 our business has grown 47.5 45.0 by almost 50% and 42.5 40.0 at the same time our 37.5 CO2 (kilotonnes) CO2 35.0 32.5 carbon footprint has 30.0 Minimising environmental Driving sustainable Leading in health & Taking an active leadership 2006 2007 2008 2009 2010 *2011 2012 2013 2014 2015 & climate change impacts sourcing & consumption well‑being role in the community reduced by more than • Carbon management • Ethical sourcing • Nutrition & healthy • Being a good neighbour Building energy • Packaging & waste • Human rights eating • Vibrant communities 50% in absolute terms 300 • Food waste • Sustainable • Education & awareness • Employment & 275 250 • Water conservation consumption • Active living opportunities 225 • Animal welfare & 200
biodiversity terajoules 175 150 125 100 2006 2007 2008 2009 2010 *2011 2012 2013 2014 2015
Over our long history, Musgrave has maintained a strong commitment to 24 sustainability. For us, it’s about running our business in a way that considers 25 social, environmental and economic well-being. In essence, it’s about looking
after people, the planet and prosperity. Minimising environmental and Total waste generation climate change impacts 20 18 We live in an ever-changing to address every macro global These fall into four broad Over the past 10 years, our business 16 world, where people are issue, we certainly have, within categories: has grown by almost 50 per cent and 14 12 becoming increasingly our sphere of influence, an at the same time our carbon footprint 10 8
aware of the negative social, opportunity and a responsibility • minimising environmental has reduced by more than 50 per cent kilotonnes 6 environmental and economic to shape and influence positive and climate change in absolute terms. Since 2010, all our 4 impacts of human activity. change and to take action to impacts facilities in Ireland have been supplied 2 0 minimise our own impacts and • driving sustainable sourcing with 100% green electricity – we have 2006 2007 2008 2009 2010 *2011 2012 2013 2014 2015 In September 2015, the United to inspire other stakeholders to and consumption also extended the supply agreement Nations published 17 Sustainable also live more sustainably. To • leading in health and to make green power available to our Recycling/Recovery Performance Development Goals to end this end, we focus on embedding well‑being retail partners and people. 100 poverty, protect the planet and sustainability in our operations • taking an active leadership 95 90 ensure prosperity for all as part of and in our brands. We also align role in the community Our advanced route planning and 85
a new sustainable development our strategy to take account of the scheduling systems help our delivery % 80 agenda. Each goal has specific Sustainable Development Goals drivers avoid or reduce mileage 75 targets to be achieved over the and in particular the nine specific whenever they can, while our 70 next 15 years. While it may not be goals most relevant to the retail backhaul process has also helped our 65 60 relevant or practical for Musgrave sector (see diagram above). suppliers to cut their mileage. 2006 2007 2008 2009 2010 *2011 2012 2013 2014 2015
*2011 purchase and integration of the former Superquinn business
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Sustainability RunningSustainability head
So despite the growth of our sustainable business practices based We have strong business work with each other, and how business, our total annual fleet on ISO 26000. It recognises our our business and brands help local emissions have reduced by performance across 27 key indicators values and a communities thrive. Sustainability 5,550 tonnes since 2006. and more than 300 individual metrics Retailer of the Year within five key areas including, good track record As well as supporting thousands We are proud to We also work hard to recycle as workplace, marketplace, environment, of other family businesses in local have been named as much waste as possible. In 2015 we community and CR management for balancing communities, we partner with businesses the 2015 NACS Insight managed to recycle 97% of the waste and communication. and government to secure a sustainable European Sustainability generated by our business, up from profitability with future. For example, for the third year Retailer of the Year which recognises our leadership in 63% since 2006. Importantly, our total Leading in health and well-being running we are involved in Feeding sustainable resource strategies and for inspiring other waste continues to fall. Operational We believe fresh, healthy food should doing the right Ireland’s Future, a joint initiative between businesses to implement sustainability initiatives of improvements have resulted in a be available to every local community. the government and industry which their own. NACS President and CEO Henry Armour reduction of over 30% since 2012. We are championing healthy living with thing supports young unemployed people with congratulated Musgrave for its focus on sustainable our commitment to support the wider pre-employment skills. We are inspiring business solutions. “The dedication Musgrave has Driving sustainable sourcing community by taking part in health young people and helping to tackle shown to enhancing the communities and people and consumption and well-being initiatives at a local and youth unemployment through giving it serves is a great example of sustainable and We are passionate about the national level. For example, under the participants the opportunity to see what environmentally conscious best practices, and even robustness of our supply chain and our Live Well banner, Centra is offering a day in the food industry is like, and more exciting is that we have the opportunity to share commitment to quality. For example, shoppers healthy and nutritious choices supporting them in developing the skills Musgrave’s endeavors with our global convenience SuperValu stores stock 100% fresh Irish across a range of 300+ products. In needed to secure a job. Over 250 young retail community.” beef, pork and lamb which is born and addition, we are providing health unemployed people participated in skills reared in Ireland and 100% National and nutrition information sessions and development workshops Dairy Council approved milk for its own in‑store and via social media. run by Musgrave throughout the country. 26 brand milk range. SuperValu has also 27 demonstrated its commitment to Irish By working with our The initiative continues to go from TidyTowns suppliers through a range of initiatives, partners to make it easier strength to strength with Youthreach 2015 marked the 24th year of SuperValu’s sponsorship such as becoming the first retailer in and more affordable education centres becoming a of the national TidyTowns Ireland to adopt the IdentiGEN National for shoppers to make beneficiary partner in 2016. competition, one of the longest DNA Traceback Programme for Bacon healthy and nutritious running sponsorships in and its role in the Food Academy food choices, we are More than 2,700 young unemployed Ireland and one we are programme. helping people lead an people have been offered skills sessions extremely proud to be active lifestyle whatever from 37 companies to date, and as the associated with through Since May 2004, we have been their age, circumstance largest private employer in Ireland we are the years. signatories to the UN’s Global Compact or budget. delighted to continue our involvement and continue to do business responsibly with the programme. by aligning our strategies and operations Taking an active leadership with the UN’s Ten Principles on human role in the community rights, labour, environment and anti- The ownership structure of family Origin Green corruption. We report our progress on businesses like Musgrave gives us We are proud to be the first and only retail and wholesale company to have these areas annually to the UN. a long term orientation that traditional achieved the Bord Bia Origin Green Sustainability Standard. Participation public firms often lack. We have strong in the Origin Green programme is an exciting opportunity for Musgrave We are also proud to be the only Irish values and a good track record for SuperValu Tidy Towns to have our comprehensive sustainability programme independently retailer to have achieved the Business balancing profitability with doing the Kinsale committee assessed and verified on behalf of Bord Bia. As well as bringing Working Responsibly Mark – Ireland’s right thing. Our values impact everything celebrate the 25 valuable credibility to our sustainability activities, it provides us with an first and only independently audited from governance to how we work with year sponsorship of opportunity to stretch our ambitions and to continuously challenge and certification for responsible and suppliers, how colleagues around the TidyTowns improve our performance.
