MORE GREGGS FOR EVERYONE

MORE SHOPS, MORE CHOICE, MORE GROWTH

GREGGS plc Annual Report & Accounts 2022

INTRODUCTION

Strategic Report

2022 highlights 1

At a glance 2

Year in review 4

Chair’s statement 8

Business model 10

Market review 11

Chief Executive’s report 12

Our strategy 18

Our strategy in action 20

Key performance indicators 30

Sustainability report 32

The Greggs Pledge 32

Task Force on Climate-related

Financial Disclosures 35

Gender of workforce 42

Financial review 43

Risk management 46

Our stakeholders 54

Directors’ Report

Board of Directors and Secretary 62

Governance report 65

Audit Committee report 72

Directors’ remuneration report 78

Statement of Directors’ responsibilities 101

Accounts

Independent auditor’s report 102

Consolidated income statement 108

Consolidated statement of

comprehensive income 108

Balance sheets 109

Statements of changes in equity 110

Statements of cash flows 112

Notes to the consolidated accounts 114

Ten-year history 156

Alternative performance measures 157

Secretary and advisers 159

And read The

Greggs Pledge at

corporate.

greggs.co.uk/

doing-good/

You can also read

our annual report

online at

corporate.

greggs.co.uk/

investors

FOCUSING ON THE

FUTURE AND OFFERING

MORE TO EVERYONE

2022 has been a year of strong progress for

Greggs, the result of committed efforts to

deliver our strategic growth plan. The significant

opportunities on which the plan is based will

remain centre stage in the year ahead as we make

Greggs more accessible to even more customers.

Although consumer incomes remain under

pressure, Greggs continues to offer exceptional

value to people looking for great tasting,

high-quality food and drink on-the-go.

We have an exciting, ambitious plan for the years

ahead and, by continuing to nurture what makes

Greggs special, I believe we are extremely

well-placed to realise the opportunity to become

a significantly larger, multi-channel business.

Roisin Currie

Chief Executive

7 March 2023

1Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

2022 HIGHLIGHTS

OPERATIONAL HIGHLIGHTS

MORE GREGGS FOR EVERYONE

In October 2021, we set out our ambitious plan

to double our sales by 2026 and have made great

progress against our 2022 targets. We identified

four key growth drivers, which are the focus of our

plan to reach our full potential in the years ahead,

underpinned by investment in our supply chain

and systems and our ongoing commitment to

doing good through The Greggs Pledge.

Read more about our progress against our key growth

drivers on page 19

THE GREGGS PLEDGE

Our sustainability plan, The Greggs Pledge, focuses

on how we are doing more to help people, protect

the planet and work with our partners to change the

world for the better. Our latest sustainability report,

The Greggs Pledge, published alongside the annual

report, is available to view on our corporate website.

Read more about our progress against

The Greggs Pledge commitments on pages 32 to 34

GROWING AND DEVELOPING

THE GREGGS ESTATE

A fundamental part of our strategic plan is shop

estate growth. Our ambition is to reach significantly

more than 3,000 shops and we have a strong pipeline

of new shop openings. We also have a significant

opportunity to further enhance the quality of our

estate through relocations and the next generation

of shop refits. Greggs is a versatile brand. This means

we can open a full range of formats in a variety of

locations, with our new digital channels enabling

us to extend the reach of each shop even further.

Read more about our plans to grow and improve

our shops on pages 20 to 21

Total sales

£1,513m

2021: £1,230 million

FINANCIAL HIGHLIGHTS*

Like-for-like (LFL) sales ***

+17.8%

Diluted earnings per share

117.5p

2021: 114.3p

Total ordinary dividend

59.0p

2021: 97.0p**

Pre-tax profit

£148.3m

2021: £145.6m profit

Colleague profit-sharing

£16.6m

2021: £16.6m

* Detailed calculations of Alternative Performance

Measures, not otherwise shown in the accounts and

related notes, are shown on pages 157 and 158

** Includes 2021 additional special dividend of 40.0p paid

*** Like-for-like sales in company-managed shops (excluding

franchises) with a calendar year’s trading history

AT A GLANCE

COMMITTED

TO TASTING GOOD

MANUFACTURING

In our own food manufacturing

centres of excellence, we make

great tasting, freshly prepared

food that our customers can trust.

LOGISTICS

We move products from our food

manufacturing sites to our shops

ourselves, which helps us to keep

our prices as low as possible.

OUR PEOPLE

We have more than 28,000

amazing colleagues, working

together to provide our customers

with the best experience, offering

fast and friendly service, day in,

day out.

CUSTOMER CHANNELS

With more than 2,300 shops,

including over 440 with franchise

partners, our wholesale

partnership, delivery and Click +

Collect, we are available to serve

customers wherever, whenever

and however they choose.

CUSTOMER

RELATIONSHIPS

Through our Greggs App, we are

building long-term connections

with our customers and rewarding

their loyalty. Our CRM systems

allow us to talk to our customers

on a regular one-to-one basis and

to serve them even better, with

exclusive offers and benefits for

being an App customer.

With ownership of our supply chain, multiple service channels for our

customers and over 2,300 shops nationwide, we are in a unique position

to make great tasting, freshly prepared food accessible to everyone. Our

teams across the business are dedicated to providing our customers with

great tasting food-on-the-go and the best experience, day in, day out.

We are a modern food-on-the-go retailer, providing

a wide menu of food and drink choices wherever and

whenever our customers need us throughout the day.

WHAT WE DO

3Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

DEDICATED

TO DOING GOOD

OUR PURPOSE

To make great tasting,

freshly prepared food

accessible to everyone

OUR VISION

To be the customers’

favourite for

food-on-the-go

OUR CULTURE AND VALUES

Our people are what makes our business

successful. We aim to provide them with

a great place to work, where they feel

valued and have the opportunity to fulfil

their potential. Our values commit

us to being friendly, inclusive, honest,

respectful, hardworking and appreciative.

We are proud to hold the National

Equality Standard in recognition of our

efforts to improve diversity and inclusion

across the business.

Read more about The Greggs Pledge on

pages 32 to 34

YEAR IN REVIEW

A LOT TO BE

PROUD OF

FEBRUARY

We launched our first fashion

collection with Primark

Greggs merchandise is something our customers

had continually asked for, so together with Primark,

we launched our first official range, providing our

audiences with great accessibility and value. Based on

the huge reaction and popularity, this has been followed

by a further two collections, including a festival and

Christmas range – perfect for fans to quite literally

wear their love for Greggs on their sleeves.

From the annual publication of

The Greggs Pledge and making

notable progress against our targets

including launching our first ever

Eco-Shop initiative and opening our

30th Outlet shop, to launching our

first fashion collection, celebrating

new shop openings including

No.1 Leicester Square and hitting

key milestones with our franchise

partners – there's a lot to be proud of.

APRIL

Second annual sustainability

report, The Greggs Pledge,

published

We reported on our progress against our ten

commitments to do more to help people, protect the

planet and work with our partners to change the world

for the better, including a pledge to achieve Net Zero

carbon, as we all fight to save our planet from the

threat of global warming. Our latest report is available

to view here: corporate.greggs.co.uk/doing-good/

5Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

JULY

Greggs launches Eco-Shop

to trial sustainable in-store

initiatives

Our Eco-Shop, which opened at Great Billing, Northampton,

is a brand new and bespoke format where we will test

innovative solutions and initiatives aimed at delivering

real progress in reducing the environmental impact of our

operations. Successful new ideas and technologies will then

be rolled out across the broader shop estate.

JULY

Greggs opens at No.1

Leicester Square

We opened our flagship shop at this

prestigious and iconic location in Central

London. In keeping with the starry location,

our new shop opened with its very own

premiere, featuring glitz, glamour and of

course… sausage rolls. Fans were encouraged

to dress to impress before strutting their

stuff down our blue carpet and striking a pose

in front of the sparkling paparazzi board.

MAY

Awarded prestigious

National Equality Standard

We were proud to be awarded the National Equality

Standard (NES) in recognition of our efforts to improve

diversity and inclusion (D&I) across the business.

To achieve NES certification, organisations are

independently reviewed via a rigorous assessment

against a defined set of criteria and best practice

standards. Achieving NES accreditation forms a key part

of The Greggs Pledge commitment ‘Embracing diversity’.

Being awarded the standard is an important step in our

journey to continuously improve in this area, enhance

D&I across the business and ensure our colleagues

increasingly reflect the communities we serve.

YEAR IN REVIEW CONTINUED

SEPTEMBER

500 shops now

open in the evening

We were proud to hit this major milestone

with over 500 shops now open until 8pm or

later, offering delivery and hot food menu

trials. Through longer trading hours in more

of our shops, we’re able to compete more

effectively for food-on-the-go sales in

the evening.

AUGUST

New pizza line at

Enfield commissioned

Our new automated pizza manufacturing

line at our Enfield site will support further

growth in this important category as well

as lowering production costs.

JULY

We celebrated the opening

of our 400th franchise shop

We celebrated this big milestone opening with new franchise

partner Rontec, in Selby. As we continue to roll out new shops

across the country, with an increased focus on targeting

on-the-go locations that are accessible by car, franchise partners

will continue to play a critical part in supporting our expansion

plans. Over many years, Greggs has built and maintained strong

and long-standing relationships with some of the UK’s largest

franchise partners and forecourt operators and today works

with 16 franchise partners across the UK.

7Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

DECEMBER

We opened our 30th

Greggs Outlet shop

Our Outlet shops redistribute unsold food

at a reduced price to enable those on a tight

budget to spend less while still having access

to great quality food. Here at Greggs, we

know it’s important that we do our bit to

reduce food wastage and address food

insecurity across the UK and that’s why we

have committed to opening 50 Outlet shops

by the end of 2025.

NOVEMBER

Greggs Foundation launches

partnership with Rethink Food

The Greggs Foundation, the independent grant-making

charity associated with Greggs plc, has partnered with

food education charity, Rethink Food, to launch a free

education programme with the potential to teach up to

50,000 UK schoolchildren the importance of food

security and sustainability. This partnership will play an

important role in furthering the commitments of The

Greggs Pledge to build stronger, healthier communities,

support schoolchildren and grow the highly successful

Greggs Breakfast Clubs programme.

Find out more about our Outlet shops

in the latest Greggs Pledge report.

CHAIR'S STATEMENT

A GREAT BUSINESS WITH

A CLEAR STRATEGY

I am delighted to have taken over as Chair

of Greggs, a business and brand that I have

long admired, and it’s great to have joined

a company that has, once again, delivered a

strong performance in a challenging trading

environment. Since joining the Board I have

been struck by the capability of the team,

the organisational culture and values, and the

customer-centric focus across the breadth

of the organisation. This puts Greggs in a

strong position to deliver on its strategic

plan and the many growth opportunities

that lie ahead.

Matt Davies

Chair

Overview

Despite challenging macroeconomic conditions Greggs

delivered another strong performance in 2022. The whole

team has demonstrated its experience and capability in

responding as conditions changed rapidly over the year.

Continued robust demand for Greggs, at a time when

disposable incomes have been under pressure, is testament

to the quality and value of the products that we offer and the

broad appeal of the Greggs proposition.

I am grateful to my predecessor Ian Durant for facilitating

such a smooth handover to the role of Chair, and to my

Non-Executive colleagues and Roisin, Richard and the entire

Greggs team for their welcome to the business. I have had

the opportunity over my first few months in role to visit a

number of our manufacturing and logistics sites, to work

in a store and in our supply chain, and to meet many Greggs

colleagues and customers across the country. What has

struck me is the absolute commitment across the business

to offering our customers high-quality products at great

value, and our customers’ affection and trust in the

Greggs brand.

Greggs has a deeply-embedded belief in carrying out its

business in a responsible manner, for the benefit of all its

stakeholders. When times get tough this approach becomes

even more important, so it has been encouraging to see the

progress made in delivery of the Company’s environmental

and social commitments in 2022, set out in The Greggs

Pledge. This is a crucial foundation for the sustainable

growth that we aim to deliver in the years ahead.

9Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Our people and values

I would like to thank all our colleagues for the part they

have played in successfully navigating the challenges of

the past year. It has really struck me how the people at

Greggs are at the very core of our business. They are skilled,

passionate, incredibly dedicated, and real ambassadors

for the Greggs brand.

The Board devotes significant time to closely engage with

Greggs colleagues across the business and discusses the

feedback received with the executive management team.

By spending time with colleagues in the business and visiting

our sites we receive direct feedback that makes for better

Board discussions. During the year the Board also spent

time with the new Chair of Greggs Foundation, Joanna

Dyson. Greggs Foundation provides essential help to

the communities where Greggs operates and, at a time

when this is needed more than ever, it has both our

support and admiration.

In the first half of 2022 Greggs achieved the National Equality

Standard accreditation, an industry-recognised standard for

diversity and inclusion. This was a significant achievement,

following several years of improvement activity. Being an

inclusive employer is entirely consistent with Greggs’

values-driven approach and in line with our Greggs Pledge

commitment for our colleague population to reflect the

communities in which we operate. The Board is encouraged

by the strong progress being made in this regard.

The Board

Roisin Currie was appointed to the Board as an Executive

Director on 1 February 2022 and took over as Chief Executive

at the end of the Company’s Annual General Meeting on 17 May

2022. Roger Whiteside stood down from the Board at that

point but remained available to support the transition process

until 5 January 2023. This process was expertly managed by

my predecessor as Chair, Ian Durant, and it has been a

pleasure to see Roisin develop in the role of Chief Executive.

Roisin enjoys strong continuity in her executive team who

are alongside her driving delivery of the strategic plan.

As part of our ongoing plans to ensure smooth succession for

board roles Lynne Weedall, who joined the Board in May 2022,

became Chair of the Remuneration Committee on

1 September 2022.

Following my appointment to the Board in August 2022 I took

on the role of Chair on 1 November following Ian Durant’s

retirement. The Board had asked Ian to stay in position longer

than the UK Corporate Governance Code expects in order

to provide continuity of leadership as we addressed Chief

Executive succession. Under Ian’s leadership Greggs has

enjoyed a period of outstanding performance, founded

on a strong strategic plan, which I fully support. Ian also

championed significant improvements in diversity and

gender balance at senior levels, a legacy for which we

are immensely grateful.

Looking forward we are now preparing for the planned

retirement from the Board of Sandra Turner, Senior

Independent Director, and Helena Ganczakowski. In

anticipation of this we have announced the appointment of

Nigel Mills to the Board. Nigel will take on the role of Senior

Independent Director with effect from the Annual General

Meeting on 17 May 2023. The Nominations Committee has

commenced a process to recruit a further non-executive

director and we expect to report progress in the year ahead.

Further details of the Board’s work are included in the

governance and committee sections of the annual report.

Dividend

At the time of the interim results in August 2022 the Board

declared an interim ordinary dividend of 15.0 pence per share

(2021: 15.0 pence). In line with our progressive ordinary

dividend policy and our target for the ordinary dividend to be

twice covered by earnings, the Board intends to recommend

at the AGM a final dividend of 44.0 pence per share (2021:

42.0 pence), giving a total ordinary dividend for the year of

59.0 pence (2021: 57.0 pence).

Looking ahead

Greggs is a great business with a compelling value-driven

proposition and cash-generative business model. Despite

the current inflationary pressures, we have a clear strategy

and robust financial position underpinning our plans for

long-term growth. We remain confident in the long-term

potential of our business.

Matt Davies

Chair

7 March 2023

OUR STRATEGIC PILLARS

Great tasting, freshly

prepared food

Best customer

experience

First class

support teams

Competitive

supply chain

KEY DRIVERS OF GROWTH

Growing and developing the Greggs estate

Through new shop openings, relocations and the next generation of

shop refits, our ambition is to reach significantly more than 3,000 shops.

Developing our digital channels

Through our digital channels, including delivery and Click + Collect,

we are able to compete more effectively at all times of day.

Expanding our evening trade

Through extending our trading hours, exciting new additions to our menu

and leveraging our existing customer channels, we are able to compete

more effectively for food-on-the-go sales in the evening.

Broadening customer appeal and driving loyalty

Through timely, effective customer communication via our Greggs App,

website and CRM system, we can communicate with our customers,

drive loyalty and be a brand considered by more people when they need

food-on-the-go.

Find out more about what makes us different on pages 18 to 29

BUSINESS MODEL

WHAT WE DO

Manufacturing

We make great tasting, freshly prepared food that

customers can trust, in our own manufacturing centres

of excellence.

Logistics

We move products from our manufacturing sites to our

shops ourselves, helping to keep prices as low as possible.

Our people

We have more than 28,000 amazing colleagues, providing

our customers with the best experience every day.

Customer channels

With over 2,300 shops across the UK, delivery and

wholesale partnerships, and Click + Collect, we can serve

our customers wherever, whenever and however they

choose throughout the day.

Customer relationships

Our colleagues provide fantastic service that makes our

customers shop with us time and time again. The Greggs

App and CRM systems allow us to build long-term

connections with our customers and reward their loyalty.

HOW WE ADD VALUE TO OUR STAKEHOLDERS

Customers

No.1

for Value on YouGov BrandIndex 2022, within the

QSR, coffee shop and delivery services

Colleagues

77%

engagement score in our latest

colleague opinion survey.

Suppliers

93.5%

of invoices were paid to suppliers

within the terms agreed.

Shareholders

59.0p

paid in line with our progressive

dividend policy

Communities

£3.5m

of grants were awarded by the

Greggs Foundation.

WHAT MAKES US DIFFERENT

PURPOSE QUALITY CONVENIENCE VALUE SERVICE THE GREGGS PLEDGE

Investing in our supply chain and systems for a bigger business

We’ve transformed our supply chain and systems infrastructure to increase

capacity and grow our digital capabilities.

* Source – YouGov BrandIndex, 18+ UK Nat. Rep. n=24,000+ (1st Jan – 31st Dec 22)

11Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

MARKET REVIEW

At Greggs, we continuously monitor the macro environment and consumer trends as they evolve. We do this to ensure we meet the needs of the

market and are able to effectively respond to both challenges and opportunities that arise now and in the future.

CLIMATE CHANGE

The planet is changing rapidly and so must businesses.

Understanding the impact of the escalating climate crisis

is key.

Greggs response

Our Net Zero Taskforce challenges the climate impact of

every area of our operations and drives action to reduce it.

We aim to be Net Zero by 2040 – a decade earlier than the

UK Government’s plan. Improved governance and reporting

across all industries and sectors will continue to drive the

reduction of carbon emissions across society and assist

in the transition to a low-carbon future.

Find out more in our TCFD report on pages 35 to 41

GEOPOLITICAL UNCERTAINTY

Global political tensions continue and Greggs must ensure

business security and continuity amidst these impacts.

Greggs response

Ongoing review and development of our enterprise risk

management (ERM) process to ensure business resilience.

INFLATION/COST OF LIVING

Mounting economic pressure and inflation is directly

impacting the market and our consumer base.

Greggs response

As a value-led business, it is vital we are monitoring the

economic situation and finding ways to mitigate costs

to ensure we continue to support our customers and

communities with great tasting, affordable products.

MACRO TRENDS

DIETARY SHIFTS

A growing number of consumers, largely influenced by climate

pressures, are reducing the amount of meat in their diets.

Greggs response

Our insights team are constantly researching to understand

latest customer preferences. Meat reducing is a trend we

have been focusing on for several years, bringing our Greggs

vegan sausage roll to the market in 2019. We continue to

expand our meat-free options accordingly to meet this need

and aim to have a non-meat alternative available across

every part of our range.

HEALTHY EATING

Governments are combating health issues through policy

and educational programmes aimed at awareness of

healthier options.

Greggs response

We are working within our communities to educate children

on the benefits of healthy eating and provide healthier

choices in our shops. We provide clear information to help

people make informed choices about what they eat. Calorie

and nutritional information is available on the shelf, as well

as on our website and mobile App. Over the years, we've been

working hard to reformulate our products, like working in line

with the government’s 20% sugar reduction targets and

reducing the salt, calories and fat in our products.

Find out more on The Greggs Pledge commitments on pages 32 to 34

ECO-CONSCIOUS CONSUMERS

Concerns about plastic waste and environmental pollution is

impacting customer preference for products deemed ‘green’

and low impact.

Greggs response

Since 2019, we have been working hard to cut over 350 tonnes

of single-use plastics from our operations, and we’ve been

on a mission to remove more ever since. By 2025, we want to

eliminate all unnecessary single-use plastic from our shops

and manufacturing sites. Our Eco-Shop provides a test bed

for future in-store sustainability initiatives aimed at reducing

environmental impact of our operations.

CONSUMER TRENDS

CHIEF EXECUTIVE'S REPORT

A YEAR OF GROWTH, AND

EXCITING PLANS AHEAD

Our purpose is to make great tasting freshly

prepared food available to everyone. We want to

be the food-on-the-go retailer that is accessible

to everyone, whoever and wherever they are, and

whatever the meal occasion. That means offering

the highest quality at the best possible price –

something Greggs does so well.

We have always been there for our customers and

– perhaps now, more than ever – they are relying

on us to offer great value during these tough

economic times.

I’m proud of what our teams have done

this year to deliver for them and want

to thank them for all their hard work,

effort and commitment.

Roisin Currie

Chief Executive

A year of growth

After two years of unprecedented disruption to trading

caused by the Covid-19 pandemic, we started 2022

relieved to see what appeared to be a return to more

normal conditions. We knew we would come back stronger

and better, having learned to cope with extraordinarily

challenging trading conditions and proved our resilience

through those tough years.

However, we did not foresee the war in Ukraine, and the

significant inflationary pressures it would cause. So many

of our customers and colleagues have been confronted

with a cost-of-living squeeze.

Despite this, 2022 has been a year of strong growth for

Greggs. One year into our ambitious five-year plan to double

sales, our sales were up 23% on 2021. We opened a record

number of new shops, and can already see the benefits of our

multi-channel approach to growth, with great progress made

in developing our digital offer, as discussed further below.

As every individual, household, and business grapples with

rising costs, we have worked hard to protect our reputation

for exceptional value, and this has been central to our

success. Customers come back to us again and again

because we offer great quality and great value. To maintain

that positioning, we have focused on driving efficiencies to

offset external cost pressures wherever possible and to

mitigate the need for price rises. We regularly monitor

our prices and our customer reputation for value to make

sure that we maintain this important competitive position.

In 2022, Greggs retained its #1 rank for Value within YouGov’s

QSR, coffee shop and delivery services sector, a position it

has held since the index started in 2013.

Through the year, customer numbers continued to increase

towards pre-pandemic levels. Our most loyal customers are

increasingly recognising the benefits of using the Greggs

App when they shop with us, including free products and the

convenience of Click + Collect.

13Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

In addition to the tough economic climate, another

challenge has been ongoing travel disruption which has

displaced customers from their usual routines. We have

successfully navigated this thanks to our diverse portfolio

of shops, which meant, as it did during the pandemic, that

we were able to serve customers in different locations –

many of those who were unable to make it to their

workplace chose to visit a Greggs in their local high street

or nearby shopping centre instead.

People are at the heart of Greggs, and we continue to nurture

our friendly, welcoming culture. Our ambitious new shop

opening programme and extended opening hours have

required our teams to increase the focus on recruitment. In a

full employment economy, we have had to work creatively to

find the right people to fill these roles. For example, during

2022, we invested in our recruitment processes to improve

the candidate experience and give new joiners an easier

start to their journey with Greggs.

Financial results

Total sales grew to £1,513 million in 2022 (2021: £1,230

million), a 23.0% increase on the level seen in 2021. Within

this, company-managed shop like-for-like sales were 17.8%

higher than the equivalent period in 2021.

Pre-tax profit for the year increased to £148.3 million (2021:

£145.6 million), reflecting strong sales growth in the face of

significant cost inflation and the removal of Government

pandemic support, as detailed further in the financial review,

on pages 43 to 45.

Saying thank you

Our continued financial success depends on the amazing

service provided by the 28,400 colleagues who make,

transport, or sell our products. One of the things that makes

Greggs so special is our long tradition of sharing 10% of our

profits with our people. Our strong performance in 2022

means we will share £16.6 million with them.

Our strategic growth drivers

Our strong financial performance in 2022 was the result

of the continued delivery of our strategic growth plan:

growing and developing our estate, extending our offer

into the evening, maximising our use of digital services,

broadening customer appeal, and driving loyalty. These

objectives are underpinned by investment in our supply chain

and technology in preparation for being a bigger business.

Growing and developing the Greggs estate

We want our shops to be the best that they can be, with

better access, more space, and providing a brilliant

customer experience.

We opened a record 186 new shops (including 70 franchised

units) in 2022 and closed 39, growing the estate to 2,328

shops as at 31 December 2022, 441 of which are franchised

shops operated by our partners, mainly in roadside locations.

We continued to expand our presence in retail parks, in

Central London and key transport hubs, with shops opening

in Leicester Square and Liverpool Street Station, as well as

Birmingham and Liverpool airports. As a result, 1,600 new

shop team jobs were created during the year.

Our ambition is to have significantly more than 3,000 shops

across the UK, and we are expanding in new locations to

achieve this – setting up shops inside supermarkets, in travel

hubs like airports and railway stations, as well as in retail

parks and shopping centres. The versatility of our shop

format is one of our greatest strengths, operating in anything

from a kiosk to a full-service drive-thru unit.

We relocated 25 existing shops to better sites in 2022,

allowing us to increase coffee shop seating as well as expand

our food preparation space so we can meet the demand of

our home delivery and Click + Collect services. In addition,

we refurbished 73 existing company-managed shops and

13 franchised shops to our latest format.

We are also reaping the benefits of maintaining strong

relationships. The trust that landlords place in us, backed

by our financial strength, is making it easier to find good sites

at a reasonable price.

In 2023, we plan to refurbish a further 150 company-

managed shops, relocate 40 shops to new, larger sites,

and open around 150 net new shops, including around 50

with franchise partners.