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Food leadership Food leadership
Great quality healthy and inspiring food Food leadership
We believe that healthy eating should be an enjoyable, 28 affordable experience that is accessible to everyone. We have 29 developed our ranges to inspire a passion for good food and this is helping to define and differentiate our brands. Our approach to growing good business means we are committed to responsibly sourcing local produce, giving shoppers a depth of range that inspires them to make healthy choices, while contributing to the prosperity of local communities.
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Food leadership Food leadership
The Irish food and retail landscape has dramatically altered in the last platform for people to exchange ideas Food sourcing and share their food passions, shoppers As the number one number of years. The Ireland of today is a more confident, diverse and were invited to share Good Food Karma supporter of the Irish dynamic place in which food and health play increasingly important roles moments and great Irish food recipes food industry, we across digital and social channels. The source from over in shaping the lifestyles of individuals and families. campaign underlined SuperValu’s fresh 1,800 Irish suppliers food credentials, with online traffic – more than any doubling within the first month of the other grocery retailer campaign. Video posts featuring real in the Irish market family recipes proved especially popular – equating to an Inspiring people to cook across social channels, as people sought economic contribution out and shared food inspiration. of €2.19 billion. 75% of with good affordable everything on SuperValu’s shelves is sourced or produced Irish food in Ireland. From 100 per cent fresh Irish beef, pork and lamb, scratch bakeries in-store, A step change in locally-sourced fruit and veg, specialist fish counters and our the supermarket Food Academy suppliers, we continue to give shoppers the concept It is important for us to keep ahead level, we are supporting our retail The best of real Live Well – Centra best locally sourced food. As of consumer needs, to continuously partners to train growing numbers Centra is redefining convenience by our stores are independently 30 innovate and evolve our offer to ensure of passionate in-store experts to food, healthy making the healthy choice the owned and operated, this 31 our retail partners lead on the main street encourage more shoppers to cook and to easy choice. means even more money goes and online. promote healthier choices. At the same eating, and back into the local economy. time, throughout 2015, we achieved Centra’s Live Well initiative, launched We are working with our partners to considerable success with national the people that in July 2015, aims to make it easier for make it easier and more affordable for promotions like SuperValu’s Good Food people to make healthy and nutritious shoppers to make healthy and nutritious Karma campaign and Centra’s Live Well matter choices. The initiative is focused on food choices and lead an active lifestyle initiative. overall nutrition and balanced, healthy Healthy lifestyle whatever their age, circumstance or eating, even when consumers are on In addition to great products budget. We are promoting healthy food Good Food Karma – SuperValu the go. Underpinned by a 300-strong and more and better information choices at every opportunity – from In April 2015, SuperValu’s commitment product range, the initiative was about them, Centra Live Well personalised dietary advice to the to great quality, healthy and inspiring developed in direct response to shopper emphasises the importance of best local fresh food. For example, we food became the basis of the Good preferences and tastes. We worked with increasing activity levels as part have increased the space in Centra’s Food Karma campaign. This was not consultant dietitian Sarah Keogh to help of a healthy lifestyle. 2015 was the impulse drinks fridges for water and about formal food – fussy recipes, create the range, which aims to highlight fifth year of Centra’s sponsorship of the healthy choices and decreased space for exotic ingredients and Michelin-star nutritional value, along with information GAA Hurling All-Ireland Senior Championship and, last fizzy drinks. In fact, Centra is removing presentation. Good Food Karma on product sourcing and how to combine summer, Centra got over 10,000 people active through 120 million calories from drinks in celebrated the best of real food, healthy ingredients and plan menus to ensure a its hurling events. For the first time, these events shopper baskets over a 12 month period. eating and the people that matter. It well-balanced diet. featured sessions on good diet and nutrition led by promoted SuperValu as a destination inter-county players. In October, the Live Well initiative Our food leadership operates at both for wholesome, natural ingredients and also saw 200 Centra stores ‘Walk the World’, which a local level and through national food and drink, and as a great way of encouraged thousands of shoppers to don their trainers, campaigns. For example, at a local bringing people together. Providing a walk their local communities and raise money for the Irish Cancer Society’s Action Breast Cancer programme.
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Food leadership Food leadership
Leadership on health Supporting healthier options – MarketPlace As Ireland’s leading grocery At MarketPlace, we are working to make it easier for our foodservice customers to business, we recognise that we have make healthy choices through range awareness, technology innovation a responsibility to lead the way in and through support services for customers. So we are making positively promoting healthier choices. it easier for customers to identify healthier choices through We put health and well-being at the branding and campaigns. We are making smarter use of centre of our brands. We want to help technology by using online and apps to provide nutritional people lead healthier lives, through information for products we sell. And we are providing the provision of healthy choices and training workshops for caterers to help them create and guidance on nutrition, portion control serve healthier meal solutions to their customers. and active lifestyles. We are also working to expand our range of healthier 1. Nutrition and healthy eating We aim to raise options while at the same time ensuring that healthy We aim to raise awareness amongst choice can also be an affordable choice for all our consumers of the benefits of nutrition awareness amongst customers. and healthy eating and actively work to encourage customers to make consumers of informed food choices which fit with their own personal needs and the benefits of lifestyles. We want healthy choices to Gourmet coffee be affordable and to lead with quality, nutrition and The merging of retail and foodservice is a trend that many retailers are taking advantage of to provide fresh, nutritious food which offers freshly prepared food and drink in-store, with particular emphasis on developing their beverage offer. healthy alternatives. healthy eating This is driven by consumer demand for a sophisticated offering encompassing barista coffee and we 32 are delighted to bring this trend to Irish shoppers. 33 2. Education and awareness We will help people to take ownership Frank and Honest Gourmet Coffee of their health and well-being and give Company is a new addition to the them the confidence to make healthy Musgrave portfolio which is choices in what they eat and how they being rolled out to Centra manage their own and their family’s and SuperValu stores health. We will partner with experts in across Ireland. This nutrition, healthy eating and fitness so is a new departure that we are able to provide consumers for Musgrave to with the very best guidance. facilitate a need in the business to 3. Active living provide customers We will raise awareness among with a consistently consumers of the importance of a high quality coffee healthy lifestyle and support them in offer at an affordable getting fit. We, and our retail partners, price. The plan is to roll will work with leading fitness experts out this coffee concept to all and organisations such as the GAA stores over the next two years to create simple, exciting, personal and add up to 50 in-store baristas fitness initiatives that bring people to the appropriate high footfall sites. together and build a strong sense of community.
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Building better brands Building better brands
Building better brands
Building Technology has changed the way we do business. It is helping 34 us extend our offer across our brands, making them available 35 to shoppers and customers when and in any way that suits profitable them. Our aim is to make Musgrave digital from the inside out, improving our ways of working and making our brands more omnichannel compelling, more accessible and more profitable. brands that are different and better
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Building better brands Building better brands
In this brave new world of digital technology, we have not forgotten our Dialprix El Súper de la Frescura – new convenience A new roots. For 140 years we have prided ourselves on bringing great value and concept in Spain fresh food to the heart of local communities. Store design and format Throughout 2015, we continued to develop our Dialprix stores with convenience directly impacts the consumer experience – and our stores need to become eight stores updated to reflect our new Super Fresh convenience concept in Spain destinations in themselves, designed so they are a pleasure to spend time in, concept. Emphasising healthier, fresher food, the Super Fresh with services that shoppers can access both online and around the corner. concept is centred on local produce, highlighting the benefits of enjoying a healthy Mediterranean diet. Revitalising the Dialprix offer, the store update has resulted in The destination place to vibrant stores which are appealing to shop, online and around consumers whilst reaffirming our the corner commitment to provide the best of local produce.
At the same time, fully exploiting payments, provide more and better digital advances has the potential to information, smarten up offers and 36 make us nimble and more responsive. deals and help people make informed 37 Technology is already enabling us to decisions about healthier choices. We Centra ‘Beat the Queue’ app respond faster and more effectively to are also exploring ‘click and collect’, Taking convenience to We pride ourselves on listening to our customers and the needs of our retail partners, while offering a new service for Ireland which the next level responding to their valued insights. And we have come up with a technological solution to feedback which at the same time delivering new ways is always open, always on. By continually We continually strive to improve and told us that the queue at deli counters at lunchtime for shoppers to engage more fully with investing in our brands and technology refine our brands for the markets they is a problem. With only an hour for lunch, they didn’t our brands. Our investment in digital innovation we will delight shoppers serve, based on customer insight and the want to waste time in a queue. So we are developing applications and services is one of and build omnichannel brands that are local knowledge of our retail partners. an app which literally beats the queue. Customers can pre-order their sandwich, to the many ways we are differentiating different and better. In Northern Ireland, this has seen us their specification, then our brands from competitors’, while Putting the tailoring our SuperValu, Centra and collect it in-store stretching our brands through digital Digi-vouchers Mace brands to better meet the needs and pay before experiences is helping to evolve our core 2015 saw the launch of digital vouchers vouchers right of convenience shoppers in this market, they go, giving business and provide new platforms for on the Centra app, driving thousands of transforming both in-store experience them more time to enjoy growth. downloads and redemptions. Putting and offering. We have refined product into people’s their leisure the vouchers right into people’s hands ranges within a new concept store, time. The Becoming a truly omnichannel business is proving to be a positive step for hands is proving focusing on food to go and food for now technical means more than mobile apps and customer engagement while at the which is largely sourced within Northern pilot is online shopping. Our aim is to make same time enabling us to target offers Ireland. Keeping ahead of consumer complete and to be a positive throughout everything associated with our brands and deals more effectively. Vouchers needs is key to consolidating our position 2016 you will faster, simpler, more convenient at the till were also launched in 2015, step for customer as a market leader and shoppers in NI see this trialled and more enjoyable. We are using allowing us to speedily respond to will see more of this continental style in a variety of city technology to cut queues, speed up customer demand and feedback. engagement store being rolled out throughout 2016. centre stores.