Evening trade

We want to be able to serve our customers wherever,

whenever, and however they choose. That’s why we

extended the opening hours of 500 shops until 8pm or

beyond – this has given us the opportunity to compete for

food-on-the-go sales in the evening. The evening daypart

is now the strongest growing segment of the day, albeit from

a relatively low base – in 2022 our share of post-4pm visits

was only 1.2% (source: NPD Crest).

In the evening many of our existing favourites such as

chicken goujons and pizza slices have proved popular,

including sharing boxes via our delivery service. We also

introduced warm versions of some of our core products, with

Hot Yum Yums and salted caramel dipping sauce going viral

186

New shops (including 70 franchised units)

opened in 2022

500

Shops open until 8pm, or beyond

on TikTok! We have expanded our range to include salad meal

boxes which can be eaten hot or cold – such as our vegan

sweet potato bhaji – and continue to grow our popular

vegan-friendly offering. Whether our customers follow a

vegan diet or not, we know many more people are choosing

to eat less meat for ethical, environmental or health reasons,

and we are meeting that need.

We are able to offer home delivery from around 80% of our

late opening stores, which is extending our reach further

and will, in time, make more of our estate viable for evening

trading. During 2023, we plan to extend opening hours in

300 shops to 9pm and will trial 24-hour drive-thru shops.

Digital channels

Our multi-channel development strategy has allowed us to

increase our reach and build customer loyalty, while making

it easier for us to compete at all times of the day.

The Click + Collect service on the Greggs App allows a

customer to see our menu, personalise their order, and then

skip the queue to pick it up. Customisation started with our

breakfast menu; we have now built on that success by

introducing customisable pizzas and are now testing

whether we can offer the same with sandwich baguettes.

The convenience of Click + Collect is key and our focus in

2023 will be on further improving the collection experience

for our customers.

Home delivery continues to be a growth area for the

business, allowing us to reach more people, including those

who aren’t on the go, or who are in a location where they can’t

access us easily. Our partnership with Just Eat continued to

strengthen, and we worked together to optimise the menu,

and reduce complexity – for both our shops, and our

customers. Delivery remains a growing market; the delivery

share of overall ‘out of home market’ visits increased to

10.8% in 2022, up on the pre-pandemic level of 7.7% from

2019 and reflecting normalisation when compared to the

Covid peak of 16.2% in 2020 (source: NPD Crest). 1,270 of our

shops now offer a delivery service, and this accounts for

circa 5% of sales overall. Consistent with the market trend,

our delivery volumes have been normalising as in-store

volumes recover post-Covid, but the longer-term

opportunity remains intact and we are committed to

developing this further in the year ahead, both by broadening

the reach of the service and by raising operational standards.

Broadening customer appeal and driving loyalty

We continue to be successful in further enhancing

perceptions of the Greggs brand and, for the 5th consecutive

year, ranked #1 in YouGov's BrandIndex within the QSR,

coffee shop and delivery services sector, achieving our

CHIEF EXECUTIVE'S REPORT CONTINUED

WHAT

MAKES US DIFFERENT?

We are a much-loved and trusted brand and have

been around for over 80 years, building a reputation

for offering exceptional value to people looking for

great tasting, high quality food and drink on-the-go,

with fast and friendly service.

PURPOSE

To make good, freshly prepared food

accessible to everyone.

QUALITY

We want our products to be

the best they can be.

CONVENIENCE

We want to be able to serve

customers wherever, whenever

and however they choose.

VALUE

We offer great value in an extremely

competitive marketplace.

SERVICE

We provide customers with fast

and friendly service, fixing issues

without a fuss and rewarding them

for their loyalty.

THE GREGGS PLEDGE

Stronger, healthier communities.

Better business. Safer planet.

15Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

highest ever score in 2022. Brand health has never been

higher; our marketing investment is increasing the number

of food-to-go shoppers considering the Greggs brand and

intending to purchase with us – now converting at a record

level of 42%. Greggs has also seen its highest share of the

food-to-go market, now at 7.7% of visits (as measured by

NPD CREST, Q4 2022).

We want Greggs to be the food-on-the-go brand of choice

for more people, more of the time. Effective customer

relationship management is crucial for this: our emails,

text messages, web and app personalisation, and targeted

social adverts help us to keep our customers informed and

engaged. We continue to invest in and improve these as

part of our digital workstream. The Greggs App offers our

customers a much more engaging and user-friendly

experience, as well as allowing them to earn stamps and

redeem rewards for their purchases. In Q4 2022 we had

1.1 million individual active users of the app (up from

0.4 million in Q4 2021) and customers scanned the Greggs

App in 8.1% of company-managed shop transactions.

Investing in our supply chain and systems

for a bigger business

Underpinning the four strategic growth drivers is our ongoing

programme of investment in our supply chain and technology

to ensure we can grow our business efficiently. As we work

towards our target of having significantly more than 3,000

shops in the UK, we are making significant investments in

manufacturing and logistics to increase capacity and reduce

the carbon footprint of our operations.

In 2022, we undertook preparatory works at Balliol Park in

Newcastle ahead of adding a fourth line that will extend

production capacity of our iconic savoury products in 2023.

We also commissioned a new pizza manufacturing line at our

Enfield manufacturing site, tripling our national capacity

for this popular range. Our logistics team completed a

programme of route optimisation for our radial fleet and are

in the process of switching our primary fleet to double-deck

trailers to allow us to move more goods per journey –

examples of projects which are helping to reduce our carbon

emissions in line with our Greggs Pledge commitment to

become a Net Zero business.

Looking forward we plan to commence the redevelopment

of our distribution centres in Birmingham and Amesbury

in 2023 in order to add additional logistics capacity to our

network by the end of 2024. Further investment in the

Midlands area will follow across 2024 to 2026 as we develop

a national distribution centre and a manufacturing and

frozen storage facility, which will support the capacity

requirements of our growth plans.

We have now completed the initial deployment of SAP across

our supply chain, a crucial part of building a centralised

business model. We continue to invest in technology

transformation and improving our digital capabilities as

well as making sure our new channels are fully integrated

into our core systems.

We are also investing in making our processes simpler and

more streamlined, whether that’s allowing our customers to

interact with us digitally, automating back-office activities,

or improving the software for our tills.

Having good data allows us to make better decisions, and

the introduction of Microsoft Business Information tools

has made a real difference. Improved data visualisation

and availability across the organisation has made it easier to

analyse the numbers, understand trends, and glean insights.

CHIEF EXECUTIVE'S REPORT CONTINUED

Redistributing unsold food – a key part of our food waste

reduction strategy – is helping thousands of families to make

ends meet. At the end of every day, we clear our shelves of

fresh food and aim to pass it on. In 2022, we donated 1,165

tonnes to local and national charities and sold 1,060 tonnes

of heavily discounted food to our customers via the Too Good

To Go app.

We also use our expanding network of Greggs Outlet Shops

– a companywide initiative originally set up in 1972 to support

socially deprived areas and help reduce food waste by

redistributing unsold food items. We have committed to have

50 Outlet Shops nationwide by 2025 and, in 2022, opened our

30th, in Newham, East London. A proportion of the profits

from each of these shops is given to local charities that are

working to tackle food insecurity.

Making our planet safer

A key highlight in 2022 was the setting of near-term science-

based emissions reduction targets based on a 1.5°C pathway,

which have been approved by the Science Based Targets

initiative. These targets will support our ambition to be Net

Zero in Scopes 1 and 2 by 2035, and in Scope 3 by 2040.

Achieving Net Zero in our operations will require a switch

to renewable energy sources (already, we only buy green

electricity and have begun the switch to biogas), and

investments in more efficient equipment. In July, we opened

our first Eco-Shop in Great Billing, Northampton. It is a brand

new and bespoke format where we test innovative solutions

and initiatives aimed at reducing the environmental impact

of our entire estate.

Better business

In May, we were accredited with the prestigious National

Equality Standard, an industry recognised standard

for diversity and inclusion. There is more to do – and

Commitment 8 of The Greggs Pledge is dedicated to that –

but this evidences the good progress that we are making.

I am proud of our reputation for bringing the best talent

through the business regardless of gender. We have

a balanced Board, and women make up half of the

management population of Greggs. Overall, 67% of our

total workforce is female.

Fundraising

Every year, our colleagues and customers show extraordinary

generosity and a genuine willingness to support people who

need help.

Making the world a better place

The Greggs Pledge

We are committed to our products tasting good, but what

sets us apart is our dedication to doing good. Our

sustainability strategy has three objectives: to help build

stronger, healthier communities; to make our planet safer;

and to be a better business.

We launched The Greggs Pledge in 2021, setting out ten

areas to focus on to deliver these three objectives by the end

of 2025 and beyond. We are making good progress against

our targets and will publish a separate sustainability report

that provides a detailed progress report.

Stronger, healthier communities

As our customers and communities grapple with rising

costs, our work to get food to those most in need is as

important as ever.

There are now 789 Breakfast Clubs up and running across the

UK, serving a free breakfast to 49,000 primary school children

each school day. We plan to have 1,000 clubs open by 2025.

17Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

We donate around 1% of our profits to Greggs Foundation;

in 2022 this totalled £1.5 million, providing funding for Greggs

Breakfast Clubs, community organisations and individual

hardship grants. Greggs Foundation also receives funding

from a number of other sources, including dedicated Greggs

products, colleague fundraising and collection boxes in

our shops.

The war in Ukraine is a human tragedy that has shaken us all.

Throughout March and April our instore donation buckets

were turned over to collect money for the Disasters

Emergency Committee (DEC) Ukraine Humanitarian Appeal,

raising over £280,000. Most recently our shops have been

supporting the DEC Turkey-Syria Earthquake Appeal.

In November, we celebrated our ‘sweet sixteen’ as a BBC

Children in Need partner, helping to improve the lives of

children and support our communities across the UK –

raising over £782,000 this year alone.

Looking forward

Focused on growth

Our four strategic growth drivers will remain a key focus in

the year ahead. While the widely publicised economic

challenges are not expected to go away, we are well

positioned to successfully navigate them and remain

confident in our ability to deliver continued success.

Although consumer incomes will remain under pressure,

Greggs continues to offer exceptional value to people looking

for great tasting, high-quality food and drink on-the-go.

Keeping our people at the heart of what we do

Our people are what makes our business successful, and it is

important that we provide a great place to work, where they

feel valued, so that they choose to stay with us.

We take time to listen to the views of our colleagues. More

than 21,000 of our 28,400 colleagues took part in our

engagement survey in 2022, telling us what is working well

and what they think could be improved. With an overall

engagement score of 77%, we know our people are

motivated, and committed to Greggs. However there is

always room for improvement, and we will continue to stay

focused on our colleague engagement agenda.

Recruiting great new people to join our growing team is

crucial too: our work in 2022 to upgrade our recruitment

platform means we are better positioned to attract new

colleagues in a tight labour market in the year ahead.

Greggs’ secret sauce

Since I joined Greggs in 2010, I have felt privileged to be part

of such an amazing team. As Chief Executive, and leader of

the team, I am more aware than ever of how our success is

the result of everyone’s contribution; our magic comes from

us exceeding the sum of our parts.

Our culture and values are what makes Greggs, Greggs. As

we grow, we will keep these at the heart of every decision

we make. We talk about our unique culture being our ‘secret

sauce’ because when people enjoy coming into work, they

do a better job, and that makes Greggs a stronger, better

business. Continuing to treat people well, and valuing

everyone’s contribution, are central to our success.

Becoming Chief Executive has reminded me of the

importance of offering the right support and guidance so

that everyone is empowered to do the best job possible: from

the newest member of the team, who might be in their first

ever job; to the shop manager who has just been promoted

and is still finding their feet; to the new production operative

who needs some encouragement.

My ambition is to ensure that we continue to nurture and

evolve that ‘secret sauce’ and enable everyone to be the best

version of themselves. For me, it’s one of the most important

parts of my job.

Current trading and outlook

We have started 2023 well, with like-for-like sales in

company-managed shops growing by 18.8% in the first

nine weeks, in line with our expectations and reflecting the

impact of Omicron in the comparator period. Cost inflation

will continue to be a challenge in the year ahead, driven

particularly by pay awards and energy costs, but we are

confident that our outstanding value proposition will remain

compelling as customers look to make their money go

further. As such, we remain confident in the prospects for

the business in 2023.

We have an exciting, ambitious plan for the years ahead and,

by continuing to nurture what makes Greggs special, I believe

we are extremely well-placed to realise the opportunity to

become a significantly larger, multi-channel business.

Roisin Currie

Chief Executive

7 March 2023

OUR STRATEGY

ENSURING

GROWTH IN THE

YEARS AHEAD

Whilst Greggs has enjoyed tremendous success in recent years as

we continued to focus on becoming the customers’ favourite for

food-on-the-go, our journey is far from over. We have an ambitious

plan to double Greggs’ sales and while the fundamental strategic

pillars of our business model have not changed, we are continually

learning and adapting. To reach our full potential in the years

ahead, our strategy is focused on four key drivers of growth and

underpinned by investment in our supply chain and systems.

1. Great tasting,

freshly prepared food

You cannot beat freshly baked,

freshly prepared food. With our

great flavours, responsibly-sourced

ingredients, consistent quality and

outstanding value, our food-on-the-go

leads the way.

3. Competitive

supply chain

By owning our supply chain, we’re able

to make our tasty products and

transport them to shops ourselves

– offering our customers great quality

food that delivers the best possible

value for money.

2. Best customer

experience

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. Through our

Greggs App, we are able to build

long-lasting relationships with our

customers and reward their loyalty.

4. 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,

to our customers.

OUR FUNDAMENTAL STRATEGIC PILLARS

The Greggs Pledge: Dedicated to doing good

STRONGER, HEALTHIER COMMUNITIES

We pledge to play our part in improving the nation’s diet

by helping to tackle obesity, providing free breakfasts

to schoolchildren, supporting families in hardship and

giving surplus food to those who need it most.

BETTER BUSINESS

We pledge to increase the diversity of our workforce

and to use our purchasing power responsibly, with

the aim of making things better in our supply chain.

SAFER PLANET

We pledge to become a carbon

neutral, zero waste business.

19Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Growing and

developing the

Greggs estate

With a strong pipeline for new shop

openings alongside a significant

opportunity to improve the quality of

our estate through relocations and the

next generation of shop refits, our

ambition is to reach significantly more

than 3,000 shops across the UK.

Read more on page 28

OUR STRATEGY IN ACTION

GROWING AND DEVELOPING THE GREGGS ESTATE

SETTING

UP SHOP:

MORE GREGGS

Our ambition is to reach significantly

more than 3,000 shops and we have a

strong pipeline of new shops opening.

We also have a significant opportunity to

improve the quality of our estate through

relocations and the next generation of

shop refits.

21Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Greggs is a versatile brand. That means we can open a

full range of formats in a variety of locations, with our new

digital channels enabling us to extend the reach of each shop

even further.

Our mission is simple – we want Greggs to be accessible,

wherever, whenever and however our customers need us.

And by ensuring our shops are the best they can be, our

customers have a brilliant experience when they visit us.

As well as opening new shops, we want our existing shops to

be bigger and better which means improving all of our shops

through our next generation of shop refits and moving some

shops to better locations.

New shop openings

When a customer is choosing where to shop for food-on-

the-go, we know that convenience is the key consideration.

We already have a strong presence in traditional towns and

suburban locations, so will continue to focus on increasing

our presence in locations where people travel, work and/or

access by car.

2022 was a record year as we accelerated our shop opening

programme – opening 147 net new shops and growing the

estate to 2,328 shops. We have a strong pipeline and exciting

new locations in development for 2023.

We continued to grow our presence in Central London,

opening a number of new shops in high footfall areas and

travel hubs, including our flagship shop at No. 1 Leicester

Square and at Liverpool Street Station. We launched our

new café format ‘Tasty by Greggs’ within the Primark stores

located on Oxford Street, London and in Birmingham.

Following a successful trial with Tesco in 2020, we rolled

out our partnership to a further nine shops. We opened five

standalone drive-thru-shops. We also opened our Eco-Shop

at Great Billing, Northampton – a brand new and bespoke

format where we will test innovative solutions and initiatives

aimed at delivering real progress in reducing the

environmental impact of our operations. Successful new

ideas and technologies will then be rolled out across the

broader shop estate. We also celebrated the opening of our

30th Greggs Outlet shop – highlighting strong progress in our

commitment to open 50 Outlet shops by the end of 2025.

Bigger and better shops through refits

and relocations

In addition to opening new shops and growing our estate, we

are focusing on improving the quality of our existing shops

through the next generation of shop refits and relocations. In

2022 we continued to evolve and refine our newest design of

shop refits, maximising space and increasing our capabilities

in food preparation enabling us to realise the potential of

both our delivery and Click + Collect digital channels, whilst

also offering the best experience for walk-in customers.

Based on this latest design we plan to move more shops to

larger, better premises, allowing us to add more coffee shop

seating and deliver multi-channel growth. We completed 25

re-sites in 2022, with a strong pipeline as we move into 2023.

Increasing customer reach through our franchise

and wholesale partners

In 2022, we welcomed SSP, Rontec, Ascona and Sodexo on

board, bringing our total to 16 franchise partners and 441

franchise locations.

Our partners play an important role in providing access to

restricted locations such as motorway service areas, petrol

filling stations, educational establishments and smaller high

street convenience locations. We were proud to celebrate

our 400th shop opening with new franchise partner Rontec,

in Selby. We expect franchise shops to account for 20% of

our estate in the years ahead.

PLANS FOR 2023

We have an annual shop opening

target of 150 net new shops

including drive-thrus, travel

hubs and supermarkets, comprised

of 100 company-managed shops

and 50 franchised shops.

We will also focus on providing

bigger and better shops to serve

all channels, by targeting 40

relocations and 150 refits. As part

of our ongoing commitments set

out in The Greggs Pledge, we plan

to open more Greggs Outlet shops

and continue the roll out of our

Eco-Shop elements.

In 2022, our longstanding partnership with Iceland hit an

11-year milestone. We extended our product range into the

sweet category to Iceland to include our Milk Chocolate and

Triple Chocolate Cookies. Our popular mini steak and mini

cheese rolls have become a permanent addition to our

range, creating great opportunity to maximise the category

during party events such as the Jubilee, Halloween and

Christmas. Our Vegan Festive Bake also launched into

Iceland for the first time in 2022, growing our festive

offering to the consumer.

OUR STRATEGY IN ACTION CONTINUED

EVENING TRADE

EVENING:

MORE TIME &

MORE CHOICES

We have a strategic opportunity to compete for

food-on-the-go sales in the evening and are

extending the trading hours in many of our shops,

adding new and exciting items to our menu and

leveraging all of our customer channels.

23Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

PLANS FOR 2023

2 million

Customers served on Just Eat

We will further explore our evening menu proposition to meet

customer expectations for both walk-in and digital channels.

We expect evening to remain our strongest-growing daypart

in the year ahead and will continue to extend our trading hours

where there is an opportunity to do so. We will also trial 24-hour

opening at selected drive-thru locations.

With over 500 shops trading until 8pm and beyond, we have

made excellent progress in extending opening hours across

our shop estate and built a strong foundation to kick start our

five-year evening growth plan.

We had fast growing evening sales in 2022 and have achieved

this by adding very little complexity into our shops. We will

further explore our evening menu proposition to meet

customer expectations for both walk-in and digital channels

– which we believe will make this opportunity even greater.

Our partnership with Just Eat

We launched our partnership with Just Eat in 2020 and,

since then, have rolled it out to over 1,270 shops nationwide.

Over 400 of our evening shops are available on Just Eat after

6pm and this is something we will continue to expand in 2023.

In 2022, we served over two million customers and fulfilled

over 7.3 million delivery orders.

Offering home delivery is key to accelerating our plans for

extended opening hours and we have big plans to further

expand delivery in the coming year, adding more locations

and more menu choices to strengthen our proposition at

every meal occasion.

Menu development

In addition to trialling new and exciting hot products that

could have day-long appeal, our existing range continues

to perform well in the evening daypart.

To build on this demand and make even more of our core

products appealing to the evening market, we now offer

a number of our existing sweet treats with the option to

have them hot including Yum Yums, Brownies and Cookies,

served with a chocolate or salted caramel dipping pot.

Chicken Goujons and Bites and Pizza Sharing Boxes

alongside our single slice and meal deal offers are also

popular and in 2022 we added two new pizza choices

to the menu – Mexican Chicken and Pepperoni Hot Shot.

7.3

million

Delivery orders fulfilled

OUR STRATEGY IN ACTION CONTINUED

DIGITAL CHANNELS

SNAPPING

UP TREATS:

IN MORE WAYS

Through our digital channels, we have the

strategic opportunity to compete more

effectively at all times of the day. Our delivery

partnership enables us to increase the reach of

our shops beyond customers passing by, and

Click + Collect offers our customers the ability

to easily browse our menu, skip the queues and

ultimately personalise their order.

25Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

When the pandemic hit in 2020, we rapidly accelerated

our multi-channel development strategy to take Greggs

to our customers, wherever they were. Digital channels

offer the key opportunity for Greggs to increase market

share by increasing menu choice, multi-channel reach

and customer loyalty.

We launched our partnership with Just Eat in January 2020

and delivery now accounts for almost 5% of sales. Delivery

offers the added attraction of serving multiple customers

in one order, with average basket size three times that of

a typical walk-in purchase.

With delivery through Just Eat now available in 1,273 of our

shops nationwide, we are focused on further improving our

operational procedures to fulfil that demand and enhancing

our offer to ensure the best customer experience.

Enhancing our delivery offer for customers

In 2022, we introduced a number of improvements to

enhance our presence on the Just Eat platform, ensuring the

customer journey and experience is the best it can be, such

as improving the menu capability to ensure that it is as easy

to navigate as possible.

Through key promotions and exclusive deals, we were able

to enhance our offer to customers and build on our reputation

for great value, including ‘Cheeky Tuesday’ – 20% discount

when spending £15 across all dayparts on Tuesdays, and

promotions during key calendar events, such as the UEFA

Women’s Euros and the Men's FIFA World Cup later in the year.

Click + Collect

Click + Collect is available through both the Greggs App and

website – enabling customers to easily browse our menu,

skip the queues and personalise their order. Click + Collect is

also encouraging customers to trade up, speeding up service

by removing payment at the till, and – by making to order –

has the potential to reduce waste too. We have worked hard

to build the capability that allows customers to earn and

redeem Greggs rewards against their purchases. In 2022,

we implemented key operational efficiencies to successfully

reduce the Click + Collect order window from ten to five

minutes to allow customers to collect their order more

quickly. We have harmonised our Click + Collect range with

what’s on offer in our shops, meaning customers in certain

areas can now order their regional favourites. Another key

feature of our digital capability is the ability for customers to

access more information about each menu item which now

includes improved nutritional and allergen information to

help everyone to make informed choices.

PLANS FOR 2023

1,273

Shops partnered with Just Eat

at the end of 2022

Where opportunity allows through new shop openings, we

will continue to extend our delivery partnership with Just Eat,

helping us to fully maximise the at-home and evening trade

opportunities. Product development, in particular hot food

options across all mealtimes, will ensure that we continue to

provide the types of food-on-the-go that our customers want,

no matter what time of the day they choose to shop with us.

We will further develop our ‘made-to-order’ range and continue

our customised baguette trial. We will further enhance the

collection experience to make it as convenient as possible

for our Click + Collect customers.

Made-to-order

Through our breakfast sandwich range, we’ve been offering

our customers the ability to customise their sandwich and

have it made-to-order for a number of years. This has proved

hugely popular and offers an opportunity to roll this out across

additional products and dayparts. In 2022, we successfully

trialled and rolled out our made-to-order pizzas to all shops

through the Click + Collect menu. Customers can add up to

three toppings including Mexican chicken, pepperoni, red

onions and jalapenos. Trials for made-to-order baguettes

are well underway and will continue into 2023.

OUR STRATEGY IN ACTION CONTINUED

BROADENING CUSTOMER APPEAL AND DRIVING LOYALTY

THE GREGGS

EFFECT:

MEANING

TO MORE PEOPLE

We have successfully repositioned the Greggs brand

in recent years to become recognised as a customer

favourite for food-on-the-go. Through timely and

effective customer communication via our new

Greggs App, website and CRM system, we have a

strategic opportunity to effectively communicate

how Greggs can be a brand considered by more

people, in more places and at all times of the day

when they need food-on-the-go.

27Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

You’re never far away from a Greggs

As a brand we’re there to serve customers throughout the

day providing freshly prepared food that delivers great value,

fills you up and keeps you going through the day. So, whether

it’s pre-ordering your early morning coffee via Click + Collect,

grabbing your lunch on the go, or having pizza delivered to

share in the evening – Greggs satisfaction is never far away,

whenever or wherever you fancy.

In 2022, we continued to develop our investment strategy

across brand and digital channels as well as in our marketing

capability, to ensure that we reached all food-to-go

consumers across the UK throughout the day – continually

promoting the products and services available in our shops

and online.

At a headline level, we focused on making more people aware

of everything that Greggs has to offer, whilst building out

our digital and data driven products to better understand

our customers’ needs, and to further reward those who shop

with us more often.

By the end of the year, brand health had never been stronger

with record numbers of UK consumers considering Greggs

as a food-to-go destination. More and more customers

downloaded and started to use the Greggs App, and our

brand partnership strategy – working together with leading

UK brands such as O2 – allowed them to reward and say

thank-you to more of their colleagues and customers

with Greggs products.

So, as well as being able to serve more customers more

often in our shops, we now have more channels than ever

through which to communicate all of the benefits that

Greggs delivers as a food-on-the-go destination, and

encourage more customers to shop with us, more often.

Building our digital capability and rewarding loyalty

We continued to develop the Next Generation Greggs

workstreams, bringing more of our digital and data

capabilities in-house, supported by a number of

best-in-class vendors and partners.

To allow more people to give the Gift of Greggs we continued

to evolve the re-launch of greggs.co.uk with a brand-new

gifting journey that provided a better shopping experience

for customers, whilst providing enhanced capability to offer

a variety of ways to buy and personalise Greggs Gift Cards.