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Building better brands Building better brands
Food excellence for The Food People Digital from the inside out Musgrave MarketPlace is now Ireland’s Once again, digital and social media largest wholesale and foodservices are helping to improve engagement operation, serving more than 45,000 and brand awareness. For example, hotels, restaurants and hospitality in 2015 MarketPlace held Ireland’s businesses. 2015 saw great strides in the first Twitter tasting experience, evolution of our foodservices offering, hosted by Jean Smullen, its new as we continue to ramp up quality, range wine consultant partner. We are also and delivery with more than 12,000 retail using online to extend convenience, and foodservice lines. choice and 24/7 service to all MarketPlace customers. When As we have developed the MarketPlace they visit our branches they enjoy brand, we have taken our customers a speedy and hassle-free shopping on the journey with us, deepening our experience. Our delivered customers get relationships through consultation a responsive and dependable service all and by working hard to get a better year round. understanding of their businesses. This has been supported by the extended Along with the new Web Shop launch, we have also Jean Smullen, role we have created for our business updated the MarketPlace shopping app to make ordering even wine consultant development chefs, who are able to work easier. Available for iPhone and Android, the app allows customers to scan partner with customers to help them design barcodes and add products directly to their baskets. A weekly blog highlighting menus and seasonal meal options. We news and inspiration showcases recipes, products and supplier features, news 38 have showcased this through a variety of events and the latest food trends. 39 of special events, including our ‘Dine with Musgrave MarketPlace’ evening for foodservices, customers and the hospitality media that featured a specially designed menu created by our chefs. Open 24/7 Open 24/7, the MarketPlace online An Exclusive Invitation to the Launch of By redefining our offering to store, offers customers the added the hotel and restaurant market The food people convenience of being able to we have connected with new To celebrate the launch of the Musgrave MarketPlace browse and order from our full Foodservice Brochure you are invited to join us for a audiences previously unaware 5 course meal expertly chosen by our team of Chefs. range at a time that suits them. of our strengths in this market. Date: 6th October 2015 To make things even easier for Time: 6.30pm The launch in October 2015 of the Location: Cleaver East, customers, we have included The Clarence Hotel, Dublin 2
foodservice brochure, The Food Please RSVP to [email protected] by 25th September 2015 a ‘Retail Must Stocks’ section, People, further raised awareness of which uses current Nielsen the brand and product range amongst data to provide customers with trade and business media. Listening details of the most popular and responding to the latest food trends products that are ‘must haves’ has also increased our focus on ethnic for Irish convenience stores. food offerings as we have tapped into demand across Ireland for access to Thai, Indian and Chinese food.
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Partnership Partnership Supporting retailers, businesses and communities Partnership
Our business model is all about partnering for success. 40 As a family-owned business, we work with thousands of 41 other family businesses and their local communities in Ireland, Northern Ireland and Spain. Through our support of local initiatives, we aim to enrich everyday lives, make communities vibrant and provide shoppers with an offer that is different and better.
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Partnership Partnership
One of the key differentiators for our brands is our network of extraordinary Northern Ireland Stores of the Year SuperValu Store of the Year – Three local SuperValu, Centra and Mace Garvey’s SuperValu in Dingle, Co. Kerry retail partners, who enable us to offer great grocery brands that are stores claimed the prestigious title of ‘Store of Garvey’s SuperValu, Dingle, has been named the Year’ at Musgrave NI’s annual awards. the SuperValu Store of the Year, in recognition both online and around the corner. Our partners have been able to build of its commitment to the SuperValu brand Barry McGuigan, Northern Ireland boxing ethos of Real Food, Real People. successful businesses because they understand the unique needs of their legend, was on hand to congratulate Hegarty’s Fintona on winning the SuperValu ‘Store of On receipt of the award, Jim Garvey paid own communities. The stores they own and run have a long track record the Year’, Watson’s Portaferry on winning the tribute to store manager Kevin O’Connor Centra ‘Store of the Year’ and Collingwood’s and the Dingle team, acknowledging their as hubs and economic powerhouses of the towns in which they operate. Aghalee on winning the Mace ‘Store of the passion, enthusiasm and dedication. ‘In From our side, Musgrave delivers the sourcing, sales, marketing and supply Year’ award. 2015, we invested €2.7 million to completely revamp our store, demonstrating our long- chain expertise so these local entrepreneurs can go head-to-head with the All these stores showcase how we have standing commitment to the community and evolved our convenience offer for shoppers in economy in Dingle. We have been serving international supermarket chains. We support with management and staff Northern Ireland, both in terms of the range the community of Dingle since 1935 and this associated with each of our brands and also award is a real testament to having a great in terms of in-store team and a store that we are all proud of.’ training, store design, financial advice and investment support. experience.
Daybreak Store of the Year – This long term commitment to aim to do what we can to make the For every Daybreak Clonliffe Road, Drumcondra independent businesses and lives of local people a little better. Daybreak Clonliffe Road, in Drumcondra, communities helps create the local €1 spent Dublin 9, was named Store of the Year 42 at the annual Daybreak Store of the Year 43 multiplier effect. For every €1 spent We want to lead the future of food in a local Awards. A series of mystery shopper audits in a local business, 45 cents are retailing and wholesaling across the assessed products and services, environment, reinvested locally. For every €1 spent whole island of Ireland. Partnership business, communications, as well as people and at a corporate chain, only 15 cents are is key for both core and new business behaviours. Daybreak Clonliffe Road was 45 cents are awarded the top prize thanks to its impressive reinvested locally. opportunities and we are driving Centra Store of the Year – Ryan’s Centra in Ennis, Co. Clare customer service and outstanding product growth through exploring new reinvested offering. So from championing healthy life partnership prospects. We also Ryan’s Centra in Ennis, Co. Clare, was named choices, to inspiring pride of place, we encourage communities to flourish locally the best Centra in Ireland at the Centra Commenting on the win, store owner Damien National Conference. An audit for the award support our partners in community- and actively seek out and support Osborne, said, ‘We are absolutely thrilled focused on range, quality, customer service, to have been named Store of active retailing and, in the process, charities that are aligned with our way hygiene, service offering and local community the Year. This award is further differentiate our brands from of thinking. involvement. a testament to all competitors. At the same time, we the hard work that Store owners Paul and Kay Ryan paid tribute our team put in to their team’s enthusiasm and constant throughout the dedication. ‘Our passionate workforce, year. It is always expertly led by our store manager Kate a huge team In October 2015 more Sherlock, strives to provide the absolute best effort at our than 250 Centra stores service, product offering and value for our store and we customers.’ hosted walks across are extremely Ireland to raise money customer Competition judge Alan Collins said: ‘There’s service-focused.’ for Irish Cancer Society’s something about this store that makes it Action Breast Cancer feel just “perfect”. The store places a huge programme emphasis on providing excellent customer service – it is the kind of store everyone wants on their doorstep.’
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Partnership RunningPartnership head
Everest Granola The Tipperary Kitchen A young entrepreneur, Seamus Tighe from The Tipperary Kitchen are Brian and Ann Marie Stepaside in Dublin, saw a gap in the market Walsh, who take traditional recipes and, using for a healthy on-the-go breakfast. The Everest local ingredients, add their own innovative product provides a gourmet granola cup that twist to create a range of products that is packed with natural Irish ingredients. Based includes Holycross Chocolate Biscuit Cake and in Dublin, Everest Granola Cups are now Holycross Marvellous Meringues. available in 38 SuperValu stores nationwide, through the participation in the Food Academy ‘As a result of Food Academy, we are now Advance programme. available nationwide. So at Bloom, The Ploughing and other large exhibitions, we ‘The Food Academy has been a fantastic tell every customer we meet that they’ll find opportunity. The detailed learnings of bringing our products in their nearest SuperValu. a product to market, the logistics of getting the That’s been a powerful game-changer for our product into stores, and the pull through from business. Working with the Food Academy back stores to shelves have been imperative team has allowed us to grow our business to Everest’s growth. It has been a real learning one step at a time, at a time when access to experience that has enabled us to grow and credit was difficult. In the heart of rural Ireland, to take on more people. The support from we now have 220 great customers, eight the Food Academy team has been brilliant employees and a robust business. In the space over the last 18 months and of two years, working with Food Academy has helped us turn our completely transformed our business.’ dream into a business.’ 44 45 Food Academy and gain valuable feedback from the Food Academy works with and nurtures store as well as their customers. This small businesses through their journey integral retail learning experience helps from start-up to getting their products the producer to further develop their on our shelves. And in 2015, the product, marketing approach, packaging programme moved up a gear. It now and even distribution. supports more than 600 local suppliers in all aspects of the food business, from Over 900 jobs are supported by the branding and marketing to finance and Food Academy programme working market research. in collaboration with Bord Bia and the Leaves Local Enterprise Office Network, actively Italian Nico Olivieri and his Dutch wife Sabine Hobbel always loved to eat pasta, but when Nico Food Academy provides participants encouraging entrepreneurship in Ireland. Giving small developed a wheat intolerance, they could not find a healthy or delicious wheat-free pasta solution. with a solid foundation to work from, to Thanks to Nico’s background as a chef and Sabine’s in health research, they designed their current gain confidence in their business and Following on from the success of producers a range of wheat-free pasta, using alternative whole grains to create extremely healthy ideas, and help them secure valuable the Food Academy programme, we and high quality pasta made without any additives, gums or chemicals. space on the shelves of retailers. have recently introduced a similar big chance Crucially, SuperValu plays a pivotal role initiative to Irish foodservice producers ‘Food Academy played an essential role in bringing Leaves to the exciting in providing successful participants with through MarketPlace. A number stage where it is now. It all started when we were given the opportunity the opportunity to trial their products of the participating companies are through Food Academy Start to sell our products in a number of SuperValu in their local stores. This provides a Food Academy graduates, so we are stores locally. It was great that we could indicate what pace was right for real advantage to small businesses, delighted to be able to introduce their us and the Food Academy team worked with us every step of the way. They as it allows them to grow sustainably products to foodservice customers. helped us to grow steadily, all the way up to central distribution nationwide in March 2016.’