We also embarked on a journey to bring our other customer-

facing websites in line with greggs.co.uk, including our

corporate, recruitment and Greggs Foundation domains –

expanding our digital infrastructure and content management

systems, and establishing a library of our design components

that aligns all aspects of our digital estate.

Following the successful launch of the new Greggs App in

2021, we’ve delivered a number of usability improvements

based on feedback from our customers, and exciting new

features, including the integration of delivery and gifting

into the App experience.

Not only did this benefit existing users of the App, but also

helped generate a 111% increase in downloads year-on-year.

In turn, this has allowed us to significantly increase our CRM

base across channel, meaning – aligned to our brand strategy

– we can send more personalised and targeted comms to

customers as and when the time is right based on their

preferences, as well as being able to surprise and delight

customers as an extra way to say thank you!

Aligned to our five-year plan, we’ll

continue to evolve our brand and

digital strategies in 2023 – with

increased media investment across

channels and new and exciting

brand partnerships and activations,

alongside building out and

enhancing our digital and

data capabilities.

As we continue to make Greggs

mean more to more people, we’ll

have more than ever to talk about

throughout the day, ensuring we’re

relevant from your first to last

meal of the day, and everything

in between!

As we continue to develop our

loyalty proposition, we’ll deliver

more ways to reward our

customers, meaning the more

often they shop with us, the more

value they can enjoy.

PLANS FOR 2023

One of the biggest developments in the Greggs App this

year has been for our colleagues, who can now enjoy their

colleague discount and earn rewards in one simple scan.

Launched in December 2022, we saw almost 40% of

colleagues switch over to using the App in the first five weeks.

OUR STRATEGY IN ACTION CONTINUED

INVESTING IN OUR SUPPLY CHAIN AND SYSTEMS FOR A BIGGER BUSINESS

INVESTING

MORE FOR

SUCCESS

Over recent years, we have

transformed our supply chain and

systems infrastructure to create a

centralised food-on-the-go business

model. Our ambition to double sales

revenues will require significant

investment in manufacturing and

logistics to increase capacity.

29Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

We’ve made better use of space and invested heavily

in centralised automation, delivering a step-change

improvement in the quality of our products and our supply

chain cost structure. This has also allowed us to create

a template on which we can build additional capacity

and continue to grow as a business to fulfil our ambition

to double sales revenues.

Completion of our major process and systems

investment programme

We successfully completed the roll out of our multi-phase

SAP programme that has touched all of our organisation,

with our last supply chain sites at Kettering and Seaham

(Iceland packing operation) going live at the start of 2022.

Continued strong financial delivery demonstrates the

benefits of the recent automation activities in our

manufacturing operations.

Increased capacity at Balliol Park delivering strongly

Our debottlenecking works, designed to increase savoury

capacity on Line 1 at Balliol Park by 50%, are now delivering

strongly and have been critical to support high savoury

demand, particularly during quarter four. We are making

good progress with the development of an additional savoury

line which is on track to start up in the latter part of 2023,

further increasing our capacity for volume and growth.

New automated pizza line at Enfield

manufacturing site

We successfully commissioned our new automated pizza

line at our Enfield manufacturing site – trebling our pizza

production volume with capacity to make up to 1.5 million

additional pizzas each week.

Improved business reporting with Microsoft Power BI

The roll out of new improved business reporting with

Microsoft Power BI has continued as we enabled further

areas beyond retail to have access to more powerful

business data to drive decision making.

Our franchise partners have also benefited from the

consolidation of all reporting, communications and content

being delivered through a new modern portal to simplify their

activities and give a consistent experience in a safe and

secure way.

Continuous improvement to shop systems,

benefitting our colleagues and customers

In retail, we have continued to evolve our in-shop solutions

to further improve efficiency for our colleagues with the

automation of many back-office activities, building on the

successful launch of our digital production system. As we

become a multi-channel business, we continue to look to

maintain simplicity for our shop team operations.

PLANS FOR 2023

2023 will be another big year for our supply

chain as we invest in further increasing

capacity and productivity by introducing an

additional production line at our Balliol Park

site, and enhanced logistics to support

product distribution in the South through

investment in our Birmingham and Amesbury

Radial distribution centres. Securing

additional national distribution capacity

in the Midlands for ambient, chilled and

frozen products will also be a key strategic

investment focus.

Digital will continue to be a key focus

for our teams in 2023 as we continue on

our journey to transform our existing till

platform and software, and introduce

a new workforce management solution.

We will continue to streamline and digitise

our operational activities in shops to

drive further efficiencies. All colleagues

will benefit from an improved colleague

engagement solution that will modernise

the way we communicate and share

information.

We have also begun the replacement programme for our

legacy tills to enable the roll out of our new till software in

2023. This will enable a simpler and easier way for our shop

teams to transact, but also enable a more efficient customer

journey at the till and a consistent experience digitally. In

parallel, we have continued to refine our in-shop production

systems including customisation and menu management.

Improved recruitment solution

In November, we launched a new Greggs Career website

and recruitment system that will help us successfully tackle

the issues present in the wider jobs market. All parts of the

recruitment process are now digitised with tablets in all

shops, enabling our teams to onboard successful candidates

quickly. We have subsequently rolled out the solution to all

supply sites and Greggs House recruitment, enabling a

consistent approach business-wide.

7.2%

13.5%

-30.5%

51.6%

23.0%

2022

2018

2019

2020

2021

2.9%

9.2%

-36.2%

52.4%

17.8%

2022

2018

2019

2020

2021

£89.8

£114.2

-£13.7

£145.6

£148.3

2022

2018

2019

2020

2021

70.3p

89.7p

-12.9p

114.3p

117.5p

2022

2018

2019

2020

2021

KEY PERFORMANCE INDICATORS

We use eight key financial performance indicators to monitor the

performance of the Group against our strategy. The definition of these

KPIs and our performance over the last five years is detailed below.

Total sales growth

23.0%

Profit before tax (PBT) (£m)

£148.3m

Like-for-like sales growth

17.8%

Diluted earnings per share (pence)

117.5p

Results for 2020 were significantly impacted by the closure of the Greggs shop estate for most

of the second quarter as a result of the Covid-19 pandemic.

All of the non-GAAP measures (other than like-for-like sales growth) detailed can be calculated

from the GAAP measures included in the annual accounts. Commentary on these KPIs is contained

within the financial review:

What this means

The percentage year-on-year change

in total sales for the Group.

What this means

Compares year-on-year cash sales in our

company-managed shops, excluding any

shops which opened, relocated or closed in the

current or prior year. Like-for-like sales growth

includes selling price inflation and excludes

VAT. The impact of shop refurbishment is

included in like-for-like sales growth. The

calculation of these figures can be found on

page 157.

What this means

Reflects the performance of the Group

before taxation impacts.

What this means

Calculated by dividing profit attributable

to shareholders by the average number

of dilutive outstanding shares.

Why this is important

This is a measure of the absolute growth

of the Group.

Why this is important

This measure provides valuable additional

information on the underlying sales

performance of the business and is

a key measure used internally.

Why this is important

This is a measure of the absolute performance

of the Group.

Why this is important

This measure reflects the underlying earnings

for each share in the Company.

31Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

£73.0

£86.0

£58.7

£57.4

£110.8

2022

2018

2019

2020

2021

£136.2

£169.5

£1.5

£236.5

£198 .8

2022

2018

2019

2020

2021

£88.2

£91.3

£106.8

£268.6

£261.6

2022

2018

2019

2020

2021

27.4%

20.0%

-2.4%

23.0%

21.0%

2022

2018

2019

2020

2021

Net cash inflow from operating activities

after lease payments (£m)

£198.8m

Capital expenditure (£m)

£110.8m

Return on capital employed (ROCE)

21.0%

Liquidity (£m)

£261.6m

What this means

Operating profit adjusted for the impact of

non-cash items, working capital movements

and repayment of the principal on lease

liabilities. The calculation of these figures

can be found on page 157.

What this means

Calculated by dividing profit before tax by the

average total assets less current liabilities

for the year. The calculation of these figures

can be found on page 157. The figure for 2018

is calculated on a pre-IFRS 16 basis.

What this means

The total amount incurred in the year

on investment in fixed assets.

What this means

This is calculated as cash and cash

equivalents plus undrawn committed

facilities, taking into account required

minimum liquidity covenants.

Why this is important

This reflects the cash-generative nature of

our business, used to fund our strategic

investment programme and to support the

distribution of dividends.

Why this is important

This is a measure of the the return generated on

capital invested by the Group and provides a

guide to how efficiently we are generating profit

with the assets used in the business.

Why this is important

This reflects the ongoing investment

in maintaining and growing the business

over time.

Why this is important

This measure provides useful information

on the Group’s net financial position and

available facilities.

SUSTAINABILITY REPORT

THE GREGGS PLEDGE

In February 2021, we launched The Greggs

Pledge which declared ten things that we are

doing to help make the world a better place

by the end of 2025, and beyond.

We have always been committed to doing the right thing,

but we wanted to be more specific about how we channel our

efforts and resources into doing good. We reflected on what

we could do to have the most positive impact on the world

around us, and chose to dedicate our efforts to three areas:

communities, the planet and our approach to business.

We have set ourselves ten stretching targets to be achieved

by the end of 2025. Each of our pledges aligns with at least

one of the UN Sustainable Development Goals (SDGs).

STRONGER, HEALTHIER

COMMUNITIES

We pledge to provide free breakfasts to

schoolchildren, give surplus food to those

most in need and play our part in improving the

nation’s diet by helping to tackle obesity.

1. Growing Greggs Breakfast Clubs: By the end of 2025,

we will support 1,000 school Breakfast Clubs providing

some 70,000 meals each school day.

2. Putting an end to food waste: By the end of 2025, we

will create 25% less food waste than in 2018 and will

continue to work towards 100% of surplus food going

to those most in need.

3. Supporting our communities: By the end of 2025, 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. Helping our customers make healthier choices:

By the end of 2025, 30% of the items on our shelves

will be healthier choices, and we will attract customers

through education and promotions.

SAFER PLANET

We pledge to become a carbon-neutral,

zero waste business.

5. Going carbon neutral: By the end of 2025, we will be

on our way to achieving carbon neutrality by using 100%

renewable energy across all of our operations.

6. Building the shops of the future: By the end of 2025,

25% of our shops will feature elements from our

Eco-Shop ‘shop of the future’ design.

7. Using less packaging: By the end of 2025, we will use

25% less packaging, by weight (as a % of sales), than in

2019 and any remaining packaging will be made from

material that is more easily recycled.

BETTER BUSINESS

We pledge to increase the diversity of our workforce,

and to use our purchasing power responsibly, with

the aim of making things better in our supply chain.

8. Embracing diversity: By the end of 2025, our

workforce will reflect the communities we serve.

9. Sourcing sustainably: By the end of 2025, we will have

a robust, responsible sourcing strategy in place and will

report annually on progress towards our targets.

10. Protecting animal welfare: By the end of 2025, we

will secure and maintain Tier 1 in the BBFAW Animal

Welfare standard.

33Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

OUR PROGRESS SO FAR

IN 2022...

789 Greggs Breakfast Clubs

fed 49,000 children every

school day.

We reduced the amount of

food waste we created in our

manufacturing operations by a

further 10% and increased food

redistribution by a further 10%.

We opened our 30th Outlet shop.

32% of our range in 2022 were ‘Healthier

Choice’ products. 34% of all new products

we created were ‘Healthier Choice’

products.

Following on from our Scope 3

analysis, we completed our Supplier

Engagement Plan. We have set

near-term science-based emissions

reduction targets which have been

approved by the Science Based

Targets initiative.

We opened our first Eco-

Shop and more than 250

(10.7%) of our shops have

Eco-Shop elements.

We have updated the design

of all own brand packaging

to feature an On Pack Recycling

Label to make recycling

communications easier to

understand.

We created a

road-map to move all of our

own brand packaging into

‘recyclable criteria’.

We achieved the National

Equality Standard.

We published our Deforestation Policy,

mapped supplier compliance and plan to

be deforestation-free by 2025.

We ensured all chicken stocking

densities are no more than 38kg/m

* We opened our 30th Outlet shop in December 2022. Unfortunately, due to a Compulsory Purchase Order, we had to close an existing shop later that month leaving us with 29 at the end of the year

** Packaging featuring an On Pack Recycling Label was rolled out to shops from early 2023, once we worked through existing back stock to avoid creating any packaging waste

How did we do?

Achieved

Partially achieved

Still to be achieved

PLANS FOR 2023

BY THE END OF 2023...

We will have 850 Breakfast

Clubs, feeding 52,000

children every school day.

We will reduce the amount

of food waste we create in our

manufacturing operations by a

further 10% and increase food

redistribution by a further 10%.

We will have 38 Greggs

Outlet shops.

We will maintain our ranging

principles to ensure 30% of

our range is ‘Healthier Choices’.

At least 98% of our electricity

usage will come from renewable

sources and 30% of the gas we use

across our operations will be from

renewable sources.

400 shops (17%

of our estate) will

feature Eco-Shop

elements.

All of our own brand packaging

will be more easily recycled.

We will report our Ethnicity Pay

Gap

and provide enhanced

support for colleagues from an

ethnic minority background

to progress their career.

We will complete the mapping of

soy in animal feed to determine

sustainability status.

We will further improve our chicken

welfare standards, with 50% at less

than or equal to 30kg/m

and the

remainder at less than or equal to

38kg/m

. All pigs will be free from

sow stalls.**

* In line with our business reporting schedule and to be included in our 2023 annual report, published April 2024

** With the exception of pepperoni (sow stall free option not currently available)

SUSTAINABILITY REPORT CONTINUED

35Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Introduction

The Task Force on Climate-related Financial Disclosures

(TCFD) and other climate-related disclosures made in this

TCFD report form part of the Company’s annual report

and accounts for the 52 weeks ended 31 December 2022

and are consistent with the TCFD recommendations and

recommended disclosures. The following pages show our

activity to date and our plans and expectations for the future,

as required under Listing Rule 9.8.6 (8)R.

There are two TCFD recommendations where we are

working to become fully compliant. These are:

– The recommendation under the Strategy pillar to describe

the resilience of our strategy, taking into consideration

different climate-related scenarios, including a 2°C or

lower scenario; and

– The recommendation under the Metrics and Targets pillar

to disclose Scope 3 greenhouse gas emissions (GHG) and

the related risks.

Our activity in these areas and progress towards full

compliance is explained in further detail in the relevant

sections of this report.

Working with an external specialist climate consultancy,

we have undertaken an extensive, Company-wide process

aimed at understanding the key risks and impacts of climate

change on our business. The project involved interviews with

senior management across the business, to determine how

different business areas are likely to be impacted by climate

change. We also undertook a physical risk assessment, the

details of which can be found below, to understand how climate

impacts, such as coastal flooding, could impact our operations.

As noted later in this report, work continues in 2023 when we

will be carrying out scenario analysis which will explore in

further detail the climate-related risks and opportunities and

the associated timeframes. This report has been drafted to

take account of the findings from the project so far; we expect

our TCFD disclosures to evolve and to be able to report further

progress and more detail in our 2023 TCFD report as we report

on the conclusions reached in our scenario analysis.

During 2022, we have set near-term science-based

emissions reduction targets based on a 1.5

C pathway

which have been approved by the Science Based Targets

initiative (SBTi). These targets are:

– To reduce absolute Scope 1 and 2 GHG emissions 46.2%

by 2030 from a 2019 base year; and

– To reduce absolute Scope 3 GHG emissions from

purchased goods and services 46.2% within the same

timeframe.

We reported in 2021 that we had modelled our Scope 3

emissions and in 2022 we have used this modelling to

initiate a supplier engagement programme, initially

focusing on the suppliers of our most carbon-intensive

ingredients. We expect this programme to drive significant

improvements across our Scope 3 portfolio in the coming

years as we work with our value chain to limit the impact

of climate change on our operations as well as the impact

of our operations on the climate.

Greggs understands the importance of

climate change and that we must reduce

our impact and mitigate against climate

risk. We believe that improved

governance and reporting across all

industries and sectors will continue to

drive the reduction of carbon emissions

across society and assist in the

transition to a low-carbon future.

TASK FORCE ON

CLIMATE-RELATED

FINANCIAL DISCLOSURES

Whilst we have made a lot of progress on our TCFD journey in

2022, we will continue to look at more granular assessments

in 2023, understanding our supply chain alongside our own

operations. We continue to work closely with advisers to

better understand the climate risks and opportunities for

Greggs and to ensure we build robust governance practices

and processes. Greggs has clear ambitions as part of The

Greggs Pledge to be a net zero business by 2040 and to

actively support the British Retail Consortium’s (BRC's)

Climate Action Roadmap.

Governance

Board oversight of climate-related risks

and opportunities

The Board has overall responsibility for overseeing climate-

related risks and opportunities – our approach to climate

change is governed at the highest level within our organisation.

The Board has received specific briefings and updates on

progress during the year on climate change matters,

including the results from our Scope 3 modelling, the

development of our science-based targets and our short-

term net zero targets and actions. To further support the

Board, and our wider senior management teams, we have

presented a ‘climate reality check’ education piece to provide

a better understanding of the potential long-term impacts of

climate change across a range of temperature rise scenarios.

We will continue to appraise climate risks and opportunities

with our leadership team including briefing new Directors to

ensure ongoing Board-level climate knowledge and support

for our transition approach.

The Board will be receiving the results of our scenario

analysis and detailed climate-related risk identification

project in the coming months. This will support the

development of our long-term climate adaptation and

mitigation plans.

Management’s role in assessing and managing

climate-related risks and opportunities

Our Chief Executive is ultimately responsible for our

sustainability strategy, which includes climate-related

risks and opportunities. Strategic progress against relevant

targets and commitments is reported to the Board on a

quarterly basis.

Our Sustainability Committee is responsible for approving

options for the delivery of our strategy. The membership

of this committee includes all Operating Board members

and is supported by the Head of Sustainability, the wider

sustainability team and relevant subject matter

experts from across the organisation.

Our Net Zero steering group is responsible for identifying and

proposing relevant actions to reduce our carbon emissions

to the Sustainability Committee. Once proposals are agreed

these are formally included in business plans as well as in the

personal objectives of relevant senior managers.

Providing more meat-free choices

for our customers

A growing number of consumers, largely influenced by climate pressures, are

reducing meat in their diets and we are expanding our product mix accordingly

to meet this need. We had a huge hit with our Vegan Sausage Roll in 2019 and our

Vegan Steak Bake in 2020.

Building on these success stories, we tested a whole range of vegan alternatives

in 2021, all of which were met with enthusiasm by our customers, including the

Vegan Sausage, Bean and CheeZe Melt, Vegan Festive Bake, Vegan Bacon

Breakfast Roll, Vegan Sausage Breakfast Roll and Vegan Ham and CheeZe

Baguette, which was crowned ‘Best Vegan Sandwich’ at the 2021 PETA Vegan

Food Awards. In 2022, we continued to trial and add vegan options to our menu

in key categories, including: Sweet Potato Bhaji and Rice salad box and our

heat-to-eat Vegan Southern Fried Chicken-Free Baguette.

In 2022, we have created a TCFD working group to assist in

developing our TCFD reporting detail as well as facilitating

analysis of climate-related risks and opportunities. This

group has worked alongside external experts to assess

material physical and transition risks related to our business

model. This project is ongoing and results are due to be

presented to the Board early this year. These results will be

used to inform our transition plan and risk strategy.

Strategy

Climate-related risks and opportunities

and their impact

We continue to develop our detailed understanding of

material climate-related risks and opportunities, which fall

into two categories – physical and transition.

In the risk management section on page 48 we note that we

consider climate change to be an emerging risk for Greggs,

since we do not believe that it constitutes a principal risk to the

business within the time horizon of our current strategic plan.

SUSTAINABILITY REPORT CONTINUED

37Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

In 2022 our climate advisers conducted 24 extensive

interviews with senior management colleagues to highlight

overarching climate-related risks and help identify which

of these would be considered material to Greggs. These

identified risks will be tested via various scenarios in early

2023 so that we can identify the relevant adaptation/

mitigation strategies required for inclusion in our transition

plan. Further to our scenario analysis, in 2023, and annually

thereafter, we will undertake a remodelling of our Scope 3

emissions to ensure that our reduction strategy continues

to be appropriately focused. The output from this exercise

will be included in our 2023 TCFD report.

Ahead of the detailed output from our scenario analysis

project, we have identified the following transition risks and

opportunities that could potentially have a material financial

impact upon the Group:

– Government Policy Development – for example, carbon

tax, meat tax or ban on sale of new petrol and diesel

vehicles by 2030 (short to medium-term risk);

– Increasing pressures of decarbonisation on the supply

chain may impact product quality (medium to long-term

risk); and

– Impact of growth plans on emissions reduction strategies

(medium to long-term risk).

Government Policy Development

The ongoing development and growth of our vegan product

range continues to mitigate risks relating to the potential

introduction of carbon/meat taxes and any consequent

cost increases throughout our supply chain. This provides

increasing opportunities to maintain our competitive

position as consumer preferences change. In 2022, we have

reviewed the potential for carbon labelling as a method of

changing consumer behaviours and we are looking to trial

this in 2023.

In anticipation of the ban on petrol and diesel vehicles from

2030, our procurement, fleet and logistics teams continue to

monitor the availability of technology which would provide

commercially suitable alternatives for our logistics fleet.

We are in the process of migrating our company car fleet to

hybrid by ensuring that all new cars are hybrid and we are

now beginning the next phase which will move the fleet to

fully electric. We have also successfully trialled fully electric

vehicles for our fleet of small vans and will continue to

develop this fleet in 2023. In addition, we have reviewed and

researched alternative fuels for our existing logistics fleet

and, in 2023, plan to further assess the potential of hydrogen

as a future alternative fuel source.

Increasing pressures of decarbonisation on the supply

chain may impact product quality

Through our supplier engagement process we have

identified suppliers of high carbon impact ingredients and

we are working in partnership with these suppliers to drive

carbon reduction through the value chain. Further to this, our

supplier management approach allows us to have an ongoing

dialogue on reduction plans which allows early identification

of risks and opportunities.

Double-deck trailers

In 2021, we trialled and purchased our first double-deck

trailers and were so impressed with the results that we

bought nine more in 2022. We use trailers on our

articulated vehicles to transport product across the

country and the double-deck version allows us to carry

56% more goods per load, meaning we need to make

fewer journeys. This reduces our use of fuel and,

consequently, has a positive impact on our Scope 1

footprint. By the end of Q1 2023, we will have moved our

entire primary fleet to double-deck trailers.

Supplier engagement –

working together to

achieve Net Zero

Our Scope 3 modelling in 2021 revealed that more

than 90% of our overall carbon footprint occurs

in our value chain, where we have influence but no

direct control. To drive reductions to this, we need

to make the most of that influence.

In 2022, we invited a group of our top suppliers

to a Net Zero workshop at our Newcastle

headquarters. These suppliers were either

our largest by volume or represented the most

carbon-intensive sectors – particularly meat and

dairy. The products that we buy from these

suppliers account for more than half of our total

carbon footprint. All the suppliers at the workshop

have agreed to collaborate on reducing carbon

emissions, with over three-quarters planning to

set science-based targets, and 28% committing

to be Net Zero.

We are now upgrading our procurement system

to improve transparency in respect of the carbon

impact of the goods we buy, which will allow

carbon to be used as one of the criteria to select

our ingredients, alongside quality and price.

In this context we consider that a short-term horizon covers

the period to 2025, a medium-term horizon is the period from

2026 to 2030 and a long-term one from 2031 onwards.

Eco-Shop

In July 2022, we opened our Eco-Shop, a brand

new and bespoke format where Greggs will test

innovative solutions and initiatives aimed at

delivering real progress in reducing the

environmental impact of the Company’s operations.

Successful new ideas and technologies will then

be rolled out across the broader shop estate.

The launch forms part of The Greggs Pledge, the

Company’s sustainability plan, which sets out ten

commitments to help make the world a better place

by 2025. Our sixth pledge is ‘Building the shops of the

future’, and we met our 2022 commitment to open

the first Eco-Shop and have 250 of Greggs’ shops

featuring elements from this ‘shop of the future’

format by the end of the year. The Eco-Shop

initiatives being trialled this year include recyclable

flooring, cistern-less and air-assisted toilets,

eco-ovens, heat pump air curtains and solar control

glass. All initiatives are focused on waste management,

water reduction or overall energy reduction.

Longer term, we have set a target for a quarter of its

shop estate to feature Eco-Shop elements and, with

the proposed initiatives, will continue to reduce both

energy use and the carbon footprint across its shops

every year, driving us further towards our Net Zero

carbon objective.

Our recent physical risk assessment has given us a

high-level indication of the risks across our global supply

base and in 2023 we will review this at a more granular level

so that we can ensure access to alternative supply where

risks are apparent.

Impact of growth plans on emissions reduction

We have committed to an absolute reduction pathway and

have developed a Scope 1 and 2 reduction strategy that aims

to tackle emissions at a rate designed to offset growth as

well as reducing intensity. As most of our emissions are

within Scope 3 it will be important that we collaborate with

our suppliers to take the same approach. The ongoing

development of our vegan product range and our ability to

adapt quickly to consumer preferences is also expected to

help mitigate the impact of our growth plans on our carbon

reduction pathway.

As noted above, as these risks are considered to be emerging

at this point in time, the financial impact of these has not

been considered as part of our current strategic plan and

forecasts. As part of our continual risk assessment, we will

monitor these risks and disclose the financial impact if they

become principal risks in the future (if material).

Physical risk assessment

We are undertaking a two-phase physical risk assessment.

An initial assessment has been undertaken of our key UK

locations in respect of specific physical climate hazards,

such as sea-level rise, coastal flooding and extreme heat,

over the medium to long-term time horizon. Moving forward,

this approach will help us to minimise risks from the outset

and implement adaptation and resilience measures as

appropriate. To further our understanding, we will embark on

a more granular assessment of relevant locations in 2023

including key supplier locations and will report further details

in our 2023 TCFD report.