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 People People
People
We are a people business and we have created and developed 46 the very best place for our people to grow and thrive. As the 47 largest private company in Ireland, we harness and energise a vast array of skills and talents to deliver our ambitions and The destination share in our success. We are one of the very few private Irish companies whose people have a share in the business – the place to work company is now jointly owned by family shareholders and Musgrave colleagues. where talented people can grow and thrive
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 People People
Ireland’s best truck driver At Musgrave we strive to be the best place to work, and as part of this we We are delighted that one of our fleet drivers, Peter O’Neill, won continually develop and nurture our people to succeed in a challenging and the Best Truck Driver at the 2015 dynamic environment. We recruit the brightest and the best people to work Irish Fleet Transport Awards, beating hundreds of applicants together to maintain and grow our market leading brands. in tests ranging from eco-driving to load-securing, to manoeuvring. Part of the Musgrave team for more We run some of the largest and most of chefs, dieticians and nutritionists The success of for our brands and our retail than 18 years, Peter is responsible for complex IT and business change focused on developing the best own partners. delivering chilled food to all SuperValu projects in Ireland and we have the brand products on the market, our our business and Centra stores covering the southern best people on board to deliver them. people are passionate about what Investing in our talent half of Ireland, as well as loads from producers. We seek out outstanding individuals they do. Our colleagues in the chill depends To achieve our growth strategy, we need in business and stretch, challenge and warehouse pick to empty every single to ensure that our people have the right Discussing his win, Peter said, ‘I’m thrilled to be Ireland’s support them to ensure they meet their day, produce which is delivered to on forging skills and that the business has the best truck driver! I want to be the best I can be and career ambitions while enabling us to stores by the largest fleet of trucks on entrepreneurial culture to support our winning this award recognises my commitment to what I deliver positive business growth. For the island of Ireland. long term ambitions. The development of future do and my determination to keep learning and improving example, our trading team is the largest leaders is key to our success and we even after the best part of 20 years.’ in Ireland and every day they deal When we talk about the people relationships will continue to invest in our people to with local and international suppliers, who make our brands, we don’t just ensure this can happen. This means enabling us to deliver the best available mean the people who work directly 48 produce to customers. for Musgrave – we also mean the 49 relationships we have with our retail Together with our retailers we employ partners and the local communities New skills, new challenges more than 45,000 people and in Ireland they serve, their people and our Kerrie Lucey began her career with Musgrave as part of our Finance Graduate Programme in 1999. alone we have 35,000 employees. suppliers. The success of our business After a number of roles across the business, she was appointed as a Financial Controller for Musgrave, Across our stores, our offices, our depends on forging long term leading a team that delivered financial control, planning and reporting for the SuperValu and Centra warehouses and our retailers, we feed relationships with: brands. ‘I had real responsibility from my first day as a graduate and the diversity of the programme one in three people every day in Ireland. • retail partners to create world- ensured that I gained a broad foundation of relevant experience,’ says Kerrie. ‘But with my promotion class retail brands with the to Financial Controller the level of responsibility stepped up exponentially – We care about the things our people closest possible links to local which is exactly what I was looking for.’ care about – their health and well- communities; being, their families, and their • suppliers to develop business Today Kerrie, as Head of Business Change for Musgrave, is communities. And the people who plans which ensure choice and responsible for leading the business change plan around the thrive in Musgrave are the people who value for our retail partners and ‘One Finance 2018’ transformation programme, which to date share our values and our belief in profit customers; has included the set-up of Musgrave Business Services and with purpose. • our people to grow the talent the implementation of a new financial system across the required to deliver our vision of organisation. ‘The business is going through exciting changes Making every day extraordinary growing good business. at the moment and the One Finance 2018 programme is Our people make our brands. From our about ensuring that we build a best-in-class finance team that bakers who get up at 3am to bake fresh In all this we have colleagues who are Our commitment to maximises the use of technology to meet the ever-changing bread every day, our drivers who start motivated to go the extra mile; proud excellence and best needs of the business.’ work at 5am to bring fresh deliveries to to recommend Musgrave as a place practice has been retailers seven days a week, to our panel to work; and committed to delivering recognised by the IITD
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 People People
offering challenging opportunities Our investment in Breakthrough on driving real business initiatives, through special projects and on the training has generated powerful which is a key element to our overall job experience, as well as external outputs and created momentum and programme. Over two years, our specialist training supported by internal more than 3,000 of our people will graduates are equipped with both mentoring. have received Breakthrough training the professional, interpersonal and by the end of 2016. Our people are leadership skills that are essential for Breakthrough Global inspired, energised and ready to face our future leaders. Over our 140-year history, innovation the business challenges ahead. We are Ciara Collins and change have been core to our uncovering the new possibilities for our “Our graduate project success and, as we open the next business and are exploring how to turn Musgrave graduate chapter in our history, we have an these possibilities into reality. focused on a commercial ambitious agenda to transform the business process, which business and grow at pace. To do this, Our Graduate Programme Our Graduate we are committed to creating the very We are proud of the fact that many is strategically critical for best teams and providing them with the people start their careers with us and Programme has a our retail partners. We tools they need to make great things stay with us throughout their working happen. This has meant working with lives. Our Graduate Programme has strong track record worked with IT, Finance Be well, work well our leadership and teams to evolve new a strong track record in developing We want to develop and foster a strong health and and Sales, and applied ways of working that better support a talented leaders for the business. in developing well-being ethos amongst our people and in doing so culture of enterprise and innovation We attribute this to the way in which continuous improvement ensure that health becomes embedded in our work and that can keep pace with consumers who we embed our graduates within talented leaders culture. Be Well, Work Well is an initiative that provides have changed for good. the business, rotating placements principles to identify steps our people with the opportunity to focus on their health so participants can build up their for the business to reduce the amount in the workplace. Developed to focus attention on 50 We chose Breakthrough Global as our experience and gain a strong the internal health culture of the business, Be Well, 51 partner in this process. With a strong commercial sense for our business as of waste and non-value Work Well is about delivering better information about track record in assisting global firms in a whole. Former graduates hold roles health and more opportunity to get healthier, and will creating high performing, innovative from director to marketing manager, to add activity by over 70%. contribute to making Musgrave a great place to work corporate teams, Breakthrough focused financial controller. Our blend of formal Since then many of our over the months and years ahead. on unlocking the potential within our and experiential development lays business, brands and people. Working foundations that enable graduates to recommendations have with them has already produced strong establish their own brand of success. results and adopting new ways of been implemented across Valuing traditional skills behaving, thinking and operating is We look for graduates who are the business and I’m The way we eat is changing and with it, so is the way in transforming our business as a whole. ambitious, commercially aware and which we shop. We know that it is important to retain analytical. We have a passion for delighted to be part of that.” traditional skills that otherwise would be lost in this Through challenging, examining and food and retail and look for this in all process, such as those of the local butcher. We are questioning our vision of the future, our people. Our programme offers proud to say that each of our SuperValu stores has its we have generated powerful outcome- graduates the introduction to an own butcher, such as Sean Kean, from Davis’ SuperValu based action plans and created the exciting career and we expect them to Longford. Sean started out as a butcher at 16 and intentionality and energy in our people take ownership of their development has seen a big rise in customer interest in his to rapidly accelerate our growth. By and to make the most of the craft over his ten years at SuperValu. ‘Nowadays creating the space for our people to opportunity. people want to know the provenance of their dream up new ways of improving our meat and how best to cook it. Increasingly we brands and delighting our customers, Cross-functional working leads to are having detailed discussions about healthy we have started to carve out a powerful demonstrable commercial benefit, eating and quality with customers – which is new future for Musgrave as a whole. and graduates are tasked with focusing why it’s important to maintain the highest of standards right across the supply chain.’
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Summary financial statements Summary financial statements
Summary financial statements
PROFIT & LOSS ACCOUNT
52 Notes Continuing Discontinued 2 January Continuing Discontinued 27 December 53 operations operations 2016 operations operations 2014
€m €m €m €m €m €m
Group turnover 3,730.3 711.1 4,441.4 3,625.9 1,011.2 4,637.1 Cost of sales (3,110.9) (617.2) (3,728.1) (3,027.5) (885.2) (3,912.7) Gross profit 619.4 93.9 713.3 598.4 126.0 724.4
Selling and distribution expenses (411.9) (69.2) (481.1) (441.0) (91.3) (532.3) Administration expenses (127.4) (20.0) (147.4) (120.5) (38.0) (158.5) Other operating expenses (26.7) (10.0) (36.7) (43.5) (12.3) (55.8) Other operating income 7.5 - 7.5 5.0 4.4 9.4 Profits arising on disposal of tangible assets – net 0.3 0.6 0.9 10.7 0.5 11.2 Profit on disposal of subsidiaries 3 - 19.6 19.6 - - - Group operating profit/(loss) 61.2 14.9 76.1 9.1 (10.7) (1.6)
Net interest (payable)/receivable (8.4) (0.2) (8.6) (8.2) 0.2 (8.0) Profit/(loss) on ordinary activities before taxation 52.8 14.7 67.5 0.9 (10.5) (9.6)
Tax (charge)/credit on profit/(loss) on ordinary activities (9.6) 1.0 (8.6) (3.5) 0.1 (3.4) Profit/(loss) for the financial year 43.2 15.7 58.9 (2.6) (10.4) (13.0)
The Happy Pear, Greystones, Co. Wicklow
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Summary financial statements Summary financial statements
BALANCE SHEET CASH FLOW STATEMENT
2 January 27 December 2 January 27 December 2016 2014 2016 2014 €m €m Note €m €m
Fixed assets Cash flows from operations 5 (48.1) 279.3 Intangible assets 57.0 53.3 Corporation tax refunded 2.1 0.2 Tangible assets 345.7 369.4 Corporation tax paid (6.7) (7.0) 402.7 422.7 Net cash (used in)/generated from operating activities (52.7) 272.5
Current assets Cash flows from investing activities Stocks 134.2 202.1 Purchase of tangible assets (60.1) (59.4) Debtors – amounts falling due within one year 443.6 540.5 Purchase of intangible assets (3.5) - Debtors – amounts falling due after more than one year 28.8 38.4 Sale of tangible assets 6.3 49.4 Cash at bank and in hand 192.6 363.0 Purchase of business 7 (10.2) (4.6) 799.2 1,144.0 Disposal of subsidiaries 3 55.8 - Interest received 2.0 1.9 Bank overdrafts and loans – amounts falling due within one year (94.7) (175.2) Net cash used in investing activities (9.7) (12.7) Other creditors – amounts falling due within one year (593.6) (864.5) (688.3) (1,039.7) Cash flows from financing activities Dividends paid (15.0) (16.4) Net current assets 110.9 104.3 Interest paid (5.9) (6.7) Loan fees paid (1.6) - Total assets less current liabilities 513.6 527.0 Payments to acquire own shares (4.3) (4.6) 54 (Repayment of)/receipts from bank facilities (65.8) 13.3 55 Bank and other loans – amounts falling due after more than one year (73.0) (74.0) Repayment of obligations under finance leases (1.3) (2.3) Other creditors – amounts falling due after more than one year (14.5) (24.7) Proceeds from finance leases received - 0.6 Provisions for liabilities (64.0) (93.4) Net cash (used in)/generated from financing activities (93.9) (16.1) Pension liability (116.2) (172.9) Net assets including pension liability 245.9 162.0 Net (decrease)/increase in cash and cash equivalents (156.3) 243.7 Net movement in net debt excluding cash and cash equivalents 69.8 (12.9) Capital and reserves Net (outflow)/inflow in the year (86.5) 230.8 Called up share capital 28.8 28.8 Opening net cash/(debt) 109.9 (120.9) Share premium account 2.7 2.7 Closing net cash 23.4 109.9 Capital redemption reserve 2.5 2.5 Revaluation reserve 17.7 17.7 Other reserves 9.1 7.8 Profit and loss account 185.1 102.5 Equity shareholders’ funds 245.9 162.0
On behalf of the Board
Chris Martin Tim Kenny Group Chief Executive Officer Group Finance Director
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Summary financial statements notes Summary financial statements notes
1 INTRODUCTION 4 DIVIDENDS 2 January 27 December The financial statements have been prepared on a going concern basis and in accordance with Generally Accepted Accounting Practice in Ireland 2016 2014 (accounting standards issued by the Financial Reporting Council of the UK and promulgated by the Institute of Chartered Accountants in Ireland, including €m €m FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” and the Companies Act, 2014). The consolidated financial Dividends paid on ordinary shares: statements have been prepared under the historical cost convention and they are presented in in the currency units of the Republic of Ireland, the euro (€). Ordinary dividends of 26.8 cent (2014: 29.1 cent) per share 15.0 16.4