Scenarios analysis: in progress

We have begun our scenario analysis project with physical

risk assessments completed in 2022. Further activity on

transition risks will be completed in early 2023 and these

will be used to inform our long-term transition plan.

In early 2023, we will carry out the climate scenario planning

exercise using several plausible scenarios that are consistent

with a 2°C or lower pathway. This exercise will help us better

understand the impacts on our business, strategy and

financial planning and the associated timeframes. We will

report further details on the outcome of this scenario planning

and resulting actions in our 2023 TCFD report.

Resilience

Although our formal scenario analysis project is ongoing,

these issues are being raised and discussed at the highest

levels of the organisation. For example, when examining

the results of our physical climate risk assessment, the

outcomes have pointed to climate risks in certain parts

of the world where some of our suppliers are based, such

as Indonesia, Thailand and Brazil. As a consequence of this,

we will continue to engage with suppliers in these areas to

understand their adaptation/mitigation plans.

We have undertaken a climate materiality assessment exercise

which has provided a foundation for building transition

scenarios. We will engage with our suppliers to collect physical

climate risk data for further assessment in 2023.

We will also analyse potential financial impacts related to

climate scenarios to inform strategic resilience planning

across our value chain.

The Transition Plan Taskforce is expected to publish guidance

in 2023 on how to develop credible and robust climate transition

plans and we will ensure our transition plan is drafted in

accordance with the requirements of the Taskforce. We will

also continue to monitor the development of the International

Sustainability Standards Board proposed disclosure standards.

SUSTAINABILITY REPORT CONTINUED

39Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Risk management

Identifying and assessing climate-related risks

We have an established risk process for the whole business,

as described in the risk management section on pages 46 to

53. The process for identifying, assessing and managing

climate-related risks is part of this process. In 2022, we

engaged external experts to support identification and

assessment of climate-related risks. As noted above, this

process included direct engagement with our senior

leadership team and in 2023 we will formally integrate

detailed climate risks and opportunities into our Enterprise

Risk Management (ERM) process.

Managing climate-related risks

Climate-related risk evaluation forms part of our Risk

Committee activity and is now included as a standing agenda

item. The current TCFD project will help in prioritising the

management of climate-related risks and, following the

scenario analysis process described above, identified

impacts will be integrated into our risk framework.

Integration of climate-related risks into overall

risk management

We treat our climate-related risks in the same way as all

other risks and assess them in line with our ERM framework.

We have continued to assess climate change as an emerging

risk (to be included as a principal risk where appropriate). The

principal climate-related risks and opportunities will be

captured in our risk register and integrated into the ERM

process for continuous management and risk reduction.

Metrics and targets

Metrics used to assess climate-related risks and

opportunities

We have reported on our Scope 1 and 2 greenhouse gas

emissions in our annual report each year since 2013 and have

set out our emissions reduction targets. We now report this

data internally on a monthly basis and use it to monitor

performance against our reduction targets. In 2022 we have

worked with The Carbon Trust to set near-term science-

based targets aligned with a 1.5°C scenario which have been

approved by SBTi. Our Environmental Management System is

certificated to ISO 14001:2015 and we disclose our emissions

through the Carbon Disclosure Project (CDP).

As noted above, and following our scenario analysis project,

detailed climate risks and opportunities will be quantified for

integration into our risk and governance structure in 2023.

GHG emissions and the related risks

We have modelled our Scope 3 emissions, working with The

Carbon Trust, and this information has been used to set a

near-term science-based emissions reduction target based

on a 1.5

C pathway which has been approved by the SBTi.

We plan to remodel our Scope 3 emissions in 2023 with the

intention of reporting these on an annual basis from 2024.

We report on our Scope 1 and 2 GHG each year. The detailed

disclosures and methodology can be found in the following

section, titled ‘Our carbon footprint’.

Targets used to manage climate-related risks and

opportunities, and performance against targets

As part of our strategy to manage climate change risks,

we have committed to becoming a net zero carbon

business by 2040 in line with the British Retail

Consortium's Climate Roadmap:

Scope 2: Net zero by 2030

Scope 1: Net zero by 2035

Scope 3: Net zero by 2040

As noted above we have also set science-based targets to

give us a clearly-defined pathway to emissions reduction

that is aligned to climate science The commitment to the

BRC’s roadmap is a more ambitious target – we always strive

to achieve the more stretching target.

Our primary metric at present is the overall level of emissions

falling under each of the three Scopes and this forms the

basis of the science-based targets set during the year.

During 2023 we plan to develop more detailed operational

and commercial targets which will support our ongoing

emissions reduction and overall transition plan. We will

develop quantitative metrics and targets for material climate

risks and opportunities and incorporate these into our

business plan after the conclusion of the scenario planning

exercise in the first part of this year.

In 2022, we have incorporated regular reporting of our Scope

1 and 2 footprint into our monthly Board reporting pack. This

ensures our leadership has ongoing visibility of the delivery

of our reduction strategy.

Next steps for Greggs

In the first half of 2023, we will complete the scenario

analysis across various time horizons to understand the

material impacts at different temperature increases.

The full results of the TCFD implementation project,

including the outcomes of the scenario analysis will be

reported in our 2023 annual report. We will use the findings

to develop robust risk mitigations and capitalise on

opportunities for the business.

Our carbon footprint

We disclose our greenhouse gas (GHG) emissions through

CDP. We continue to drive efficiencies to further reduce our

carbon footprint in a bid to target a net zero impact. In 2022,

we decreased our gross location-based intensity (tonnes per

£m turnover) impact by 13.91% (compared to 2021 or 29.9%

compared to 2019).

As a result, our market-based carbon footprint for the 2022

financial year was 46,922 tonnes of carbon dioxide and

equivalent gases (CO

e), with an intensity of 31.02 tonnes

of CO

e per £m turnover, which accounts for our efforts

in generating and purchasing low-carbon energy.

Global GHG emissions data

In line with the Companies Act 2006 (Strategic Report and

Directors Report) Regulations 2013, we are reporting our

GHG emissions as part of our annual strategic report. Our

GHG reporting year is the same as our financial year, from

2 January 2022 to 31 December 2022. We have reported on

all of the emission sources which we deem ourselves to be

responsible for, as required under the Act. These sources

fall within our operational control and financial boundaries

and include emissions from manufacturing, retail and

distribution sites and the operation of our distribution fleet,

all of which are wholly based in the UK. We do not have

responsibility for any emission sources that are outside of

our operational control. The methodology used to calculate

our emissions is based on the GHG Protocol Corporate

Accounting and Reporting Standard, Defra Environmental

Reporting Guidelines and ISO 14064-3: 2019 – Specification

with guidance for the verification and validation of GHG

statements.

Dual emissions reporting

Overall emissions have been presented to reflect both

location and market-based methodologies, affecting both

Scope 1 and Scope 2 emissions.

Streamlined Energy and Carbon Reporting

In line with Streamlined Energy and Carbon Reporting (SECR)

requirements, we have also reported on the underlying

energy used to calculate Group GHG emissions.

Where original data was provided in litres of diesel, gas oil or

petrol it has been converted to kWh. The reporting boundary

has been determined by operational control, whereby all

emissions within operational control have been included

within scope, i.e. Scope 1 and Scope 2.

Energy efficiency initiatives

Greggs is committed to reducing the energy consumption

and the carbon impact from its operations. We have set our

target of net zero operational carbon emissions across the

organisation by 2040 and have put in place a plan aligned to

the BRC’s Climate Roadmap. We have moved to renewable

electricity sources across 93% of our estate and will look

to investigate other renewable energy sources for our

remaining Scope 1 emissions.

In 2021 we measured our value chain emissions with The

Carbon Trust and found Scope 3 emissions account for 92%

of all market-based emissions with emissions from Scope 3

purchased goods and services (products) having the biggest

impact. We will look to develop and focus our attention on

where we have significant impact. We have set near-term

company-wide emission reduction targets in line with

climate science which have been approved by the SBTi.

Following our 2021 value chain emission modelling activity,

in 2022 we hosted Net Zero workshops with the suppliers of

our most carbon intensive ingredients with the intention of

aligning our collective efforts towards a low-carbon future.

As a result of these workshops we are now planning further

collaboration in the coming years to share collective learning

and experiences. In 2023, we will also repeat this process

with further suppliers and service providers.

13.91%

2022 reduction in gross location-based intensity

impact (tonnes per £m turnover)

SUSTAINABILITY REPORT CONTINUED

41Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Current reporting

year 2022

(tonnes of CO

Comparison year

2021

(tonnes of CO

Base year 2019

(tonnes of CO

Location and market-based emissions

Scope 1

Combustion of fuel and operation of facilities 32,813 30,115 33,155

Scope 1 Refrigerants 6,999 5,850 5,513

Scope 2 (Location-based)

Electricity purchased for own use (including PV Generated and green tariff) 47,716 46,318 57,294

Scope 2 (Market-based) Residual electricity 7,109 4,265 2,909

Gross emissions (Location-based) Total Scope 1+2 CO

e emissions 87,529 82,283 95,962

Gross emissions (Market-based) Total Scope 1+2 CO

e emissions to account for use of renewable energy 46,922 40,230 41,577

Intensity measure (Location-based) Tonnes of CO

per £m turnover 57.86 67.21 82.54

Percentage change 2022 compared with 2021 -13.91% -29.9%

Intensity measure (Market-based) Tonnes of CO

e per £m turnover 31.02 32.90 35.76

Intensity percentage change accounting for renewable energy 2022 compared with 2021 -5.71% -12.56%

Location-based method is provided for disclosure only

UK Underlying energy use (kWh)

Total Scope 1 Energy use Combustion of fuel and operation of facilities (natural gas, fleet fuel oils, company cars and LPG) 140,090,349 130,910,991 141,717,583

Total Scope 2 Energy use Electricity 246,749,496 218,141,798 224,154,292

Total Energy use (kWh) 386,839,845 349,052,789 365,871,875

* We are resetting our baseline year to 2019 to allow alignment with the baseline year for SBTs

** UK only

We continue to focus our internal teams on energy

efficiency and carbon reduction programmes. In 2022, we

opened our first Eco-Shop which provides a test bed for

future in-store sustainability initiatives. Successful new

ideas and technologies will then be rolled out across our

new shops and existing estate. Furthermore, we have

introduced double-deck trailers into our logistics fleet

(which reduce the number of journeys our fleet are required

“ We continue to hold The Carbon Trust

Standard in recognition of our work

on carbon efficiencies and our

environmental management system is

certificated to ISO 14001:2015. In addition,

we disclose our GHG emissions through

the Carbon Disclosure Project.”

to complete), we are replacing high Global Warming

Potential (GWP) refrigerants in refrigeration and air

conditioning systems with lower GWP refrigerants, and all

new refrigeration equipment uses low GWP refrigeration

gas as a specification requirement. We have successfully

trialled electric refrigeration units on our delivery fleet,

replacing diesel powered refrigeration and we will roll this

across 39% of the fleet in 2023.

28,493

Total number of employees*

67%

Percentage of female employees

SUSTAINABILITY REPORT CONTINUED

Female Male Total

Board 5 3 8

Senior managers 57 69 126

Other managers 288 281 569

All employees 19,063 9,386 28,493

Notes:

* Headcount figures at 31 December 2022. 67% of total workforce is female (19,063 of 28,493).

** As at 31 December 2022.

For info: There are 44 employees whose gender is recorded as ‘Unknown’, ‘Undeclared’ or ‘Other’, hence the total

figure of 28,493 is not the sum of the Female and Male totals.

We are proud of our reputation for bringing the best talent

through the business regardless of gender and that 67%

of our total workforce is female. We have great female

representation on our Board, and women make up half

of the management population of Greggs.

WORKFORCE GENDER BREAKDOWN**

Board

Other managers

Senior managers

All employees

Male

Female

GENDER OF

WORKFORCE

43Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

FINANCIAL REVIEW

Greggs delivered a strong financial performance

in 2022 in the face of challenging economic

conditions. Sales momentum was good and we

opened a record net number of new shops as we

pursued our ambitious growth plan. Our robust

balance sheet will support our growth strategy,

providing a strong covenant to our partners

as well as funding for our investment

programme and for shareholder returns.

Richard Hutton

Chief Financial Officer

2022

£m

2021

£m

Revenue 1,512.8 1,229.7

Operating profit 154.4 153.2

Net finance expense (inc. leases) (6.1) (7.6)

Profit before tax 148.3 145.6

Income tax (28.0) (28.1)

Profit after tax 120.3 117.5

Sales

Total Group sales for the 52 weeks ended 31 December 2022

grew by 23.0% to £1,513 million (2021: £1,230 million).

Year-on-year growth was particularly strong in the first

quarter, reflecting comparison with pandemic lockdown

restrictions in the comparable period of 2021. Through the

remainder of the year we saw growth from new shop

openings and like-for-like transaction numbers as we made

progress with our sales growth initiatives and passed on

necessary price increases in response to cost inflation.

Total Group revenue reflects sales from company-managed

shops, which include delivery sales, and sales through

business-to-business channels with our franchise and

wholesale partners.

Reporting ‘like-for-like’ sales (sales in company-managed

shops with more than one calendar year’s trading history)

is a key alternative performance measure for Greggs, as it

shows underlying estate sales performance excluding the

impact of new shop openings and closures. The like-for-like

sales results across 2022 reflected the impact of the

pandemic on the first and fourth quarters of 2021, and also

the closure of our shops out of respect for the funeral of

Her Majesty the Queen in September. Overall there was

strong growth, with like-for-like sales 17.8% higher year-on-

year and 14.6% higher than the pre-pandemic level of 2019.

STRONG FINANCIAL

PERFORMANCE AND

A ROBUST FINANCIAL

POSITION

Q1 Q2 Q3 Q4 2022

Company-managed

like-for-like sales vs. 2021 37.0% 11.3% 9.7% 18.2% 17.8%

Profit for the year

Profit before tax in 2022 was £148.3 million (2021: £145.6 million).

This was a strong performance in challenging conditions,

with cost inflation increasing at a significantly higher rate

than had been expected and reduced support from

Government pandemic measures that had been present

in 2021.

We started 2022 expecting higher than normal food cost

inflation as supply chains reacted to post-pandemic growth,

but the war in Ukraine triggered a dramatic increase in food

and energy commodity costs. Our forward cover positions

for electricity and gas procurement meant that we were

largely protected from energy volatility in the year, but food

costs rose significantly as our forward positions rolled off

over the second and third quarter. Reluctantly we brought

forward price increases whilst maintaining our relative value

position in the market. In doing so across the year as a whole

we under-recovered overall business cost inflation by

around one percentage point.

Overall wage and salary cost inflation was 4.9% in 2022 and

is expected to be approximately 8.0% in 2023. Food and

packaging inflation increased significantly in the second

half of 2022 as forward cover for key inputs expired. This

will continue to annualise during the first half of 2023. Shop

occupancy costs continue to improve; in 2022 the ratio of

IFRS 16 ‘right of use’ charges on leased property assets to

company-managed shop sales was 4.3%, down from 4.9%

in 2021. Greggs’ strong covenant is attractive to landlords

and this is an important factor in lease renewal, as well as

providing the good pipeline of shop opening opportunities

that underpins our planned estate growth. Across the

business as a whole, cost inflation totalled 9% in 2022, in

line with previous guidance. The reintroduction of business

rates in the second half of 2021 resulted in a £15 million

year-on-year cost increase in 2022.

Looking forward we expect overall input cost inflation in 2023

to be in the range of 9-10%. Uncertainty over commodity

prices remains but we have been able to secure forward cover

for all of our electricity requirements through to the end of the

third quarter of the year and expect to extend this further

when opportunities present themselves. We also have

forward purchase agreements representing between four

and five months of our food and packaging needs.

Financing charges

The net financing expense of £6.1 million in the year (2021:

£7.6 million) comprised £6.8 million in respect of the IFRS 16

interest charge on lease liabilities, £0.7 million of facility

charges under the Company’s (undrawn) financing facilities,

offset by £1.4 million relating to income on cash deposits and

foreign exchange gains.

Taxation

The Company has a simple corporate structure, carries out

its business entirely in the UK and all taxes are paid here. We

aim to act with integrity and transparency in respect of our

taxation obligations.

The Group’s overall effective tax rate on profit in 2022 was

18.9% (2021: 19.3%) which reflects the benefit of ‘super-

deductions’ relating to capital expenditure in 2022, offset

by the corresponding deferred tax movements being taxed

at 25% rather than 19%, ahead of the increase in the

corporation tax rate which takes effect on 1 April 2023.

We expect the effective tax rate for 2023 to be around

24.0% and for 2024 to be around 26.0%. Going forward the

effective rate is expected to remain around 1.0% above the

headline corporation tax rate; this is principally because of

disallowed expenditure such as depreciation on properties

that do not qualify for tax relief and acquisition costs

relating to new shops.

Earnings per share and dividend

Diluted earnings per share in 2022 were 117.5 pence (2021:

114.3 pence per share).

The Board recommends a final ordinary dividend of 44.0

pence per share (2021: 42.0 pence per share). Together with

the interim dividend of 15.0 pence (2021: 15.0 pence) paid in

October 2022, this makes a total ordinary dividend for the

year of 59.0 pence (2021: 57.0 pence plus 40.0 pence special

dividend). This is covered two times by diluted earnings per

share and is in line with our progressive ordinary dividend

policy, which aims to increase the dividend in line with

growth in earnings per share.

Subject to the approval of shareholders at the Annual

General Meeting, the final ordinary dividend will be paid on

26 May 2023 to shareholders on the register at 28 April 2023.

Balance sheet

Capital expenditure

We invested a total of £110.8 million (2021: £57.4 million) in

capital expenditure during 2022. Retail estate expenditure

increased in 2022 as we accelerated the rate of company-

managed shop openings and shop refurbishment. In our

supply chain we completed the investment in additional pizza

manufacturing capacity at our Enfield site and commenced

work on the construction of a fourth production line for our

iconic savoury pastries at Balliol Park in Newcastle.

FINANCIAL REVIEW CONTINUED

45Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Depreciation and amortisation on property, plant and

equipment and intangibles in the year was £62.7 million

(2021: £58.7 million). A further £52.8 million (2021 £48.7

million) of depreciation was charged in respect of right-of-

use assets as a result of capitalised leases.

The level of capital expenditure will increase in coming years

as we invest to increase capacity in our supply chain to

support our ambitious growth plans. In 2023 we will

commence work to expand capacity for radial distribution to

shops at our Birmingham and Amesbury distribution centres.

We also expect to progress plans for new manufacturing and

logistics facilities in the Midlands, the start of a multi-year

development that will provide medium-term capacity to

allow our shop estate to grow to significantly more than

3,000 stores in time, as well as supporting our plans to grow

like-for-like sales in line with our ambition.

Our shop opening and relocation plans mean we will invest in

circa 160 new company-managed shops in 2023 and refurbish

around 150 existing stores as we modernise older sites and

introduce better facilities to support our growth plans.

Overall we expect capital expenditure in 2023 to be around

£200 million, and anticipate that it will remain around that

annual level through 2024 and 2025 as we invest to support

our growth plans.

Management of return on capital

We manage return on capital against predetermined

targets and monitor performance through our Investment

Board, a management committee where all capital

expenditure is subject to rigorous appraisal before and

after it is made. For most new shop investments we target

an average cash return on invested capital of 25%, with

a hurdle rate of 22.5%, over an average investment cycle

of eight years. Other investments are appraised using

discounted cash flow analysis.

Managing return on capital well is an important discipline

in Greggs. As such, return on capital employed (ROCE)

is embedded as a performance metric in our long-term

incentive plans. In 2022 ROCE was 21.0% (2021: 23.0%

including the benefit of relief from Business Rates),

comparing favourably with the pre-pandemic level (2019:

20.0%). As we grow the business in the years ahead our

ambition is to maintain the business’ track record of

delivering strong returns on capital.

Working capital

We ended the year with Group net current assets of

£38.9 million (2021 £59.2 million) as we continue to carry a

robust cash and cash equivalents position of £191.6 million

(2021: £198.6 million) to support investment in our capital

expenditure programme. Excluding cash and cash

equivalents, net current liabilities increased from

£139.4 million to £152.7 million over the year. This reflects

the impact of strong growth on trade and other payables.

Pension scheme

The Company’s closed defined benefit pension scheme has

moved to a net asset position of £6.3 million at the end of

2022 (2021: £2.4 million net liability). The improvement in

the balance sheet position reflects already-committed

scheme contributions that were advanced to support the

scheme at the time of significant collateral calls on its

Liability Driven Investments (‘LDI’) in October 2022. The

reduction in liabilities that resulted from a significantly

increased discount rate was largely offset by performance

of the scheme assets and LDI positions.

The scheme underwent a full actuarial revaluation in 2020,

the results of which showed a deficit in funding. The

Company committed to making additional contributions of

£2.5 million each year from 2021 to 2026 to ensure that any

funding requirements are met over the medium term as the

scheme works towards full de-risking. As noted above, as a

result of the volatile market conditions in the autumn

of 2022 the Company advanced an additional payment

of £5.5 million of these committed contributions

(£8.0 million for the year), leaving £4.5 million of the

original commitment to pay in future years.

Cash flow and capital structure

The net cash inflow from operating activities after lease

payments in the year was £198.8 million (2021: £236.5 million

including a significant working capital inflow as sales

recovered from the pandemic). At the end of the year the

Group had net cash and cash equivalents of £191.6 million

(2021: £198.6 million).

In normal circumstances the Group aims to maintain a

year-end net cash position of around £50 million to allow

for seasonality in its working capital cycle and to protect

the interests of all creditors. The cash position will

normalise in future years as we deploy resources to

support our ambitious growth plan.

The Company’s undrawn revolving credit facility, which runs

to December 2025, allows it to draw up to £100 million in

committed funds, subject to it retaining a minimum liquidity

of £30 million (i.e. maximum net borrowings are £70 million).

Taking this into account, total available liquidity at the end of

2022 was £261.6 million (2021: £268.6 million).

Looking forward

Our strong financial position will support our ambitious

growth plans in the year ahead. At the same time we

will maintain the discipline that has delivered profitable

growth and excellent capital returns, to the benefit of all

of our stakeholders.

Richard Hutton

Chief Financial Officer

7 March 2023

The various roles within the risk management process are set out below:

WHO? ROLE KEY ACTIVITIES/RESPONSIBILITIES

Main Board Direction and oversight

Approving policy; overall responsibility for risk; setting risk appetite;

embedding the risk management culture; setting the ‘tone at the top’

Audit Committee Main Board activities

as delegated

Challenge and agreement of principal risks and uncertainties

disclosure; oversees risk management systems and controls;

annual review of effectiveness of approach

Operating Board Ownership and

monitoring

Ownership and management of significant risks;

agreeing and monitoring actions to mitigate risks

Risk Committee Identifying,

assessing and

monitoring risk

Consideration of new and emerging risks; escalation of functional

risks; bi-annual strategic risk review and validation

Business

Assurance team

Independent

overview

Managing the risk register; consolidation of significant risks;

independent assurance over controls; monitoring compliance

with policy; updating Audit Committee at each meeting

Heads of business

functions

Operational risk

ownership and

implementing

actions

Identifying risks which may prevent the achievement of objectives;

ongoing review of risks and controls within area of remit;

implementing controls to mitigate risk

Process owners Day-to-day business

operations

Ensuring that mitigating controls are operating effectively;

reporting areas of new and emerging risk; ensuring compliance

with policies and procedures

Top downBottom up

RISK MANAGEMENT

An effective and robust risk management

process is fundamental to protecting our

business, our customers and colleagues,

and shareholder value.

Risk management and internal control

To be able to deliver our strategy and make the right

decisions for the business, we need to understand and

manage our risks. Taking risks in a managed way can help us

to deliver value whilst protecting the business, our people

and our reputation. Risks cannot be avoided, but an effective

system of risk management ensures that they are mitigated

to an acceptable level.

Roles and responsibilities

The Board has overall responsibility for risk management,

and determines the nature and extent of risks which we are

prepared to take in the pursuit of our strategy.

The Audit Committee, on behalf of the Board, maintains

oversight of the risk management approach, including

reviewing its overall effectiveness on an annual basis,

and receiving regular updates on assurance activity.

OUR APPROACH

TO RISK MANAGEMENT

47Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Risk is managed and overseen through a Risk Committee,

which is a committee of our Operating Board. Other senior

leaders are also part of the Committee and attend the

meetings, which take place at least three times per year.

Our Business Assurance function supports with the

documentation and review of risk, and with the Audit

Committee’s review process.

Risk management process

We have a risk management policy and framework in place,

both of which have been approved by the Board. This

supports us in taking a consistent approach.

Our risk process works ‘top down’ and ‘bottom up’, as

shown in the diagram on page 46. Risks are identified,

by considering potential events which could prevent the

achievement of our objectives.

The Operating Board is responsible for maintaining the

overall corporate risk map, which documents the key risks

to the achievement of strategic objectives. We conduct

a formal review of our key strategic risks twice a year via the

Risk Committee, with input from each of the risk owners.

This allows us to discuss the gradings, reflect on any

changes and ensure that the level of risk remains consistent

with our risk appetite. The Risk Committee also considers

new risks escalated to it and assesses whether or not these

are significant enough to merit inclusion on the strategic

risk register.

The risk process is facilitated by the Business Assurance

team, who help identify and assess key risks, as well as

providing support in developing an appropriate risk

response. The team also provides a route for matters of

concern to be quickly escalated to the Operating Board and

Risk Committee. In addition, Business Assurance provides

an independent view on the controls in place over specific

risk areas within the internal audit plan.

Risks are assessed under our strategic pillars (including The

Greggs Pledge), and are categorised into four broad groups

– strategic, operational, financial and legal/regulatory.

Our strategic risk register captures a description of each risk,

and allocates an Operating Board member as risk owner.

Each risk owner is responsible for ensuring that appropriate

mitigating controls are in place. We then set out key controls

for each risk, and make an assessment of their effectiveness.