The Group implemented a change to its reporting period for the 2014 year end, changing from the calendar year ending 31 December to a period ending on the Saturday closest to 31 December, being 2 January 2016 for 2015 year-end and 27 December 2014 for 2014 year-end. This change in financial calendar brings the Group into line with standard retail industry reporting practice. 5 CASH FLOWS FROM OPERATIONS This is a shortened version of the full statutory accounts approved by the Board on 8 April 2016 and on which the auditors, PricewaterhouseCoopers, have issued an unqualified opinion. 2 January 27 December 2016 2014 €m €m
Group operating profit/(loss) 58.9 (13.0) 2 OPERATING PROFIT/(LOSS) Adjustments for: 2 January 27 December Taxation on profit on ordinary activities 8.6 3.4 2016 2014 Net interest payable 8.6 8.0 €m €m Operating profit/(loss) 76.1 (1.6) Operating profit/(loss) of the Group has been arrived at after charging/(crediting): Depreciation and impairment of tangible assets 48.5 56.6 Restructuring, integration and re-organisation costs 14.4 38.3 Amortisation and impairment of intangible assets 5.1 27.9 Provision for impairment of tangible assets 10.6 18.4 Profit arising on disposal of tangible assets – net (0.9) (11.2) Provision for impairment of goodwill - 19.4 Profit arising on disposal of subsidiaries (19.6) - 56 Pension settlement gain (13.9) - Surplus on the revaluation of investment properties (0.2) (0.7) 57 Share based payment plans expense 4.6 4.6 Net movement in working capital (159.5) 205.0 Currency translation adjustment (2.2) (1.3) Cash flows from operations (48.1) 279.3 3 DISPOSAL OF SUBSIDIARIES The movement in working capital is primarily driven by the change in the year end cut-off date. On 14 September 2015 the Group disposed of MRPGB to Booker Group Plc for a total cash consideration of €59.2 million.
The following table summarises the profit on disposal and the net cash flow arising on the disposal.
2 January 2016 €m
Net proceeds received 59.2 Costs of disposal and assets and liabilities disposed of (39.6) Profit on disposal of subsidiaries 19.6
Net proceeeds received 59.2 Disposal costs paid (3.4) Total net cash inflow from disposal 55.8
MUSGRAVE GROUP PLC | Annual report & review 2015 MUSGRAVE GROUP PLC | Annual report & review 2015 Summary financial statements notes
6 PENSIONS 2 January 27 December 2016 2014 www.supervalu.ie €m €m Ireland 223 stores The pension charge for the year is: Northern Ireland 34 stores Defined contribution schemes 6.3 6.7 Our brands Defined benefit scheme costs 14.4 7.1 Settlement gain (13.9) - 6.8 13.8
Pension interest 3.7 2.6 www.centra.ie www.musgravemarketplace.ie Total pension costs 10.5 16.4 Ireland 461 stores Ireland 7 branches Northern Ireland 76 stores Northern Ireland 3 branches The pension scheme deficit consists of: Scheme liabilities (507.9) (673.1) Scheme assets 394.2 507.8 Net defined benefit schemes liabilities (113.7) (165.3)
This has been disclosed in the balance sheet as: www.musgrave.es Pension liability (for schemes with pension deficits) (116.2) (172.9) Spain 80 stores Pension asset (for schemes with pension surpluses) 2.5 7.6 (113.7) (165.3)
58 7 BUSINESS COMBINATIONS www.daybreak.eu www.musgrave.es Ireland 200 stores Spain 17 branches On 10 January 2015, the Group acquired the trade and assets of the logistics business of Allied Logistics Limited and a related company, Tallaght Cold Store Limited, for a consideration of €10.2 million.
www.maceni.co.uk Northern Ireland 117 stores
It is a source of pride for all of us in Musgrave that, as we enter our 140th year in business in Ireland, all of our Irish brands are in leadership positions in each of their respective markets.
Chris Martin, CEO, Musgrave Group
MUSGRAVE GROUP PLC | Annual report & review 2015 Our values
LONG TERM, STABLE RELATIONSHIPS | NOT BEING GREEDY | HONESTY | WORKING HARD | ACHIEVEMENT
Our brands
MUSGRAVE GROUP PLC Musgrave House, Ballycurreen, Airport Road, Cork, Ireland Tel +353 (0)21 452 2100 | Email [email protected] | Follow Musgrave on LinkedIn and Twitter www.musgravegroup.com