The likelihood and impact of each risk arising is then calculated,

taking into account the controls which are in place.

Developments in 2022

Our Enterprise Risk Management (ERM) framework, which we

developed with Marsh Advisory in 2021, has been rolled out

more widely. The ERM policy and procedure were signed off

by the Board to demonstrate commitment at the top of the

organisation.

Our Chief Executive has continued to increase our focus on

risk management. This has emphasised the importance of

risk management and is helping to promote our work to fully

embed the concept.

We have engaged with heads of business functions to

increase their involvement in the process. They participated

in the strategic risk grading review at the year end, which

provided a different perspective from the Operating Board

and gave some valuable insight. We plan to continue an

ongoing dialogue with this group, the output from which we

will feed into discussions at Risk Committee meetings.

We reviewed the structure of the Business Assurance team

and we have appointed an Audit and Risk Manager, to drive

a more joined up assurance approach. The role will help us to

optimise the opportunities for internal audit to independently

assess the effectiveness of key controls.

Plans for 2023

We will further embed our ERM approach, and support

more of our functions to develop their own risk registers in

the standard corporate format. This will also involve more

regular and structured engagement with our heads of

business functions.

We have engaged with our insurance brokers to conduct an

overall review of our approach to insurance, a significant

mitigating control against a number of our strategic risks.

This will involve members of our Main and Operating Boards

as well as key heads of business functions.

We will be increasing the resource within the Business

Assurance team to ensure that we are able to continue to

support the growing business.

Climate risks

As set out in our TCFD disclosure on pages 35 to 41, our

climate risks and opportunities are in the process of being

fully defined, though we have undertaken a significant

amount of work to understand our exposure. Once the risks

have been agreed, they will be incorporated within our main

ERM framework, and managed consistently with other risks

identified across the business.

We continue to monitor climate change as an emerging risk,

since we do not believe it constitutes a principal risk to the

business within the time horizon of our current strategic

plan. However, we keep under review future climate change

legislation and customer preferences.

Emerging risks

We conduct an emerging risk review on a quarterly basis, and

report our findings to the Risk Committee and Main Board.

Various sources of information are used to ensure this is as

complete as possible:

– Horizon scanning by subject matter experts throughout

the business, coupled with an escalation route to raise

any issues;

– Engaging with our functional heads to discuss any areas

of concern within their remit;

– Monitoring customer and consumer trends; and

– Taking input from our advisers and other specialists with

whom we work.

Current areas of emerging risks which we are monitoring

include changes to legislation, geopolitical tensions and the

cost of living crisis.

RISK MANAGEMENT CONTINUED

Risk appetite

Risk appetite is the level of risk which we are prepared to

take to meet our strategic objectives. In determining this,

we recognise that there is a balance between a prudent

approach to risk and sufficient flexibility to take appropriate

opportunities when they arise.

Our appetite for taking risks depends on the category of risk

in question. For example, we would be prepared to take more

risk in the pursuit of our strategy than in areas such as food

safety, where compliance with legislation drives a zero

tolerance of risk.

Changes to principal risk disclosures

A principal risk is a risk or combination of risks that could

seriously affect our performance, future prospects or

reputation. Not all of our strategic risks are considered to be

principal risks, only those which could have a significant

impact on our ongoing viability.

Key changes to principal risks and our risk profile are as

follows:

– Our previously disclosed risk of ‘supply chain disruption’

incorporated both internal interruption events and

external supply issues. We have described this as two

separate risks, since the risk profile and the mitigations

are different for each.

– A previously disclosed risk of ‘significant fines for

non-compliance’ has been removed from the listing, since

we no longer believe it to meet the definition of a principal

risk. The reputational impact of such an incident is stated

elsewhere within the risk register.

– We have included the additional disclosure of the

category of each risk as set out in our risk register –

strategic, operational, financial and legal/regulatory to

aid understanding.

– Although not disclosed as a principal risk in our 2021

annual report, we set out our ongoing response to the

Covid-19 pandemic. Any such activity still in progress is

now considered part of our normal business operations,

and hence no further comment is necessary. However,

we are reflecting on our overall response to the pandemic,

and report our key lessons learned to the Board.

The following table sets out the principal risks, shows the

movement during the year, and describes the impact and key

mitigations. The list is not in priority order, and does not

include all the risks which are faced by the business. Other

risks which are not included here could also have a negative

impact on the business, including those which are not

presently known to us. The position described in the following

table is a summary at the time of publishing this report.

49Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Risk and description Impact Key mitigations Strategic pillars Movement

BUSINESS INTERRUPTION

EVENT

We could suffer a significant business

interruption event impacting one or more

of our key locations. For example, a

prolonged power outage, denial of access

or an incident resulting in physical damage.

OPERATIONAL

We would potentially be unable to

supply our customers for a period

of time. This could impact our own

customers, those of our franchise

partners, and also our wholesale

sales through Iceland Foods.

– We have contingency plans in place for our sites,

which are tested periodically.

– Our resilience throughout the pandemic demonstrates

that we are well-placed to manage disruption to our

operations.

– Our diversified product range from multiple production

sites provides alternatives for our customers.

– We have flexibility within our network, to enable us

to continue our operations.

– Insurance cover is in place.

SUPPLY CHAIN

DISRUPTION

External supply could be interrupted,

resulting from issues such as third-party

business interruption or unexpected

product shortage.

OPERATIONAL

A prolonged outage at one of

our key suppliers could impact

on our ability to produce some

of our range, or otherwise impact

on our ability to operate.

– We try to avoid single source supply for key ingredients.

– In the event of interruptions, we are agile in our

response to implementing contingency plans.

These are regularly tested.

CYBER & DATA

SECURITY INCIDENT

A cyber incident may occur which

impacts on our IT infrastructure.

The external threat environment is

constantly evolving and there is currently

an extended period of heightened cyber

threat, as advised by the National Cyber

Security Centre.

OPERATIONAL

We could suffer a significant loss

of data, resulting in litigation

and fines.

Our operations could be disrupted

for a period of time.

– Third parties provide expertise and support, including

regular penetration testing and a Security Operations

Centre monitoring our networks.

– Our technical measures are constantly reviewed and

updated in line with changing requirements and

recognised information security control sets.

– Our Operating Board took part in a desktop cyber event

simulation, facilitated externally.

STRATEGIC PILLARS:

Great tasting, freshly prepared food

Best customer experience

Competitive supply chain

First class support teams

The Greggs Pledge

PRINCIPAL RISKS AND UNCERTAINTIES

Risk and description Impact Key mitigations Strategic pillars Movement

PROLONGED SYSTEM

DOWNTIME/

INTERRUPTION

As we streamline the business and

embrace greater flexibility in our working

arrangements, we increase our reliance

on technology. Any system interruption

becomes more disruptive, with an

increased risk of it having an impact

on business operations.

OPERATIONAL

We may be unable to run our

production systems for a period

of time. This could ultimately

impact on our ability to supply

into our shops for our customers.

Data may be unavailable or lost,

making it difficult for us to operate.

– We continue to invest in our IT infrastructure.

– We have established disaster recovery processes

which are tested periodically.

– Our ERP system incorporates multiple

layers of resilience.

– External partners are engaged to provide

specialist support and expertise when required.

– We will be refreshing our crisis and contingency

plans in 2023.

DETERIORATION OF

RELATIONSHIP WITH KEY

PARTNER

We continue to work closely with

franchise, wholesale and delivery

partners in order to broaden our service

offer into locations where our customers

want us to be. There is a risk that our

strategy and goals are not fully aligned.

STRATEGIC

A lack of alignment could result

in targets not being met, due to

performance not being optimised.

The brand’s reputation could be

damaged, and the relationship

would be put at risk.

– We work with a number of respected partners and

are continuing to broaden the range of businesses

with whom we operate. This reduces the reliance

on any one individual partner.

– Contracts and service level agreements are in

place, along with a robust onboarding process

for new partners.

– We are strengthening our in-house teams

to provide more resource to support our partners.

RISK MANAGEMENT CONTINUED

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

STRATEGIC PILLARS:

Great tasting, freshly prepared food

Best customer experience

Competitive supply chain

First class support teams

The Greggs Pledge

51Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Risk and description Impact Key mitigations Strategic pillars Movement

ABILITY TO ATTRACT/

RETAIN/MOTIVATE

PEOPLE

Our people are an essential part of our

business and our culture. Particularly in

the current environment, we may be

unable to attract and retain the right

talent within Greggs.

OPERATIONAL

We may be unable to continue

to deliver the product range

and service standards that

our customers want and

expect from us.

The loss of existing resource

results in additional recruitment,

which in turn creates workload and

training requirements.

Ultimately, we may be unable

to grow the business in line

with our strategy.

– We recognise that our people are a key asset to the

business, and offer competitive packages, along with

extensive training and development opportunities.

– Colleagues have a range of ways to communicate their

ideas for improvement, including opinion surveys and

listening groups.

– We have a robust succession planning process for our

leadership teams and are continuing to develop this

across the wider organisation.

DAMAGE TO REPUTATION

As we grow our social media presence,

and engage more with our customers,

there is a risk of damage to our brand if

we fail to respond quickly and

appropriately to an incident.

STRATEGIC

Customers could lose their trust

in the brand, ultimately impacting

on our ability to grow our estate

and achieve our objectives.

Shareholder value could

be reduced.

– We have a robust crisis management process in place,

which we test regularly. This is supported by appropriate

third parties (such as PR agencies) when specialist

advice is required.

– We have conducted a detailed review of our Food Safety

incident response with our Operating Board.

– All of our shops are required to follow consistent

procedures, to ensure that our food complies

with standards.

– Our audit team ensure compliance, across both

company-managed and franchise shops.

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

STRATEGIC PILLARS:

Great tasting, freshly prepared food

Best customer experience

Competitive supply chain

First class support teams

The Greggs Pledge

Risk and description Impact Key mitigations Strategic pillars Movement

SIGNIFICANT FOOD

SAFETY INCIDENT/

PRODUCT QUALITY ISSUE

We may inadvertently produce and/or sell

products which are unsafe, or not of the

appropriate quality. This could be a result

of incorrect labelling of allergens,

product contamination or a failure to

correctly follow procedures.

OPERATIONAL

There could be harm to our

customers or colleagues.

Our reputation as a trusted

brand could be significantly

impacted, which in turn would

affect our financial performance.

We could also be exposed to

significant fines.

– All new external suppliers require formal approval.

– All ingredients and products have specifications

to ensure consistency.

– Allergen risk assessments are in place.

– Our teams are trained, with specialists able

to provide additional knowledge.

– We have a Primary Authority relationship in place,

which gives independent assurance that our

processes and procedures are adequate.

– Audits are undertaken by our internal teams

and external bodies.

– Our complaints process ensures all matters

are investigated. When a root cause identified,

we take action to address it.

CHANGES IN THE

REGULATORY

LANDSCAPE

New regulatory requirements could be

implemented, driven by environmental,

health or other concerns.

LEGAL/REGULATORY

It may be necessary for us to

make changes to our product

range. Without an ability to

respond quickly, we could lose

market share.

We believe that we may have

greater exposure in some areas

than our competitors.

– Regular horizon scanning activities are undertaken

by our teams.

– We engage with Trade Associations and government

bodies to ensure we are updated with developments.

– Participating in industry forums gives us an opportunity

to influence decision making.

RISK MANAGEMENT CONTINUED

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

STRATEGIC PILLARS:

Great tasting, freshly prepared food

Best customer experience

Competitive supply chain

First class support teams

The Greggs Pledge

53Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Viability statement

The Directors have assessed the Group’s prospects and

viability taking into account its current position, plans and

principal risks. In carrying out its assessment the Board has

reviewed the three-year operational and financial plans to

2025. This is the period over which the Board reviews

management’s business planning and sets performance

targets, and therefore the Board believes that this remains

the most appropriate timeframe over which to make the

viability assessment.

The Directors have carried out a robust assessment of the

principal risks facing the Group, including those that would

threaten its business model, future performance, solvency

or liquidity.

The principal risks to which the Group is exposed ultimately

affect the ability of its shops to trade successfully, either due

to reduced demand or because of operational interruptions,

including those to its internal supply chain. A significant loss

of sales is particularly damaging given the Group’s vertical

integration in that the cost of the internal supply chain

cannot be reduced quickly.

Scenarios were modelled in order to stress-test the Group’s

financial resilience to the impact arising from occurrence of

the following principal risks:

1. Pandemic threat – the risk that the Group is forced to

close its shops to walk-in customers for three months as a

result of lockdown rules, and subsequently experiences

subdued levels of walk-in trade as the economy recovers

(starting at 50% of previously forecast sales in January

2024, building back to 100% by the end of that year).

Delivery channel sales are assumed to continue through

the lockdown months, with a 2.5x increase in volume as

customers switch channels, as are ‘bake at home’ sales

through the Group’s wholesale relationship with Iceland

Foods. This forward scenario assumes that Government

support would be available for the support of employment

and that relief from business rates would be available

during the periods of forced closure.

2. A brand-damaging food scare resulting in a significant

one-year sales reduction (c. 25% sales reduction for initial

six months) followed by gradual recovery of confidence.

In making assumptions the Directors considered real

examples of companies in the food sector that had

experienced such issues.

3. Temporary loss of production capacity for the Group’s

iconic savoury products and the consequences for

liquidity as capacity is restored.

In each case the Directors reviewed the mitigating actions

that would be necessary to protect the Group’s liquidity.

These included:

– The temporary suspension of dividend payments in order

to preserve cash for operational use;

– Restriction of capital expenditure whilst protecting

essential infrastructure maintenance and commitments

to strategic investments;

– Access to Government support;

– Drawing on existing committed financing facilities; and

– Calling on the Group’s insurance arrangements on the

occurrence of an insured risk.

The scenarios tested were capable of being managed within

the Group’s existing, committed financing facilities. The

pandemic scenario presents by far the greatest financial

stress to the business, and this simulation does show a

breach of the fixed interest cover covenant at one reporting

date. Given the Group’s relationship with lenders, and the

actions of banks through the Covid-19 pandemic, the

Directors believe it is reasonable to conclude that a waiver

would be secured.

Given the opening cash position in 2023 the Group has

sufficient existing and committed financing facilities to

manage in a situation where multiple principal risk scenarios

occur concurrently. This will likely not be the case in future

years as we increase capital expenditure and reduce the

Group’s cash position. In the event of multiple principal risk

scenarios occurring the Directors believe that the borrowing

capacity of the Group would be sufficient to allow it access

to temporary additional facilities.

Based on the results of the analysis, the Directors have

a reasonable expectation that the Group will be able to

continue in operation and meet its liabilities as they fall due

over the three-year period of their detailed assessment.

OUR STAKEHOLDERS

ENGAGING WITH

OUR STAKEHOLDERS

Despite significant pressures on customers’ incomes and against an economic

inflationary environment, we made progress with our strategy during 2022, and

the Directors continued to engage with our stakeholders through a series of

formal and informal activities.

SECTION 172 STATEMENT

The following pages 54 to 61 comprise

our section 172 statement and

describe how the Directors

individually and collectively, acting

in good faith, have exercised their

duties over the course of the year

to promote the long-term success

of the Company for the benefit if its

members as a whole, and in doing so

have had regard to the matters set

out in section 172(1) (a) to (f) of the

Companies Act 2006.

Our Executive Directors undertake much of the day-to-day

engagement across the various stakeholder populations

with members of the Operating Board sometimes acting

as proxies for the Directors. For example, since her

appointment, the Chief Executive has met with several

suppliers accompanied by our Operating Board lead,

the Commercial Director. These have deepened her

understanding of the those relationships, and allowed

her to hear how they are mutually beneficial, and what

improvements could be made. After an engagement,

the Chief Executive reports key findings to the Board.

A series of activities are planned across the year to which

the Non-Executive Directors are invited. These include

listening groups with colleagues, the annual management

conference, and formal and informal visits to shops and

production and distribution sites. Our Company Secretary

retains an engagement log. At Board meetings, Directors are

invited to comment on their activities and the key things they

have learned.

55Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

STRATEGIC PILLARS

CUSTOMERS

How and why we engage

Our customers are at the heart of everything we do.

Understanding the role we play in peoples’ lives is at the

forefront of how we plan and operate, so we’re constantly

evolving our proposition to remain relevant.

By speaking to customers in shops, through our Customer

Care and Insight teams, and across our digital channels

– we’re constantly listening and learning so we can

understand how best to serve the nation.

Impact on Board decisions

Our purpose is to make great tasting, freshly prepared food

available to everyone, and our vision is to be the customers’

favourite for food-on-the-go. With this in mind, the Board

approved a significant and extended shop opening

programme which is putting Greggs into new locations

through relationships with, for example, supermarkets and

new franchise partners. The Board approved extending shop

opening hours so that at least 500 shops would remain open

until 8pm, with a complementary evening range.

At the Board’s strategy meeting in the summer, the team

considered what the future might hold for our customers

in ten years’ time. This assessment is now being used

to develop customer strategies in the coming years.

More detail has been set out in the case study entitled

Understanding our customers on page 60.

COLLEAGUES

How and why we engage

Our people are what makes our business successful. We

strive to provide a great place to work, where our colleagues

feel valued, can be themselves, want to stay with us, and new

employees want to join. As our business grows, we continue

to recruit new talent, which is harder in the current

employment market. To help us tackle this issue, we launched

a new Greggs Career website and recruitment system in

2022. We continue to communicate with our colleagues

through regular Chief Executive updates, partnership

forums, the colleague suggestion scheme ‘Your Ideas Matter’,

and our annual conference and cascades. Our three networks

– ethnicity, disability, and LGBTQ+, as well as our D&I steering

group – are attended by many colleagues from across the

business as well as the sponsors from our Operating Board.

Impact on Board decisions

With the lifting of Covid-19 restrictions, the success of the

national vaccination campaign and the lower impact of the

Omicron variant, the Board were pleased to be able to

recommence meeting colleagues from across the business

in person. These meetings help our Directors to consider

the environment in which our people operate, the challenges

that they face in their day-to-day working lives, and the

impact of Board decisions on operational activities. For

example, the Board’s decision to extend shop opening hours

requires additional workforce planning and recruitment to

keep shops open during longer hours, often for 12 hours or

longer. Board members attended Listening Groups and

meetings of the Greggs Negotiating Committee (GNC) (the

formal conduit for engaging with recognised unions). More

information outlining the various colleague engagement

activities is outlined in pages 58 to 59.

SUPPLIERS

How and why we engage

By working collaboratively with suppliers who share our

values, we produce high-quality products while also having

a positive impact on people and the planet. Although we

manufacture the majority of what we sell, we are reliant on

food ingredient suppliers, services providers, property

landlords, sellers of ’goods not for resale’ – such as shop

uniforms and equipment – and many other suppliers. We

use the Ariba platform to qualify suppliers and a variety of

tools to support our focus on ethics and sustainability. To

build and maintain good relationships, we also hold regular

meetings, undertake joint projects and visit and invite our

suppliers to our annual Supplier Conference.

Impact on Board decisions

Every year, our Chief Executive attends several ‘top-to-top’

meetings with selected suppliers, accompanied by the

Operating Board’s Commercial Director. Since taking on the

Chief Executive appointment, these included a visit to a

waste recovery and recycling plant operated by our partner,

Biffa, and a meeting with our milk supplier, Müller, to discuss

our commitment to animal welfare. Findings from such

meetings assist the Board in considering our environmental

strategy as part of The Greggs Pledge, for example, the

difference we can make to recycling rates by improving

how we sort our waste before it goes to Biffa’s plant.

Great tasting, freshly prepared food

Best customer experience

Competitive supply chain

First class support teams

The Greggs Pledge

OUR STAKEHOLDERS CONTINUED

SHAREHOLDERS

How and why we engage

Our shareholders are the owners of the business, and we

have obligations to keep them apprised of significant

developments. We do this through our regular reporting

schedule and meetings with institutional shareholders

across the year, conducted mainly by the Chief Executive

and Chief Financial Officer.

We hold an AGM after which Directors mix with attendees

over a Greggs lunch. After two years of virtual meetings due

to the pandemic, we were pleased to once again welcome

shareholders in-person to our AGM in May 2022.

Impact on Board decisions

The Chief Financial Officer leads on the Board’s engagement

with institutional investors and analysts, has regular

interaction with existing and potential investors, and reports

to the Board on the key points that arise from those

meetings. At each Board meeting, a register of the top

shareholdings is tabled, including movements of buyers

and sellers. Following the Preliminary and Interim Results

Roadshows, the Board receives feedback from investors

and analysts on Company performance and levels of

engagement. The Chair and Senior Independent Director

offered meetings to several major shareholders

to discuss the process that had resulted in Roisin Currie

succeeding Roger Whiteside as Chief Executive.

LENDERS

How and why we engage

Greggs is a cash-generative business and prior to the pandemic

had not needed to approach capital and debt markets to fund its

growth strategy. With the onset of the pandemic, it became

clear that it would be appropriate and prudent to have in place

a formal bank facility, and consequently, towards the end of

2020, a revolving credit facility of £100 million was put in

place with two commercial banks. Although that facility

remains undrawn, as part of that ongoing relationship, the

Finance team provide regular performance and covenant

compliance updates to banking partners.

Impact on Board decisions

In determining the use of cash resources, the Board has

regard to several stakeholders, including shareholders

(through the potential for dividend payments), colleagues

(through pay awards and bonus entitlements), and Greggs

pension scheme obligations (through managing the scheme

alongside the Trustee to ensure it is successful on its journey

to de-risking in the next few years). Should the Board

authorise a drawdown of the revolving credit facility, it would

take that debt into consideration when determining the

allocation of cash resources.

During the year, the Board approved the payment of an

additional £5.5 million to the Trustee of the defined benefit

pension scheme (‘the Scheme’), to enable it to respond

to cash calls received from Legal & General Investment

Management during the so-called ‘LDI crisis’. The Board

had previously approved the payment of £15 million into

the Scheme over six years as part of a deficit recovery

programme and agreed to bring forward annual payments

so that the Trustee could meet the cash call. This advanced

funding will assist the Company and the Scheme along its

journey towards buy-out in the coming years.

COMMUNITIES

How and why we engage

The sheer ‘localness’ of our operations and our longstanding

relationship with the Greggs Foundation helps us to better

understand the needs of our communities and how we are

placed to make a positive impact. We aim to build stronger,

healthier communities – a fundamental tenet of The Greggs

Pledge. We do this through initiatives such as Greggs

Breakfast Clubs, our food donation programme and our

employability programme Fresh Start, as well as by facilitating

fundraising activities for many other good causes, including

the Disasters Emergency Committee (DEC), Children in Need,

The Children's Cancer Run and the Poppy Appeal.

Impact on Board decisions

The Board, acting through the Operating Board, approved

support for the DEC's fundraising to provide relief to those

impacted by the war in Ukraine. Thanks to the generosity of

our customers, we were able to donate over £278,000. We

also celebrated our sixteenth anniversary as a BBC Children

in Need partner, helping to improve the lives of children and

support our communities across the UK – raising over

£782,000 this year alone.

STRATEGIC PILLARS

Great tasting, freshly prepared food

Best customer experience

Competitive supply chain

First class support teams

The Greggs Pledge

57Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Following two years of disruption caused by the pandemic when virtual meetings were the norm,

the Board welcomed the opportunity to engage with stakeholders face-to-face in 2022.

Below, by stakeholder, are some examples of the activities undertaken by the Board, or relevant information that was presented to them.

COLLEAGUES CUSTOMERS SHAREHOLDERS

Attendance at Greggs Negotiating Committee meetings Progress report on App development Declaration of interim dividend

Attendance at listening groups with our retail operations

managers and manufacturing colleagues

Market insight presentations Annual general meeting

Updates on achieving the National Equality Standard Pricing strategy and impact of inflation Share register monitoring and development

of an engagement plan

Findings from the Employee Opinion Survey

(see more on page 61)

Attendance at a menu tasting session with

our category and food development teams

(see case study on page 59)

Investor relations strategy review and

the allocation of resource

Undertaking shop visits to meet our shop teams Attendance at ‘Customer of the Future’ session

(see case study on page 60)

Transparency around the Chief Executive

recruitment plan

Attending a fundraising walk to support the Greggs Foundation

(see case study on page 58)

Presentations from Customer Insight team

(see case study on page 60)

Consultation ahead of the tabling

of the remuneration policy in 2023

Participating in colleague development days

OUR STAKEHOLDERS CONTINUED

Colleague engagement

Board engagement

In September, the Board visited shops in and around

Birmingham city centre, speaking with colleagues and

customers, and seeing new formats such as the ‘Tasty by

Greggs’ café within the Primark store. The Board also

visited the Birmingham distribution centre and engaged

with colleagues responsible for fulfilling shop stocking

requirements and saw the logistics planning system that

supports deliveries to shops in the Midlands area every day.

In addition to the Board visit to Birmingham, Chief Executive,

Roisin Currie, Non-Executive Director Mohamed Elsarky, and

Supply Chain Director, Gavin Kirk, visited colleagues at our

National Distribution Centre in Kettering to discuss the

current operation at the site and understand key capacity

constraints and plans in place to ensure supply at peak

trading. They also discussed local recruitment, logistics

plans and colleague facilities.

Non-Executive Director Helena Ganczakowski attended a

meeting with colleagues at our North Lakes manufacturing

site. A number of topics were discussed including the

recruitment market, the available facilities on site and

pay levels.

Sandra Turner, the Non-Executive Director having oversight

for colleague engagement, attended the Masterclass

development programme for some of our senior leaders

and shared her knowledge and experience of being a

non-executive director as well as providing an overview

of her role. Sandra also conducted shop visits to meet

our retail colleagues. Product availability was among the

topics discussed.

Union recognition and engagement

As part of Greggs’ longstanding relationship with recognised

unions (Bakers Food and Allied Workers Union (BFAWU),

Union of Shop, Distributive and Allied Workers (USDAW) and

United Road Transport Union (URTU)), regular meetings are

held covering a variety of topics, including trading, strategic

initiatives, The Greggs Pledge and annual pay negotiations.

The GNC is our national union forum. It is attended by

Sarah Woolley (General Secretary of the Bakers Food &

Allied Workers Union) and union representatives from

across our business. In July 2022, our Non-Executive Chair,

Ian Durant, attended a scheduled meeting for an open

feedback session where the teams were able to ask

questions and provide any feedback on operations. The

Chief Executive regularly attends this forum to provide

a business update and engage in an open discussion

regarding any issues the forum choose to table.

Topics that were discussed included recruitment challenges

across the business, the appointment of the new Chief

Executive as well as succession on the Main Board.

Retail Partnership Forum – December 2022

The Retail Partnership Forum is made up of our union

representatives from across retail and the teams specifically

discuss operational issues across the retail estate. Non-

Executive Director Lynne Weedall attended to meet the team

and understand their roles in representing their colleagues

across retail. Key topics discussed in this meeting included

retail systems and connectivity in shops and recruitment.

Fundraising walk to

support the Greggs

Foundation

Greggs continues to support the fantastic work

of the Greggs Foundation including its Breakfast

Club programme which by the end of 2022 had

789 Breakfast Clubs up and running, serving

a free breakfast to 49,000 children.

To help raise funds for its Breakfast Club

programme, the Greggs Foundation hosts an

annual walk. In 2022, the walk covered 21 miles of

the Northumberland coast, stretching from Holy

Island to Bamburgh Castle. Over 250 walkers took

part on the day, including members of the Board,

colleagues, suppliers and partners, helping to

raise a total of £50,000.

Total amount raised from the walk

£50,000

59Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Rewarding the workforce

Following a strong business performance in 2022, the Board

was delighted to continue its long tradition of sharing 10%

of profits with colleagues, enabling them to share in our

success. Payments to qualifying colleagues will be made

in late March 2023.

In order to determine the annual pay award, each year we

undertake negotiations with the relevant trade unions

representing those colleagues covered under a collective

bargaining agreement. Following the successful conclusion

of the resulting ballot, our shop teams receive a pay increase

with effect from April in any year and our supply chain teams

from January in any year.

The 2023 pay award agreed for our wider workforce

consisted of a base pay award of 7%, with an additional 3%

(10% in total) for certain roles and an additional 3.2% (10.2%

in total) for our retail team members. Over three-quarters of

our workforce received a pay increase of 10% or more. We

chose to bring forward the pay increase for our operational

retail colleagues (over 21,500 colleagues) by three months,

from April to January 2023.

Over recent years, the pay award applied to our graded

management population and Directors has reflected the

base increase for our wider workforce and is generally

applicable from January in any year. However, the Board

acknowledged that 2022 was an unusual year with

significant inflationary pressures being faced, particularly

in the second half of the year. In recognition of these

significant economic conditions and the disproportionate

impact on our lowest paid colleagues, the Board agreed a

tiered pay award for our graded management teams. Our

lower paid management colleagues therefore received the

base increase of 7%, whilst senior managers’ pay awards

Menu tasting with our category

and food development teams

As a food retailer, our menu is at the heart of our

operations, and new product development and

evolving our existing menu is key to our success.

In November 2022, the Board attended a presentation

and tasting session led by our category and food

development teams at our dedicated FoodZone

facility. As part of this session, the Board were invited

to share feedback and insights on the core pillars of

the menu for 2023 and beyond, diversification of the

menu, healthier choices and the growth of our vegan

range in line with our sustainability commitments.

ranged between 5% and 6%. It was agreed that the pay

award of both the Executive Directors and Operating Board

should be proportionally lower and were subsequently

agreed by the Board at 4%.

The pension contributions (or cash equivalent) for Executive

Directors are fully aligned with most of the workforce as of

1 January 2023. Further details can be found in the Directors’

remuneration report on page 78.

Provision 36 of the Governance Code requires the

Remuneration Committee to develop a formal policy for

post-employment shareholdings. The Committee has

considered the new remuneration policy for the coming

three-year period and the post-employment holding

requirement will apply to all Executive Directors at the level

of the shareholding guideline prior to departure or the actual

shareholding on departure if lower. The previous approach

was that a post-employment holding requirement would

apply only for new Executive Directors. Full details can be

seen in the Directors' remuneration report on page 85.

OUR STAKEHOLDERS CONTINUED

Understanding our customers

The Board receives several reports and

presentations across the year from the

Customer Insight team, which helps the

Board determine various commercial

strategies, factoring in competitor activity,

pricing and inflation, customer footfall for

shop locations and marketing promotions.

Specific topics covered in the year included:

– Macro customer trends

– Food-to-go market overview

– Greggs and competitor performance

in food-to-go

– Brand health

– Brand perceptions/satisfaction

– Competitor profiling and analysis

– Daypart performance

– Business plan, deep dives:

– Focus on delivery/evening/hot food

– Focus on coffee

– Focus on health

As part of our longer-term strategic planning

for the business, the Board was engaged to

provide challenge and debate about our

future customers, their likely preferences,

and how the business proposition would

need to evolve to ensure that we remain

relevant and appealing to reach our

customer growth and retention aspirations.

We chose 2030 as the future date, and

invited a third-party agency to provide an

independent view of future mega-trends,

using existing business knowledge and

insights to help inform likely future

customer habits.

The habits deemed the most pertinent in

affecting the future strategic direction of

the Greggs offering were then distilled into

key areas. Members of the Operating Board

used these areas to develop hypotheses

which formed the foundation of a face-to-

face Board strategic debate. The Board

members’ role was to challenge and shape

the thinking of the business and to provide

expert insights from their own experiences.

The outputs of these sessions and the

strategic debate were fed into the relevant

development teams and the workshops have

now been repeated with our senior managers

to further enhance the robustness of the

inputs to our future strategy.

61Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Colleague engagement survey – Your Opinion Matters

In November 2022, the Directors received a presentation

from Emma Walton, People Director and her team on the

findings of the latest colleague engagement survey, ‘Your

Opinion Matters’, conducted in the third quarter of 2022. The

response rate was 78% overall (21,067 respondents), made

up of 92% management and support, 79% in retail and 69%

of supply chain. This compared with an overall response rate

of 64% the last time the survey was undertaken in 2021.

We calculate an engagement score using four questions

from the survey including: ‘I am proud to say I work for

Greggs’ and ‘I would still like to be working at Greggs in two

years’ time’. The engagement score was 77%, a drop of 5%

versus 2021, 10% ahead of the relevant benchmark and given

the unusual year with significant economic uncertainty

which had an impact on the whole of the UK, the Board

considered this to be a good outcome.

We cross-reference responses with self-declared ethnicity,

sexual orientation and disability, and were pleased to see

that overall levels of engagement are similar to those

reported for the whole responding population. These results

were shared with the Main Board and the D&I steering group.

Sharing ethnicity data allows the Board to see progress

towards our goal of having a workforce which reflects the

communities where our shops are located.

The Board was informed that each function would be

producing an action plan in response to specific findings,

with the aim of improving the engagement of our colleagues

over the next year.

Shareholders

The Chair takes responsibility for ensuring that key

shareholders are aware of, and supportive of, the Board’s

approach to governance, networking widely across the

institutional shareholder population, and from time-to-time

meeting with larger shareholders.

Much of the regular interaction with shareholders and the

analyst community is undertaken by the Chief Executive

and Chief Financial Officer, particularly around the times

of the release of the preliminary and interim results. In

between, the Chief Financial Officer is in regular contact

with the investment community sharing details of the

Company‘s performance and strategy. Following key

announcements, the anonymised views of shareholders

are reported to the Board by UBS and Investec, the

Company’s retained brokers, and press and analyst

feedback is provided by Hudson Sandler, the Company’s

financial communications consultants.

Following two years of virtual AGMs due to pandemic

restrictions, we were pleased to be able to welcome our

shareholders to attend the 2022 AGM in person. The AGM is

generally attended by around 60 to 70 private shareholders

and all Board Directors were in attendance along with

members of the Operating Board.

Shareholders were able to meet Directors and Operating

Board members during the refreshment breaks held before

and after the meeting, as well as being invited to ask

questions during the meeting itself. The Directors appreciate

the opportunity to hear from private shareholders about

their views on Company performance. Our Head of

Sustainability was also in attendance to share key

progress made in The Greggs Pledge.

On this occasion, the Board welcomed two individuals who

raised concerns about the remuneration and treatment of

workers within the business of our partner for online food

order and delivery. They were given the opportunity to put

their concerns to the Board both formally during the meeting

and informally afterwards. As a result, the Board ensured

that those concerns were raised with its delivery partner.

In advance of the Board seeking approval of its remuneration

policy at the Annual General Meeting to be held in May 2023,

the Chair of the Remuneration Committee wrote to the top 12

shareholders on the register and other interested parties to

explain proposed changes to the policy and offered to meet

and explain the Committee’s reasoning. Several shareholders

and proxy agencies responded offering support or seeking

further information ahead of casting their votes. Feedback

from that engagement was shared with the Remuneration

Committee and Board, and was used to shape how the policy

will be applied, assuming it is approved.

Other stakeholder considerations

Greggs is committed to acting fairly towards all stakeholders

of the Company. The impact of the Company’s operations on

the environment is covered in The Greggs Pledge report on

pages 32 to 34. Our business conduct policy is available on

our website.

Roisin Currie

Chief Executive

7 March 2023

BOARD OF DIRECTORS AND SECRETARY

MATT DAVIES

Chair

ROISIN CURRIE

Chief Executive

RICHARD HUTTON

Chief Financial Officer

MOHAMED ELSARKY

Non-Executive Director

KATE FERRY

Non-Executive Director

Matt is a widely experienced retailer

and was previously the CEO of Tesco

UK&ROI, before which he held CEO

positions at Pets at Home and

Halfords. As a Non-Executive

Director, Matt chaired N Brown Group

plc and was on the Board of Dunelm

Group plc.

Roisin was appointed Chief

Executive following the AGM held on

17 May 2022, having been appointed

to the Board on 1 February 2022

from the role of Retail and Property

Director. Prior to joining Greggs in

2010, Roisin worked at Asda where

she held People Director roles

responsible for the organisation’s

retail and distribution operations.

Richard qualified as a Chartered

Accountant with KPMG and gained

career experience with Procter

and Gamble before joining Greggs

in 1998.

Mohamed is an experienced

international food manufacturing

executive, who has held senior

positions in Kellogg, Danone and

Godiva Chocolatier and has

previously held Non-Executive

Director positions including at

Nomad Foods, a company listed on

the New York Stock Exchange.

Kate was appointed Chief Financial

Officer at McClaren Group in April 2021.

Prior to joining McClaren Group, Kate

was Chief Financial Officer of TalkTalk

Group and has previously held positions

on the Dixons Carphone plc Executive

Committee. Kate began her career in

audit with PricewaterhouseCoopers,

qualifying as an ACA before moving to

Merrill Lynch as a Director within the

retail sector equity research team,

where she spent the next ten years.

Appointed since

2 August 2022

Appointed since

1 February 2022

Appointed since

13 March 2006

Appointed since

21 June 2021

Appointed since

1 June 2019

Independent

Yes

Independent

n/a

Independent

n/a

Independent

Yes

Independent

Yes

Committee membership

Chair of Nominations Committee.

External appointments

Chair of Travel Counsellors and

Hobbycraft. Trustee of Barnardos.

Operating Partner Advent

International.

External appointments

Chair of the Employers Forum

For Reducing Re-offending.

External appointments

Non-Executive Director and Chair

of the Audit Committee of

The Lakes Distillery Company plc.

Trustee Director of Business

in the Community. Trustee

of Greggs Foundation.

Committee membership

Member of Audit, Remuneration and

Nominations Committees.

External appointments

Senior Adviser at Bain Partners

Committee membership

Chair of Audit Committee.

Member of Remuneration and

Nominations Committees.

External appointments

CFO McLaren Group. Chair of Audit

Committee – British Olympic

Committee Foundation.

As noted on page 66, Nigel Mills was appointed to the Board as a Non-Executive Director on 7 March 2023.

63Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

HELENA GANCZAKOWSKI

Non-Executive Director

SANDRA TURNER

Non-Executive Director

LYNNE WEEDALL

Non-Executive Director

JONATHAN JOWETT

Company Secretary and General Counsel

Helena worked for Unilever for 23 years and

held senior positions in brand management and

marketing, including UK Marketing Director and

ultimately Head of Global Agencies. Helena was

also previously a director of PAD, a leading

producer of sustainable cleaning brands.

Helena has a PhD in Engineering from the

University of Cambridge.

Sandra has been involved in the retail sector

throughout her career and was employed by

Tesco PLC, latterly as Commercial Director for

Tesco Ireland, from 1987 to 2009. Prior to this

she worked in sales and marketing roles for

Unilever and Wilkinson Sword. Sandra has

held a number of Non-Executive Directorships

in UK-listed companies, including McBride plc

and Countrywide PLC.

Lynne has been involved in the retail sector

throughout her career, latterly as Group People

and Culture Director for Selfridges Ltd. Prior to

joining Selfridges Ltd, Lynne was Group Director

of Human Resources at Dixons Carphone plc

(now Currys plc) and has previously held senior

positions in companies such as Whitbread plc

and Tesco plc.

Jonathan is a lawyer by profession and has held

the position of Company Secretary for a number

of FTSE 250 and FTSE Smallcap companies.

His previous employers include Avon Cosmetics

Limited, SSL International plc, Wagon plc and

Bakkavor Group.

Appointed since

2 January 2014

Appointed since

1 May 2014

Appointed since

17 May 2022

Appointed since

12 May 2010

Independent

Yes

Independent

Yes

Independent

Yes

Independent

n/a

Committee membership

Member of Audit, Remuneration and

Nominations Committees.

External appointments

Senior Independent Non-Executive Director

and Remuneration Committee Chair of Croda

International Plc. Owner and manager of a

consulting business working at a global level

with multi-national food businesses, helping

them to develop and implement strategies.

Committee membership

Senior Independent Non-Executive

Director and Non-Executive Director

having oversight of colleague engagement.

Member of Remuneration, Audit and

Nominations Committees.

External appointments

Non-Executive Director of Huhtämaki OYJ.

Committee membership

Chair of Remuneration Committee. Member

of Audit and Nominations Committees.

External appointments

Senior Independent Non-Executive Director and

Remuneration Committee Chair at Dr. Martens

plc and Senior Independent Non-Executive Director

and Remuneration & Nomination Committee

Chair at Softcat plc. Non-Executive Director of

Stagecoach. Member of The Prince’s Trust Council.

External appointments

Member of the British Retail Consortium Policy

Board. Senior Independent Non-Executive

Director of Newcastle Hospitals NHS

Foundation Trust. Chair of Trustees of the

Great North Air Ambulance Service.

The Nominations Committee uses a skills matrix

as it assesses the requirements for new recruits.

This is shown below, with incumbents’ attributes:

Matt Davies Mohamed Elsarky Kate Ferry Helena Ganczakowski Sandra Turner Roisin Currie Richard Hutton Lynne Weedall

UK PLC Executive Director experience

● ● ● ● ●

UK PLC Non-Executive Director

outside Greggs

● ● ● ● ●

Finance/banking

● ● ● ●

Mergers and acquisitions

● ● ● ●

HR and Remuneration Committee experience

● ● ● ● ● ● ●

Food manufacturing experience

● ● ●

Food retailing experience

● ● ● ● ● ●

Food safety, Health and safety

● ● ● ●

International experience

● ● ● ● ●

Broader consumer sector experience

● ● ● ● ● ● ● ●

Marketing expertise

● ● ● ●

Digital expertise

● ● ●

Gender diversity

● ● ● ● ●

Ethnicity diversity

●

Corporate governance

● ● ● ● ● ● ●

BOARD OF DIRECTORS AND SECRETARY CONTINUED

65Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

GOVERNANCE REPORT – CHAIR’S INTRODUCTION

the Chair of the Remuneration Committee in anticipation

of Helena Ganczakowski’s stepping down from the Board

following the 2023 AGM.

As noted below, we have recruited Nigel Mills as Senior

Independent Director to replace Sandra Turner, who will also

step down from the Board after the AGM. I have placed on

record the Board’s thanks for their nine years on the Board

overseeing significant change and growth. The Nominations

Committee also oversaw my recruitment, which is reported

on in more detail on page 67, and on behalf of the Company

I thank Ian Durant for ensuring such a smooth hand over, and

for his leadership of the Board since 2013.

The Board has largely met in person during the year, save

for two shorter meetings which were held virtually. In

September we met with senior managers from the retail

team and visited our own and competitor shops, talking with

colleagues and customers about their Greggs experience.

We also visited the Birmingham distribution centre and

spoke with colleagues who are working so hard to deliver

quality products to our customers. More details of how we

engage with stakeholders are set out on pages 54 to 61.

The Greggs Pledge and sustainability

The Greggs Pledge is a topic of regular focus, and the

Board receives frequent updates on progress against those

commitments, and on the wider sustainability agenda. More

details of our activities are set out on pages 32 to 34, and in

our separate sustainability report, The Greggs Pledge, which

can be found on the corporate website. The team have

produced a much-extended report of our approach to and

compliance with the Task Force on Climate-related Financial

Disclosures, which can be found on pages 35 to 41. There are

a couple of areas that we continue to work on to achieve full

compliance, but we are very pleased with the progress so far.

We have set near-term science-based emissions reduction

targets which have been approved by the Science Based

Targets initiative, and again further details can be found on

page 35.

Governance and reporting

I am aware that Greggs has a good record of governance,

ensuring that it has the right processes in place to support

the business as we continue to deliver our growth plans as

were highlighted by management in October 2021. However,

there were two areas from the UK Corporate Governance

Code (2018) (‘the Governance Code’) where the Company

did not comply during the year. Those are in respect of

Provision 19, as my predecessor remained on the Board

for ten years and 11 months as he oversaw Chief Executive

succession delayed by the pandemic, and Provision 38,

where our Chief Financial Officer's pension contribution

was being aligned with that of the majority of the workforce

over time, but has since been brought into line. Otherwise

we were compliant with the Governance Code during 2022,

and I invite you to consider that alongside the report on how

the Directors have fulfilled their duties in accordance with

s172 Companies Act 2006.

I look forward to welcoming shareholders to our AGM which

will be held in Newcastle on 17 May 2023.

Matt Davies

Chair

7 March 2023

CHAIR'S INTRODUCTION

Dear Shareholder

Welcome to my introduction to the governance section

of the Greggs annual report, following my appointment

as Chair on 1 November 2022.

I am delighted to have been asked to Chair the Board of

Greggs, a company I have long admired. I have spent my

first few months since I was appointed as a Non-Executive

Director visiting our operations and meeting colleagues

across the business.

Culture and purpose

At Greggs, our purpose is to provide our customers with

great tasting, freshly prepared food at affordable prices.

Our colleagues are what makes our business successful.

We are focused on providing them with a great place to work,

where they feel valued and have the opportunity to fulfil their

potential. Our values are at the core of how we operate, and

the Board experiences those values whenever it meets with

colleagues across the breadth of our operations.

Our people

We remain focused on improving our diversity and inclusion

across the business. Earlier in the year, we achieved

accreditation to the National Equality Standard, and we

now have a number of working groups where colleagues

have the opportunity to consider ways that we can improve

their experience as a colleague at Greggs.

Board composition and operations

It has been another very busy year for the Nominations

Committee, first identifying and recommending Lynne

Weedall to the Board. Lynne is a highly experienced

executive and Non-Executive Director, and has assumed

GOVERNANCE REPORT CONTINUED

This Governance Report sets out how the Company

has applied the principles in the 2018 UK Corporate

Governance Code during its financial period ended

31 December 2022. A copy of the Code is available at

https://www.frc.org.uk/directors/corporate-

governance/uk-corporate-governance-code

Board composition, succession and evaluation

The Board has seen several changes in the year. Roisin Currie

joined the Board as CEO Designate on 1 February 2022, and

became Chief Executive following her election to the Board

by shareholders immediately following the close of the

AGM on 17 May, as Roger Whiteside retired from the Board.

On the same date, Lynne Weedall joined the Board as

an independent Non-Executive Director, and will offer

herself for election by shareholders at the 2023 AGM.

Lynne became Chair of the Remuneration Committee in

September 2022, taking over from Helena Ganczakowski

ahead of an informal consultation with certain institutional

investors and proxy advisers in advance of the renewal of

our remuneration policy due to be tabled at the AGM in 2023.

Ian Durant stepped down as a Director and Chair on

31 October 2022, having been a Non-Executive Director since

October 2011 and Chair since May 2013. Ian had been invited

to extend his tenure on the Board beyond the nine years

anticipated by Provision 19 of the Governance Code, in order

to oversee the Chief Executive succession plan which had

been delayed as a result of the pandemic. In that respect,

the Company did not comply with the Governance Code,

but despite this Ian had been re-elected by shareholders

at the AGM in May 2022 with over 95% of those who voted

supporting his re-appointment. Our new Chair, Matt Davies,

will step down from the Board and offer himself for election

by shareholders at the AGM in May 2023.

As part of the appointment of any new Non-Executive

Director, a number of engagements with colleagues are set

up to familiarise the appointee with all operations, including

those in shops, at production and distribution sites, and at

Greggs House. As Roisin Currie had not previously held a

directorship of a public company, her induction included

reference to the roles and responsibilities of being a

company director of a listed company.

Once a new Non-Executive Director has been on the Board

for around six months, they are asked to present to the Board

their ‘first impressions’. This provides feedback on strategy,

processes and procedures including the induction process,

and a view on key strategic priorities for the future. This

facilitates further debate and discussion around the Board

table, with agreed areas for attention in the coming months.

In particular it helps identify areas within the induction

process where greater or lesser focus may be appropriate.

As their nine-year terms have or will have expired by the

time of the AGM in 2023, both Sandra Turner and Helena

Ganczakowski will leave the Board following the close

of that meeting. Helena relinquished the role of Chair of the

Remuneration Committee in September 2022 following the

appointment of Lynne Weedall. As announced on 7 March

2023,the Board has appointed Nigel Mills as an independent

Non-Executive Director. Following his election to the

Board by shareholders, Nigel will assume the role of Senior

Independent Director when Sandra Turner steps down from

the Board at the close of the AGM on 17 May 2023.

Nigel had a distinguished executive career having been

Chief Executive at Hoare Govett and Chair of Corporate

Broking at Citi Group, advising a wide range of companies

including a significant number within the Consumer sector.

He currently holds the Senior Independent Director role at

both John Wood Group PLC and at Persimmon plc, where

he was also acting Chair during 2018.

The Nominations Committee is also currently in the process

of recruiting an additional independent Non-Executive Director.

Sharing Board responsibility

There is a clear written statement of the division of

responsibilities between the Chair and the Chief Executive,

and the Chair is considered by all of the Directors to have been

independent on his appointment, and continues to be so.

There is a written statement of the responsibilities of

the Senior Independent Director, duly approved by the

Nominations Committee and the Board. Sandra Turner

was Senior Independent Director throughout the year,

and met with the other Non-Executive Directors on at

least one occasion in the absence of the Chair. Sandra

also chaired the Nominations Committee as it set about

the search for a new Board Chair, ultimately leading to the

Committee recommending to the Board the appointment

of Matt Davies, initially as an independent Non-Executive

Director and Chair Designate.

During the year, Ian Durant continued his adopted practice

of holding regular and informal conversations with the

Non-Executive Directors, collectively and individually

ensuring that they had plenty of opportunity to raise any

concerns that they might have or to express opinions.

Ian also had regular sessions with the Executive Directors

and members of the Operating Board. Matt Davies is now

developing his own style of leadership and interaction

with Board members and senior management.

67Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

The Board has three main Committees, being the Audit,

Remuneration and Nominations Committees, each chaired

by an independent Non-Executive Director. Terms of

reference for each of the Committees, which were last

reviewed by the Board and re-adopted by the respective

Committee in November 2022, can be found on the

corporate website. Details of the work of those Committees

can be found on pages 72 to 77 (Audit Committee report),

78 to 100 (Directors’ remuneration report), and 67 to 68

(Nominations Committee update).

The Board generally schedules six formal meetings in each

year, and then meets from time to time as may be required.

Board and Committee meetings are well attended, and

attendance is set out in the following table:

Attendance Board

Audit

Committee

Remuneration

Committee

Nominations

Committee

Current Directors

Matt Davies

2/2 1/1 2/2

Roisin Currie

6/6

Richard Hutton 8/8

Mohamed Elsarky 8/8 4/4 4/4 6/6

Kate Ferry 8/8 4/4 4/4 6/6

Helena Ganczakowski 8/8 4/4 4/4 6/6

Sandra Turner 8/8 4/4 4/4 6/6

Lynne Weedall

4/4 2/2 3/3 3/3

Retired Directors

Ian Durant

6/6 5/5

Roger Whiteside

4/4

1 Matt Davis joined 1 August 2022

2 Roisin Currie appointed 1 February 2022

3 Lynne Weedall appointed 17 May 2022

4 Ian Durant retired 31 October 2022

5 Roger Whiteside retired as a Director 17 May 2022

Nominations Committee update

The Nominations Committee is chaired by the Board Chair

and has written terms of reference that are reviewed

each year and approved by the Board and adopted by the

Committee. Those terms of reference, which are available

on the Company’s corporate website, set out the

responsibilities of the Committee. All of the Non-Executive

Directors are members of the Committee, in line with the

Board’s current policy of having all Non-Executive Directors

appointed to each of the three main Committees. The Chief

Executive is a regular attendee at Nominations Committee

meetings, and from time to time the Chief Financial Officer

and the People Director are also invited.

The Committee’s primary responsibility is to ensure plans are

in place for orderly succession to the Board, and also to the

Operating Board when that is not reviewed by the Board as a

whole. During 2022, the Board received a presentation from

the Chief Executive and from the People Director on the

succession plan for the Operating Board Directors, to include

a review of potential candidates and their proximity to being

ready to take up an appointment as and when appropriate.

During the year, there were two appointments to the

Operating Board, both of which were internal promotions.

During 2022, the Committee’s primary task was to oversee

the recruitment of a Chair to replace Ian Durant, who was

to step down from the Board having overseen the Chief

Executive succession. In this respect, Sandra Turner led

the Committee, supported by Heidrick and Struggles (H&S),

the Committee’s retained adviser (who have no connection

with the Company or any individual Director). The key stages

of that process included:

– H&S conducting one-to-one confidential interviews with

all Board Directors on the key criteria (skills, experiences

and personal characteristics) required for the new Chair

including interviews with the outgoing Board Directors.

– Board Directors participated in the H&S Success Profile

Builder, an online, mobile-enabled survey to ensure

alignment on the strategic context and collective

priorities amongst Board members.

– A role specification for the new Chair was prepared

for and approved by the Board.

– H&S conducted a market mapping exercise to identify

Chair candidates who met the agreed selection criteria

and then began initial informal referencing of candidates

approved by the Nominations Committee.

– Interested Chair candidates were introduced to Sandra

Turner and Helena Ganczakowski for an initial meeting,

supported by confidential candidate reports.

– Chair candidates met with Roisin Currie ahead

of the Committee agreeing on preferred candidates

to take forward.

– Preferred candidates met remaining Non-Executive

Directors and the Chief Financial Officer.

– Preferred Chair candidates met with Ian Durant for

information gathering purposes and due diligence.

The process lasted some five months, with the Nominations

Committee meeting during July 2022 and the Board decision

on the appointment being made on 1 August.

In the meantime, the Nominations Committee, led by Board

Chair, Ian Durant, had also undertaken a process to appoint

a new Non-Executive Director with experience of chairing

Remuneration Committees, with a view to replacing Helena

Ganczakowski as Chair of the Remuneration Committee

given that Helena’s nine-year term as a Director was due to

expire in January 2023. The Committee was again supported

by H&S, and on 27 April 2022 the Board announced that

Lynne Weedall had been appointed with effect from the

close of the AGM on 17 May 2022. Lynne will step down as

a Director at the AGM in 2023, and will offer herself for

election by shareholders.

GOVERNANCE REPORT CONTINUED

In selecting new Non-Executive Directors the Nominations

Committee uses a skills matrix (as shown on page 64) to

assess the necessary and preferred attributes in potential

candidates, and for the exercise undertaken in 2022, the

assessment was reviewed by H&S and used to develop the

role specification. The Nominations Committee also takes

into account other demands on the potential candidates'

time and asks them to confirm they will be able to commit the

necessary time to Greggs, with that commitment ultimately

being included in the Letter of Appointment.

The Nominations Committee has considered the

contribution of each of the Directors, and has confirmed

to the Board its recommendation that all Non-Executive

Directors including the Chair should be appointed or

re-appointed at the AGM in May 2023.

Board evaluation and activity

As required by the Governance Code, the Board undertakes

an annual evaluation of its activities and effectiveness and

those of its Committees. An externally facilitated evaluation

was undertaken in 2021, supported by Grant Thornton, and

therefore in December 2022, under the leadership of new

Board Chair Matt Davies, it was agreed that an internal

assessment be undertaken, using the Board Clic online tool.

This generated a report for the Board and each of its

Committees, and also a comparison with scores from the

previous year when the tool had also been used to support

Grant Thornton’s review. The Company Secretary produced a

summary of key themes arising from the reports, and having

discussed those themes and the reports, a series of actions

were agreed as part of the Board’s objectives for 2023.

In addition the Non-Executive Directors meet without the

Chair present to appraise the performance of the Chair. The

Non-Executive Directors met during 2022 to appraise the

performance of Ian Durant during 2021. Given the change of

Chair announced in the summer of 2022 which was effected

on 1 November 2022, the Senior Independent Director and

the remaining Non-Executive Directors did not consider an

appraisal of either the outgoing or incoming Chair's

performance appropriate.

The Board made a number of key decisions across the year

including the significant appointments of a new Chief

Executive and Chair, and plans for significant supply chain

investment as had been envisaged at the Capital Markets Day

held in October 2021. Other matters considered across the

year included:

January Appointment of CEO Designate; budget for 2023; risk

review; governance report for the annual report; and

Board evaluation.

March Preliminary results and annual report; the

partnership with Primark; the commencement of a

review of the potential for expansion beyond the UK;

an investor relations strategy; and resource

requirements.

May Supply chain development; a review by joint broker

Investec; and AGM preparation including

consideration of proxy adviser reports and voting.

June The annual strategy meeting where topics included

customer and market insight, the customer and

workforce of the future; and a deep dive into

sustainability and climate change.

July Interim results; business plan 2022 progress

updates; and the appointment of a Chair Designate.

September A visit to a number of our shops in Birmingham and a

visit to the Birmingham distribution centre; a review

of stakeholder engagement; a market update and

presentation from UBS as joint broker; a review of

Operating Board succession; and an update on

supply chain development plans.

November A presentation on the outcomes of the annual

employee opinion survey; a review of food safety and

health and safety; and a presentation from the new

Chair of the Greggs Foundation on its recent activity.

Diversity and inclusion (D&I)

The Board as a whole, rather than the Nominations

Committee, monitors the gender balance in the Company.

67% of our employees are women, with female workers

largely within retail shops. There is a strong representation

of women at the most senior level. Of the seven Non-

Executive Directors (including the Chair) four are female.

Greggs is one of 18 FTSE 350 companies to be led by a female

Chief Executive. At Operating Board level, including the two

Executive Directors, four out of 11 are women and

approximately 46% of roles reporting into an Operating

Board Director are held by women. Further information on

our statutory gender reporting can be found on page 42.

In 2021, we set out our intention to pursue the National

Equality Standard which we successfully achieved in Q2 2022.

Key to our success is having leaders who advocate for D&I,

supporting people throughout their employment journey and

having strategies in place to drive change. During 2022 we

established a D&I steering group, with cross functional

representation at senior management level.

Our colleague networks continue to develop, supported

by their Operating Board sponsors.

Our LGBTQ+ colleague network worked on recommendations

for optional pronouns to be included on name badges.

Our Ethnicity network supported the development and

delivery of a Zero Tolerance campaign focusing on customer

attitude towards colleagues and our Disability network

provided invaluable insight and feedback to develop our

Neurodiversity Guides covering ADHD, Autism, Dyslexia

and Dyspraxia. We continue to listen to and learn from our

networks to understand how we can improve the way we

do things at Greggs and how we can be more inclusive of

colleagues from minority groups.

69Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

A more comprehensive outline of our achievements can be

found in The Greggs Pledge report, available at corporate.

greggs.co.uk/responsibility/the-greggs-pledge.

As part of the DTR 7.2.8A disclosure, pages 32 and 33 are

incorporated by reference into this Directors’ report.

Other disclosures

Directors and their interests

The names of the Directors in office during the year, together

with their relevant interests in the share capital of the

Company at 1 January 2022 and 31 December 2022 are set

out in the Directors’ remuneration report on page 98. Details

of the Directors’ share options are set out in the Directors’

remuneration report on page 96.

Directors’ indemnities and conflicts

As at the date of this report, indemnities are in force under

which the Company has agreed to indemnify the Directors,

to the extent permitted by law, in respect of losses arising

out of, or in connection with, the execution of their duties,

powers or responsibilities as Directors of the Company.

The indemnities do not apply in situations where the relevant

Director has been guilty of fraud or wilful misconduct.

Under the authority granted to them in the Company’s

articles of association, the Board has considered carefully

any situation declared by any Director pursuant to which

they have or might have a conflict of interest and, where

it considers it appropriate to do so, has authorised the

continuation of that situation. At each Board meeting,

a Schedule of Potential Conflicts of Interest is reviewed

and Directors are asked to declare any new or changed

interests. In exercising their authority, the Directors

have had regard to their statutory and other duties to

the Company. All Directors have access to the Company

Secretary as and when required.

Substantial shareholdings

At 6 March 2023 the only notified holdings of substantial

voting rights in respect of the issued share capital of the

Company (which may have altered since the date of such

notification, without any requirement for the Company

to have been informed) were:

Shareholder

Number of

shares held

Percentage of

issued share

capital

Royal London Asset Management 6,117,002 5.99%

BlackRock, Inc. 5,185,999 5.08%

Schroders plc 5,121,967 5.02%

MFS Investment Management 5,049,548 4.95%

Aviva plc 4,065,885 3.98%

Additional information

– Future business developments: details of future business

developments can be found throughout the strategic

report on pages 1 to 61.

– Financial risk management: details of our financial risk

management policies and objectives can be found in Note

2 of the accounts.

– The information set out within the governance report in

pages 65 to 71 forms part of the Directors’ report.

– Greenhouse gas emissions: All disclosures concerning

the Group’s greenhouse gas emissions (as required to be

disclosed under the Companies Act 2006 (strategic report

and Directors’ report) Regulations 2013) are contained in

the TCFD report on pages 35 to 41.

– Dividends: details of the dividends declared

and paid are given in Note 22 of the accounts.

– Stakeholder engagement: details of the Group's

engagement with colleagues, suppliers, customers

and others are given on pages 54 to 61.

Non-financial reporting regulations

The information required by sections 414CA and 414CB of the

Companies Act 2006 is included within the strategic report

on pages 1 to 61 and the Directors’ report on pages 62 to 101.

Authority to purchase shares

At the AGM on 17 May 2022, the shareholders passed a

resolution authorising the purchase by the Company of

its own shares to a maximum of 10,100,000 ordinary shares

of two pence each.

That authority had not been used as at 31 December 2002.

The authority remains in force until the conclusion of the

AGM in 2023 or 16 August 2023, whichever is the earlier. It is

the Board’s intention to seek approval at the 2023 AGM for

the renewal of this authority.

Takeover directive information

Following the implementation of the European Directive on

Takeover Bids by certain provisions of the Companies Act

2006, the Company is required to disclose certain additional

information in the Directors’ report. This information is set

out below:

– The Company has one class of share in issue being

ordinary shares of 2 pence each. As at 7 March 2023, there

were 102,120,602 such ordinary shares in issue. There are

no shares in the Company that grant the holder special

rights with regard to the control of the Company;

– At general meetings of the Company, on a show of hands,

every shareholder present in person or by proxy has one

vote only and, in the case of a poll, every shareholder

present in person or by proxy has one vote for every share

in the capital of the Company held;

– The Company’s articles of association set out the

circumstances in which shares may become

disenfranchised. No shareholder is entitled, unless the

Directors otherwise determine, in respect of any share

held to be present or vote at a general meeting either

personally or by proxy (or to exercise any other right in

relation to meetings of the Company) in respect of that

share in certain circumstances if any call or other sum

is payable and remains unpaid, if the shareholder is in

default in complying with a duly-served notice under

section 793(1) of the CA 2006 or if any shareholder has

failed to reply to a duly-served notice requiring them to

provide a written statement stating they are the beneficial

owner of the shares;

– A notice convening a general meeting can contain a

statement that a shareholder is not entitled to attend and

vote at a general meeting unless their name is entered

on the register of members of the Company at a specific

time (not more than 48 hours before the meeting) and

if a shareholder’s name is not so entered, they are, not

entitled to attend and vote;

– Under the Company’s articles of association the Directors

may, in their absolute discretion, refuse to register the

transfer of a share in certified form in certain circumstances

where the Company has a lien on the share (provided that

the Directors do not exercise their discretion so as to

prevent dealings in partly paid shares from taking place

on an open and proper basis), where a shareholder has

failed to reply to a duly-served notice under section 793(1)

CA 2006 or if a transfer of a share is in favour of more than

four persons jointly. In addition, the Directors may decline

to recognise any instrument of transfer unless it is in

respect of only one class of share and is deposited at the

address at which the register of members of the Company

is held (or at such other place as the Directors may

determine) accompanied by the relevant share certificate(s)

and such other evidence as the Directors may reasonably

require to show the right of the transferor to make the

transfer. In respect of shares held in uncertificated form

the Directors may only refuse to register transfers in

accordance with the Uncertificated Securities Regulations

2001 (as amended from time to time);

– Under the Company’s code on dealings in securities

in the Company, persons discharging managerial

responsibilities and some other senior executives may

in certain circumstances be restricted as to when they

can transfer shares in the Company;

– There are no agreements between shareholders known

to the Company which may result in restrictions on the

transfer of shares or on voting rights;

– Where, under an employee share plan operated by the

Company, participants are the beneficial owners of

shares but not the registered owner, the voting rights

are normally exercised by the registered owner at the

direction of the participant;

– The Company’s articles of association may only be

amended by special resolution at a general meeting

of the shareholders;

– The Company’s articles of association set out how

Directors are appointed and replaced. Directors can be

appointed by the Board or by the shareholders in a general

meeting. At each AGM, any Director appointed by the

Board since the last AGM must retire from office but is

eligible for election by the shareholders. Furthermore,

the Board has resolved that, in line with the Corporate

Governance Code (2018 revision), all the Directors will be

subject to annual re-election by shareholders. Under the

CA 2006 and the Company’s articles of association, a

Director can be removed from office by the shareholders

in a general meeting;

– The Company’s articles of association set out the powers

of the Directors. The business of the Company is to be

managed by the Directors who may exercise all the

powers of the Company and do on behalf of the Company

all such acts as may be exercised and done by the

Company and are not by any relevant statutes or the

Company’s articles of association required to be

exercised or done by the Company in general meeting,

subject to the provisions of any relevant statutes and the

Company’s articles of association and to such regulations

as may be prescribed by the Company by special resolution;

– Under the CA 2006 and the Company’s articles of

association, the Directors’ powers include the power to

allot and buy back shares in the Company. At each AGM

resolutions are proposed granting and setting limits on

these powers;

– The Company is not party to any significant agreements

which take effect, alter or terminate upon a change in

control of the Company, following a takeover bid; and

– There are no agreements between the Company and its

Directors or employees providing for compensation for

loss of office or employment (whether through

resignation, purported redundancy or otherwise) that

occurs because of a takeover bid. However, provisions

in the employee share plans operated by the Company

may allow options to be exercised on a takeover.

Significant relationships

The Group does not have any contractual or other

relationships with any single party which are essential to the

business of the Group and, therefore, no such relationships

have been disclosed.

Colleagues

What makes Greggs so special is its culture – the way our

people behave and support each other. We want everyone to

feel welcome at Greggs and our colleagues to be able to be

themselves at work, whatever their background, preferences

or views. Where colleagues or prospective colleagues have

a disability then discussions will be had with individuals to

review any adjustments required and every effort will be

made to support them. Greggs is committed to creating

a work environment free of discrimination, bullying,

harassment and victimisation, where everyone is treated

equally with dignity and respect. This applies in all aspects

of employment including, recruitment and selection,

promotion, transfer, training or other developmental

opportunities, pay and benefits, other terms of employment,

discipline and selection for redundancy. Our colleague

networks, covering LGBTQ+, ethnicity and disability provide

valuable insight and feedback and help us to develop training

for our colleagues and understand how we can improve the

way we do things at Greggs. Details on the contribution of our

networks can be found on page 68.

GOVERNANCE REPORT CONTINUED

71Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Accountability, audit and going concern

The Board acknowledges its responsibility to present a fair,

balanced and understandable assessment of the Company’s

position and prospects. In order to assist the Board to

comply with the requirements within the Corporate

Governance Code, each year the Audit Committee is

requested to undertake an assessment of the annual report

and to make a recommendation to the Board. This request

has been enshrined within the Audit Committee’s terms of

reference, which are available at corporate.greggs.co.uk.

The actions undertaken by the Audit Committee

in confirming its advice to the Board included the

consideration of a detailed review that has been

undertaken by the Head of Business Assurance and

reviewing the annual report as a whole to confirm that it

presents a fair, balanced and understandable assessment.

In considering the advice of the Audit Committee, and

having reviewed the annual report including the contents

of the strategic report on pages 1 to 61, together with the

statutory accounts themselves, the Board duly considers

the annual report and accounts, taken as a whole, is fair,

balanced and understandable, and provides the necessary

information for shareholders to assess the Company’s

performance, business model and strategy.

A statement of Directors’ responsibilities in respect of the

preparation of accounts is given on page 101. A statement of

auditor’s responsibilities is given in the report of the auditor

on page 106.

After making enquiries, the Directors have a reasonable

expectation that the Group has adequate resources to

continue in operational existence for the foreseeable future.

For this reason, they continue to adopt the going concern

basis in preparing the accounts (see basis of preparation

on page 114). The Board’s viability statement made in

accordance with Corporate Governance Code Provision 31

can be found on page 53.

Policies

Freedom of association

At Greggs, we recognise the right of all employees to

freedom of association and collective bargaining. Whilst we

do not have a formal Freedom of Association policy, the

Company encourages all its employees in supply sites, shops

and offices to become, and remain, members of a union.

Bribery and corruption

Greggs has an Anti-Bribery and Corruption policy which

applies to all employees and prohibits the offering, giving,

seeking or acceptance of any bribe in any form to any person

or company by acting on its behalf, in order to gain an

advantage in an unethical way.

Business conduct

We have a specific policy that sets out the standards of

ethical behaviour that are expected of all employees. Graded

managers, and all members of the procurement department,

are required to make an annual confirmation

of their compliance with the policy.

Whistle-blowing

Our ‘whistle-blowing’ policy creates an environment

where employees are able to raise concerns without fear of

disciplinary action being taken against them as a result of any

disclosure. Any matters raised are treated in confidence and an

independent review will be undertaken where it is appropriate.

The Chair of the Audit Committee is the designated first point

of contact for any concerns which cannot be addressed

through normal management processes.

Political donations

Greggs has a clear policy forbidding political donations

or contributions. This includes financial and in-kind

contributions made by the Company.

Disclosure of information to the auditor

Each of the Directors who held office at the date of approval

of this Directors’ report confirms that, so far as they are

individually aware there is no relevant audit information

of which the Company’s auditor is unaware and that they

have taken all the steps that they ought to have taken as a

Director to make themselves aware of any relevant audit

information and to establish that the Company’s auditor

is aware of that information.

By order of the Board

Jonathan D Jowett

Company Secretary

7 March 2023

Greggs plc (CRN 502851)

Greggs House, Quorum Business Park

Newcastle upon Tyne NE12 8BU

AUDIT COMMITTEE REPORT

Introduction

Dear Shareholder

As Chair of the Audit Committee, I am pleased to present

the Committee’s report for the 52 weeks ended

31 December 2022.

The Committee plays an important part in the governance

of the Company with its principal activities focused on the

integrity of financial reporting, quality and effectiveness of

internal and external audit, risk management and the system

of internal control.

In this report, I aim to share some of the Committee’s

discussions from the year, providing insight regarding the

role of the Committee, the main matters considered by it

during the year and the conclusions drawn. The Committee

meets formally at key times within the reporting calendar

and the agendas for its meetings are designed to cover all

significant areas of risk over the course of the year and

to provide oversight and challenge to the key financial

judgements, controls and processes that operate within

the Company.

During 2022 the Committee has:

– Reviewed the performance of RSM as external auditor

following their first full audit cycle.

– Overseen the development of our TCFD reporting

following our first such report in 2021. The TCFD report

is set out on pages 35 to 41.

– Maintained an awareness of cyber security, and reviewed

the processes and controls in place across the business.

– Overseen the continuing rollout of our new Enterprise

Risk Management (ERM) framework, which was

implemented in 2021, ensuring that our approach

remains robust and fit for purpose.

The Committee continues to keep its activities under review

in the light of the Government’s audit and governance reform

agenda. The Committee has received regular updates

following the publication of the draft Audit Reform Bill during

2022 and ahead of the introduction of the Audit, Reporting

and Governance Authority (ARGA) and it is ready to respond

to anticipated regulatory changes.

During 2023 the Committee will oversee a risk evolution

project, reviewing and refreshing our approach to risk and

insurance. This will ensure that we have the appropriate risk

financing strategy in place as the business continues to grow.

The Committee will be involved in redefining the Company’s

risk appetite, which is a key early step in the process.

Within the scope of our ongoing review of the approach to

risk management, the Committee will be supporting a review

and refresh of the Risk Committee’s terms of reference.

The Committee will also monitor progress with the

development of business continuity planning across the

business. This project is being undertaken to strengthen

and formalise existing arrangements and improve

business resilience.

AUDIT COMMITTEE REPORT

Overall, I am satisfied that the activities of the Committee

enable it to gain a good understanding of the key matters

impacting the Company during the year along with oversight

of the governance and operation of its key controls, and

ultimately to draw the conclusions set out in the following

report. I will be available at the AGM to answer any questions

about our work.

Kate Ferry

Chair of the Audit Committee

7 March 2023

73Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Composition

The Audit Committee is comprised of the following:

Kate Ferry (Chair)

Helena Ganczakowski

Sandra Turner

Mohamed Elsarky

Lynne Weedall (from 17 May 2022)

It is the practice of the Company for all independent Non-Executive Directors to serve as

members of the Audit Committee.

Training is provided for any new members of the Audit Committee by way of a thorough

induction process which includes access to the external auditor, the Head of Business

Assurance and relevant members of management.

The Committee provides independent and robust challenge to management and our internal

and external auditors, ensures there are effective and high-quality controls in place and

appropriate judgements are taken, with a particular focus on matters that involve either

a high degree of judgement and/or are significant to the accounts.

The Directors’ biographies on pages 62 to 64 detail the Committee members’ previous

experience and demonstrate that they have experience individually in a range of disciplines

relevant to Greggs’ business. The Board considers that Kate Ferry has recent and relevant

financial experience.

Role and responsibilities

The terms of reference of the Committee can be accessed at: http://corporate.greggs.co.uk/

investors/corporate-governance/company-documents.

The key responsibilities of the Audit Committee are:

– Ensuring that the accounting and financial policies and practices of the Company are

proper and effective;

– Assisting the Board in fulfilling its oversight responsibilities by monitoring the integrity of

the accounts and information published by the Company and reviewing and challenging

significant financial judgements contained in them;

– Advising the Board on whether it believes the annual report and accounts, taken as a whole,

is fair, balanced and understandable and provides the information necessary for

shareholders to assess the Company’s position and performance, business model

and strategy;

– Reviewing the internal financial controls and the Group’s approach to risk management;

– Overseeing whistle-blowing arrangements;

– Monitoring compliance with the Listing Rules and the recommendations of the UK

Corporate Governance Code;

– Overseeing the Company’s internal auditors and reviewing the effectiveness and

objectivity of the audit process;

– Overseeing the Company’s external auditors, reviewing their independence and objectivity

and monitoring the effectiveness of the audit process;

– Developing and implementing policy on the external auditor’s provision of non-audit

services; and

– Reporting to the Board on how it has discharged its responsibilities.

Meetings during the year

The Audit Committee met four times during the year. Details of Committee members’

attendance are given on page 67. All members attended every meeting they were eligible

to attend. Detailed papers are prepared and circulated in advance of Committee meetings

by both management (including internal audit) and the external auditor, thereby allowing

informed discussions, challenge and decision making to take place at meetings.

The Committee normally invites the Company Chair, the Executive Directors, the Head of

Business Assurance and the external auditor to attend its meetings. Time is set aside

bi-annually for discussion with the external auditor and with the Head of Business Assurance,

in each case in the absence of all Executive Directors. The Committee also has access to the

Company’s management team and to its auditor and can seek further professional advice, at

the Company’s cost, if required. The Chair has regular contact with the Chief Financial Officer,

and internal and external auditors, in addition to scheduled Committee meetings to ensure

that emerging issues are addressed. She also has access to an audit partner independent of

the partner responsible for the audit.

Financial reporting

In 2022 the Audit Committee reviewed the 2021 annual report, interim results, preliminary

results announcement and reports from the external auditor on the outcome of their reviews

and audits.

During the year, and up to the date of this report, the Committee considered key accounting

issues and judgements and related disclosures in the Group’s accounts. The significant areas

of judgement considered by the Committee in relation to the accounts for the 52 weeks ended

31 December 2022 are as follows:

Area of focus Action taken

Accounting for leases

Under IFRS 16 lease liabilities, representing the obligation to make lease payments, are recognised

on the balance sheet together with corresponding right-of-use assets. In the income statement

rent costs are replaced by a straight-line depreciation charge on each right-of-use asset

and an interest charge that reduces over the lease term.

At the end of 2022 the Group has recognised right-of-use assets of £281.6 million

(2021: £263.6 million) and lease liabilities totalling £301.3 million (2021: £283.2 million).

Charges to the income statement of £52.8 million (2021: £48.7 million) in respect of

depreciation and £6.8 million (2021: £6.3 million) in respect of interest were recognised.

The sensitivities of the assumptions on this amount are set out on page 116.

The Committee continues to review and monitor developments in this area to ensure that judgements made

are up to date and remain valid and that the approach adopted is still appropriate to the Group’s circumstances.

The Committee considers that the judgements made are appropriate to the Group’s particular circumstances.

Fair, balanced and understandable

The Committee is responsible for advising the Board on whether it believes the annual report and

accounts, taken as a whole, is fair, balanced and understandable.

The Committee received a report from the Head of Business Assurance who is not involved in the

preparation of the annual report and accounts and who conducted an independent review of it.

The following factors were considered during the course of this review:

– Ensuring that all the statements are consistent with one another;

– Verifying that figures in the narrative sections are consistent with the relevant financial detail;

– Identifying any duplication of information;

– Confirming that ‘bad news’ is included, as well as ‘good news’; and

– Highlighting any inappropriate use of technical language or jargon.

The Audit Committee considered the feedback from this report alongside its own review of the

annual report and accounts when making its recommendation to the Board regarding fair, balanced

and understandable.

Going concern

The accounts continue to be prepared on a going concern basis.

Information provided by the Chief Financial Officer regarding future financial plans, risks and liquidity

was presented to the Committee to enable it to determine whether the going concern basis of

accounting remained appropriate.

The Committee reviewed and challenged the assumptions used and concluded that the Board is able

to make the going concern statement on page 71 of the Directors’ report.

Viability

The Board is required to consider the period over which it is able to conclude that the Company will

remain viable, having taken into account severe but plausible risks and risk combinations.

The Committee reviewed the process undertaken by management to support and allow the Directors to

assess the Group’s long-term prospects and make its viability statement. The Committee considered

and provided input into the determination of which of the Group’s principal risks and combinations

thereof might have an impact on the Group’s liquidity and solvency.

The Committee reviewed the results of management’s scenario modelling and the stress testing of

these models. The Committee reviewed and challenged the assumptions used and concluded that the

Board is able to make the viability statement on page 53 of the strategic report.

AUDIT COMMITTEE REPORT CONTINUED

75Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Last year the following issues were separately disclosed as key areas of judgement in the

Audit Committee report but are no longer considered to merit separate disclosure:

– The impairment of property, plant and equipment and right-of-use assets. Following

the recovery from the pandemic and associated improvement in trading performance,

management no longer considers there to be a global indicator of impairment and have

reverted to reviewing the estate for specific indicators of impairment.

– The valuation of defined benefit pension liabilities. In 2021 the Company agreed to a

schedule of contributions to the defined benefit pension scheme to address the actuarial

deficit at 6 April 2020. This introduced a need to consider the appropriate accounting and

whether a net pension surplus should be recognised. The conclusion reached in 2021 is not

expected to change from year to year.

The Committee also considered other key accounting issues and related disclosures in the

Group’s accounts as follows:

– Whether the principles and judgements applied when management assess property,

plant and equipment and right-of-use assets for impairment remain appropriate;

– Whether the assumptions made in valuing the defined benefit pension scheme liabilities

remain appropriate, including consideration of the discount rate, inflation rates and

mortality rates as well as the requirements of IFRIC 14: IAS 19 – The Limit on a Defined

Benefit Asset, Minimum Funding Requirements and their Interaction;

– Whether there were any material items of income or expense in the year together

with the Financial Reporting Council's (FRC's) guidance on the subject;

– Whether any changes in accounting policy were required following changes

in the business or in legislation;

– Whether the Company’s tax policy remains appropriate;

– The impact of changes in accounting standards and their relevance, if any,

to the Company; and

– Reports from the Company Secretary and Chief Financial Officer which

assess the Company’s compliance with the Listing Rules.

External audit

Assessing external audit effectiveness

The Audit Committee discussed and agreed the scope of the audit with the external auditor

and agreed their fees in respect of the audit.

The Committee reviewed the effectiveness of the external audit in line with the FRC's

‘Practice aid for audit committees’ (December 2019). It sought feedback from senior

management, by way of a detailed questionnaire, in respect of the effectiveness

of the audit process.

The Committee also considered the effectiveness of the audit through the reporting from and

communications with the auditor and an assessment of the auditor’s approach to key areas of

judgement and any errors identified during the course of the audit.

The Committee concluded that the audit was effective and that the relationship and

effectiveness of the external auditor be kept under review.

Appointing the auditor and safeguards on non-audit services

The Committee’s policy on auditor appointment is to consider annually whether to conduct an

audit tender for audit quality or independence reasons. During 2020 the Audit Committee

conducted a full tender exercise for the appointment of a new auditor which resulted in the

appointment of RSM UK Audit LLP (RSM) as auditor at the AGM in May 2021.

It is the responsibility of the Committee to monitor the independence and objectivity of the

external auditor (including the impact of any non-audit work undertaken by it) and its suitability

for reappointment.

The Company has a formal policy to ensure that the provision of non-audit services by the

external auditor for non-audit work does not compromise the auditor’s independence or

objectivity. It monitors the level and type of non-audit fees on an annual basis and ensures that

the overall level of non-audit fees remains in line with current ethical guidance governing the

accounting profession.

The Audit Committee favours a presumption that non-audit work will be awarded to a firm

other than the audit firm unless there is a good reason to use the auditor. An annual base plan

for non-audit fees paid to the external auditor is agreed in advance by the Audit Committee.

Expenditure in accordance with this plan can then be committed without further referral to

the Audit Committee. Expenditure that is not included in the agreed plan is subject to strict

authority limits and is reviewed by the Committee.

All use of the external auditor for non-audit work must be reported to and approved by the

Committee. In circumstances where non-audit fees are significant relative to the audit fee

an explanation would be provided in the subsequent Audit Committee report. In addition,

the Audit Committee ensures that the external auditor has its own policies and is subject to

professional standards designed to safeguard their independence as auditor.

The Audit Committee has reviewed whether, and is satisfied that, the Company’s current

auditor, RSM, continues to be objective and independent of the Company. The Committee has

approved RSM to provide non-audit services during 2022 in respect of the review of turnover

certificates as required by certain shop landlords. Fees of £31,300 were billed during the year

for turnover certificate reviews, which represents 11.8% of the audit fee for the year.

Appointment of auditor

In accordance with Section 489 of the Companies Act 2006, a resolution for the reappointment

of RSM UK Audit LLP will be proposed at the forthcoming AGM. The length of their tenure as

external auditor is two years.

Risk management and internal control

Internal control

The Group has an internal control environment designed to protect the business from the

material risks which have been identified. Management is responsible for establishing and

maintaining adequate internal controls and the Audit Committee has responsibility for

ensuring the effectiveness of these controls. The Committee receives updates from the

Business Assurance function on the internal control environment at every meeting,

covering both risk management and internal audit perspectives. This regular reporting

ensures timely review of any key issues. Whilst the Committee is updated on all internal

audit activity, those reports which conclude only limited assurance are considered in

greater detail, with a summary provided of key issues identified. This gives Committee

members assurance that appropriate actions have been taken or are in progress to

implement the audit recommendations.

The Committee considers the matters described above to be the main features of the Group’s

internal control and risk management systems in relation to the financial reporting process

for the undertakings included in the consolidation as a whole. The Committee reviewed the

Company’s internal control environment and is satisfied that procedures are in place to ensure

that assets are well protected, authority levels for expenditure are clear, segregation of duties

exists and performance is regularly monitored. Processes are in place to ensure that key

controls are being operated and compliance with these processes is the subject of inspection

by the Internal Audit team within the Business Assurance function, and subsequent review and

oversight by the Audit Committee.

Whistle-blowing

The Company’s whistle-blowing policy is available to all employees via the intranet, as well

as via posters displayed across the business This gives information regarding how to raise

a concern in strict confidence, and incorporates three escalation levels. Our policy has been

subject to an internal audit during 2022, which made a number of recommendations, all of

which have been implemented or are in progress. This will ensure that our policy is aligned

with best practice and improve our colleagues’ awareness.

Our Audit Committee Chair is the final contact and resolution point for this process, and

received three calls during the year. All allegations were thoroughly investigated. One

colleague was assigned to work in a different shop as a result, but no formal action was taken.

Risk management process

The Audit Committee receives an update on risk management at each of its meetings, and an

annual report providing detail on the overall process and key activities during the year. This

process ensures that the Committee meets its obligation to oversee the effectiveness of risk

management, and allows it to confirm to the Main Board that arrangements are appropriate.

The risk management process is explained in more detail on pages 46 to 52,

AUDIT COMMITTEE REPORT CONTINUED

77Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

The Committee has reviewed the risk management process and is satisfied that appropriate

arrangements are in place to ensure that existing risks are properly managed across the

business and that processes are in place to identify and consider any new and emerging risks

in a timely manner. Key areas subject to specific review by the Committee include the following:

Area of focus Action taken

Financial reporting All judgemental areas in the accounts are considered by the Committee, to

provide independent challenge to the process.

TCFD The Committee considered and confirmed the proposed statement regarding

TCFD requirements.

Cyber risk and

information

security

Cyber risk and information security is considered at every Audit Committee

meeting, within the Head of Business Assurance’s activity update. In particular,

there have been regular updates on the Information Security Management

System, the implementation of which continues to strengthen our cyber

resilience. The Committee is also apprised of future developments including

further testing and simulated attacks.

ERM The Audit Committee has received updates on the progress with the

implementation of our ERM model, including how the wider business is being

engaged in the process.

New and emerging

risks

New and emerging risks are raised and discussed by members of the Risk

Committee at each of its meetings.

Any significant matters are escalated to the Audit Committee for

further discussion.

Review of principal

risks and

uncertainties

The Risk Committee discussed the key risks faced by the business during 2022

and used this to develop the content of the statement of principal risks and

uncertainties. This in turn was considered by the Audit Committee after the year

end, and approved for inclusion in this report, on pages 49 to 52.

Viability and going

concern status

As part of the annual report review, the Committee has considered and agreed

the viability statement and the various scenarios modelled within it as part of

the assessment.

The Company’s adoption of a going concern basis for accounts preparation was

reviewed at the mid-year, as well as during the consideration of the annual report.

Internal audit

function

The Committee has reviewed the work and output of the internal audit function,

and concluded as to its effectiveness throughout the year.

Internal audit

The work of the internal audit function is set out in more detail within the risk management

section on pages 46 to 52 of this annual report. The team is led by the Head of Business

Assurance, supported by 26 auditors, along with the Data Protection Analyst. The majority of

the audit resource is dedicated to the retail estate, including our franchise shops, providing

the Audit Committee with assurance that the required controls for safe operation within the

shops are in place and operating effectively.

The Business Assurance team presents an annual plan to the Audit Committee for approval,

setting out how the resource will be allocated across the business. Progress against this

plan is monitored at subsequent meetings throughout the year. The effectiveness of the

team and its level of resource are reviewed by the Committee on an annual basis, including

a consideration of outputs and customer feedback received.

Committee effectiveness

As noted in the governance report on page 68 there was an externally facilitated evaluation of

the Board and its Committees during 2021. The evaluation for 2022 was therefore conducted

internally using an online tool, which generated a report specifically relating to the Audit

Committee. The Committee has considered the results of this evaluation and is satisfied that

it is operating effectively.

Kate Ferry

Chair of the Audit Committee

7 March 2023

DIRECTORS' REMUNERATION REPORT

Dear Shareholder

On behalf of the Remuneration Committee (the ‘Committee’),

I am pleased to present our Directors’ remuneration report

for 2022. I have taken over the role of Remuneration

Committee Chair as of 1 September 2022 and would like to

take this opportunity to thank the former Chair, Helena

Ganczakowski, for all her contributions whilst in the role.

I would also like to thank my colleagues for their

engagement and support throughout the year.

The Committee will continue to have a transparent approach

to remuneration at Greggs. A key focus continues to be

workforce fairness and the pay arrangements and support

provided to our colleagues across the business. Our people

are what makes our business successful and protecting our

culture alongside our shareholders’ and wider stakeholders’

interests remains our priority. Our report aims to be clear,

simple and easy to read, providing explanations and rationale

for our decision-making in the context of Company

performance, the longer-term Company strategy (including

environmental, social and governance (ESG) priorities) and pay

arrangements for the wider workforce.

The report is made up of three key sections:

– My annual Chair’s letter.

– Our new Directors’ remuneration policy, which will

operate for the three years commencing with the 2023

financial year. This new policy will be tabled at our AGM on

17 May 2023 to be formally agreed by shareholders by way

of a binding vote.

– Our annual remuneration report, split into sections that

set out:

A. How our policy links to Company strategy and

reward across the wider workforce;

B. Remuneration Committee activity for the 52 weeks

ended 31 December 2022;

C. How Directors’ remuneration will be implemented

in 2023 in line with our new proposed three-year

policy; and

D. How our remuneration policy was implemented

in 2022. This is an audited section of the report

outlining the remuneration of the Executive and

Non-Executive Directors during the 52 weeks

ended 31 December 2022.

The annual remuneration report, together with this Chair’s

statement, will be subject to an advisory shareholder vote

at the 2023 AGM.

Remuneration policy

Our remuneration policy consists of the following elements:

– Fixed pay – base salary, pension and benefits; and

– Variable pay – annual bonus (paid in both cash and deferred

shares) and performance share plan (PSP) measuring long-

term performance and delivered in shares.

New three-year remuneration policy

During 2022, the Committee undertook an extensive review

of our current policy, taking into account the remuneration for

the wider workforce, the views of our shareholders as well as

the fact that executive remuneration continues to be debated

in the public domain. The Committee also assessed the

effectiveness of overall levels of remuneration in light of a

recent period of change in the Board and was keen to ensure

there continued to be a focus on alignment to the long-term

business strategy. The Committee fully reviewed emerging

market practice, the UK Corporate Governance Code and the

best practice expectations of investors and others.

In developing the new policy, the Committee wanted to

ensure we continued with a policy that was simple and

consistent, with pay outcomes dependent upon

performance clearly linked to our business strategy and

growth plans. Another key focus for the Committee was the

unique Greggs culture and the importance Greggs places on

this in respect of wider workforce remuneration. We were

also keen to avoid making unnecessary changes to a policy

which has generally served us well.

The new policy continues to ensure a significant proportion

of pay is delivered in shares to ensure a shared ownership

culture is created with the Executive team as well as to

provide alignment with investors. Our new policy is now fully

in line with the UK Corporate Governance Code with regards

to pensions alignment to the wider workforce and post-

employment shareholding requirements. We are very

comfortable that the new policy continues to ensure that the

team running the business is incentivised appropriately

whilst allowing a level of flexibility over the coming three

years. Accordingly, there are minimal formal changes to our

proposed policy for the three years commencing 2023.

The main changes to the policy are outlined below:

Pensions

As noted above, we are bringing the policy fully into line with

the UK Corporate Governance Code. In practice, this has

already happened as we have agreed that all Executive

Directors will have their pension contributions aligned

to the majority of the workforce (currently 4% of salary)

by 1 January 2023.

79Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Post-employment shareholding requirement

We are extending the post-employment shareholding

requirement to all existing Executive Directors, thus

including the Chief Financial Officer within this arrangement.

The requirement will not apply to any earlier PSP/deferred

bonus shares nor to shares purchased by the Executive

Directors from their own resources.

Increase to annual bonus and PSP policy limit

Having reviewed the competitiveness of the current policy

and to ensure sufficient flexibility should it be required, we

wish to increase the maximum policy limits for the annual

bonus and the PSP.

For the annual bonus, we propose extending the policy limit

to 150% of salary for all Executive Directors, however for

FY2023 the opportunity will remain unchanged from the

prior year (125% of salary).

For the PSP, we propose increasing the policy limit from

150% to 200% of salary for the Chief Executive and from

125% to 175% of salary for other Executive Directors. The

FY2023 grant will remain unchanged at 150% of salary for the

Chief Executive, and for the Chief Financial Officer we wish

to preserve the increase from 125% to 150% of salary that

was exceptionally awarded in FY2022. The rationale for this

is explained further in my letter in the section covering our

approach for FY2023.

We are conscious that we are currently below market in terms

of the incentive opportunities offered to the Executive

Directors and we are keen that the new policy includes

suitable flexibility to enable us to increase incentive levels if

considered necessary during the policy period, without the

need to seek approval for a new policy at the time. We have no

current intention to increase award levels above those agreed

for FY2023, and in particular we recognise the potential

concerns about making such a change against the current

economic backdrop. If, over the policy period, we decided to

increase the quantum above FY2023 levels then we would fully

consult with investors to provide the specific rationale for our

approach and would only proceed if we were comfortable that

shareholders were supportive of the approach taken.

In the new policy, PSP performance will continue to be based

on long-term KPIs, with a majority weighting on financial

measures. This will be sufficiently flexible to allow us to add

in additional ESG metrics which are aligned to our strategic

plan and The Greggs Pledge. If we were to seek to use the

flexibility within the new policy to make higher awards than

planned for FY2023, we would of course ensure that the

related performance targets were appropriately stretching.

Business performance in 2022

and incentive outcomes

As outlined in the Chair’s statement and Chief Executive's

review, despite the challenging economy, which has

impacted the business and resulted in many of our

customers and colleagues being confronted with a cost of

living crisis, 2022 has been a year of growth for Greggs. One

year into our ambitious five-year plan to double sales, our

sales were up 23% on 2021. Despite rising energy costs and

food price inflation that has impacted every individual,

household and business, we have worked hard to mitigate

the impact of external cost pressures and protect our

reputation for exceptional value and great quality.

Consideration of the wider workforce

Our continued financial success is thanks to our amazing

colleagues. With this in mind, the Committee monitors and

reviews the effectiveness of the Directors’ remuneration

policy and its impact on and alignment with the remuneration

policies in the wider workforce. To support decisions on

Executive Directors’ pay, the Committee is provided with

information detailing the pay and benefits of the wider

workforce which gives additional context for the Committee

to make informed decisions. As well as this, the Committee

has engaged with colleagues to explain how remuneration

for Directors aligns with the wider Company pay policy and

more recently has outlined the new proposed remuneration

policy to a group of colleagues. In November 2022 I met with

a group of retail colleagues to introduce myself and the role

of the Committee. Separately, in February 2023 I met with

a group of colleagues to discuss the new policy and the work

of the Committee. Key topics discussed with colleagues

included how reward is structured across the business,

the link to reward and Greggs sustainability journey, and

ensuring reward across our wider workforce continues to

support and complement the Greggs culture.

One of the unique aspects of Greggs’ remuneration approach

is that of profit share – with 10% of all our profits being

shared with eligible colleagues. The profit share payment

this year will see over 21,800 colleagues benefitting from this

additional payment that will be made in March 2023.

Bonus 2022

As disclosed last year, the annual bonus scheme for 2022

was set up with performance targets based on profit (50%),

sales (20%) and strategic objectives (30%). We set target

ranges which were designed to ensure that bonus payments

would only be made for appropriately stretching levels of

performance. This included profit targets designed to

incentivise growth, sales targets aimed at like-for-like

growth as well as driving forward our strategic plans in the

areas of evening growth, and a continued focus on ESG with

targets based around food waste and food redistribution.

As noted above, despite continued disruption to trading,

Greggs performed well in 2022. Significant market

disruption in our supply chain, cost pressures and the

employment market with significant skill shortages

contributed to the broader challenges we experienced both

in our own estate and in our supply chain. Despite this the

team continued to deliver positive like-for-like sales growth

and, as a consequence of this financial performance over the

year, the profit (50%) element of the bonus reached 33.2%

payout and sales (20%) reached the maximum 20% payout.

The strategic objectives comprised three separate

elements, with 10% based on business efficiency/cost

savings, 10% on food waste targets and 10% on evening

sales post 4pm.

There was a continued focus on cost control during the year

resulting in the business efficiency/cost saving element of

the bonus paying 7.8%.

The 10% food waste element was split equally between

reducing food waste and increasing food redistribution.

These were challenging targets and our teams across the

business worked hard to meet them. For our food waste

reduction target, our teams achieved the full 17% reduction,

resulting in a 5.0% pay out of this element. For food

redistribution, again the team achieved the stretch target of

38.3%, resulting in 5.0% of this element of the bonus paying

out. These were both tough targets on top of a great result in

the previous years and the teams did a tremendous job in

hitting both targets in full.

The final 10% of the bonus was based on increasing evening

sales with the target to achieve average weekly sales of

£2.1 million in the second half of the year. This is a continued

area of growth, and the teams across the business worked

incredibly hard to maintain focus in this area resulting in 4.4%

of this element of the bonus paying out.

The Committee is satisfied that the overall bonus outcome

aligns well with the business performance in what were

tough trading conditions in 2022. The Committee carefully

reviewed management’s performance against these targets,

taking the full business context and stakeholder experience

into account and determined that this level of payout was

appropriate with no need to apply discretion. Overall, annual

bonuses were paid at a level of 75.4% of the maximum.

For the Chief Executive, this equated to a payment of 88%

of her total salary for the year, reflecting a higher bonus

opportunity following her appointment to the Chief

Executive role in May 2022. For the Chief Financial Officer,

his bonus payment was equivalent to 94% of his salary (out

of a maximum of 125%). The former Chief Executive was also

entitled to a bonus payment relating to the period of the year

prior to his retirement at the AGM.

The element of the bonus earned above 50% of the

maximum will be paid in shares and will be subject

to a two-year holding period.

PSP vesting in 2023

Due to the impact of Covid-19 the PSP awards in 2020 were

granted in October of that year. This delay in the normal grant

schedule reflected the considerable uncertainty at the time

regarding the long-term performance of the business in the

context of the unprecedented set of circumstances arising

from the pandemic. After extensive consideration, the

Committee selected a robust set of performance measures

and target ranges designed to complement the recovery

strategy and link to the performance outlook for the business

as assessed at the time. The three-year performance period

for these awards ended on 31 December 2022, although the

awards will not vest until October 2023.

The normal financial metrics of earnings per share (EPS) and

return on capital employed (ROCE) were retained with an

allocation of 25% of the PSP grant attributed to each of these

metrics. Targets were set with an intentionally wider range

than prior awards recognising the significant variance in

likely performance outcomes over the performance period.

The remaining 50% of the award was equally split between

two strategic initiatives considered essential to help shape

the business for the post-pandemic market. The first was

related to the implementation of a centralised digital app,

with targets based on a significant increase in active user

numbers. The second was based on growth of our new

delivery model, with targets set on a sliding scale focused on

sales growth.

The threshold and maximum targets were as follows:

Metric Weighting How assessed

Threshold

target

Maximum

target

EPS

25%

EPS achieved in

FY2022 18.3p 69.3p

ROCE

25%

ROCE achieved

in FY2022 3.4% 12.5%

Digital app

25%

No. of active

users 550,000 650,000

New

delivery

model

25%

Delivery sales as

% of company-

managed shop

sales by FY2022 6% 9%

In the event, FY2022 EPS was at 118.5p, FY2022 ROCE was

at 21.0%, Active App digital users in 12 weeks (based on Q4

usage) were at 1.1 million and delivery sales as a percentage

of company-managed sales was at 5.5%. This meant that the

portion of the awards based on the EPS, ROCE and digital app

performance conditions vested in full but the delivery sales

target was not met, therefore delivering a 75% total vesting

level for this award.

The Committee has reviewed this outcome in the context of

wider business performance, the quality of the results and

the stakeholder experience, and is very comfortable that

vesting is justified at this level with no need to apply

discretion to adjust the outcome. The Committee recognises

that actual performance exceeded the target ranges very

significantly in relation to EPS and ROCE. As noted above

these ranges were considered appropriately stretching at

the time they were set, when there was considerable

uncertainty about the future. Notwithstanding this the

actual result represents all-time-high performance and the

Committee considers that there would likely have been a full

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81Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

vesting outcome for these metrics even if significantly

greater stretch had been built in to the targets.

In recognition of the expectation of investors in relation to

PSP awards granted in 2020, the Committee also considered

whether the vesting outcome reflected a “windfall gain” for

participants. The award was granted at a time when the

share price was £14.07. Immediately prior to finalising this

report, the share price was in the region of £27, and

therefore notably higher than the price at the time of grant.

The Committee has considered this matter in detail, taking

into account the 75% vesting outcome noted above, and is

satisfied that at this stage a windfall gain has not been

realised. Among other things, this reflects the fact that the

size of the award was scaled back at the time of grant as well

as Greggs' significant outperformance of the market. The

full rationale for our position is set out on page 95. We will

take a final definitive position on this immediately prior to

the vesting of the award in October 2023, and confirm the

decision in next year’s report.

Appointment of new Chair in 2022

Matt Davies was appointed as the new Board Chair during

2022, joining the Board as a Non-Executive Director on

2 August 2022 and stepping up to the Board Chair role on

1 November 2022 upon the retirement of Ian Durant. The

Remuneration Committee considered the appropriate Chair

fee for Matt Davies, taking into account factors such as his

role and responsibilities, the expected time commitment,

his extensive experience and also the level of fees payable

for Board Chairs of similarly-sized companies. The Committee

concluded that a fee of £250,000 was appropriate, applicable

from his appointment as Chair on 1 November. This fee will

not change for 2023 and will next be reviewed in January 2024.

Approach for 2023

As we move ahead with our strong growth plans we continue

to focus on the fundamental strategic pillars of our business

model and the four key growth drivers of our plan to reach

our potential in the years ahead. In delivering the strategic

pillars, the four key growth drivers and The Greggs Pledge,

it is vital that there continues to be alignment with our

remuneration policy and approach. While continuing to act

with restraint in remuneration matters, we believe we have

a policy and incentive plans that strike the right balance

between achievability and stretch, driving the right decisions

for the business, supporting the wider workforce and

shareholders, and at the same time motivating and enabling

the retention and recruitment of senior talent.

Salaries and fees

The Committee acknowledges that 2022 was a challenging

year for both the business and our colleagues due to the

continued uncertainty and significant cost pressures being

faced in the second half of the year. We have reviewed

carefully the approach taken with the wider workforce when

considering the approach to salary for the Executive

Directors for the year ahead. The 2023 pay award agreed for

our wider workforce consisted of a base pay award of 7%,

with an additional 3% (10% in total) for a number of our roles

and an additional 3.2% (10.2% in total) for our retail team

members. On this basis, over 76% of our workforce received

a pay increase of 10% or more. For our operational retail

colleagues (over 21,500 colleagues) this pay increase

was brought forward by three months and therefore

implemented from January 2023 (rather than April 2023).

For our graded management population, we implemented

a tiered pay award this year. Our management colleagues

received the base increase of 7% with our senior managers’

pay awards ranging between 5% and 6%.

Subsequently the Committee reviewed the pay award of both

the Executive Directors and Operating Board and agreed that

the awards should be proportionally lower than the general

increases across the wider workforce.

With effect from 1 January 2023, the Committee agreed a

salary increase of 4% for the Chief Executive Officer and the

Chief Financial Officer, with the same increase being agreed

for the Operating Board. A consistent approach was also

taken by the Board in relation to the Non-Executive Directors’

fees. With regards to the Chair fee this is next due to be

reviewed in January 2024.

Annual bonus

The maximum bonus opportunity for Roisin Currie, Chief

Executive, and Richard Hutton, Chief Financial Officer, will

remain at 125% of salary.

The Committee believes that the current performance

measures – profit (50%), sales (20%) and strategic objectives

(30%) remain appropriate and no changes are proposed to

these weightings. Profit and sales are critically important to

Greggs, and are measures which are closely followed by the

market as indicators of the financial health of the business.

The strategic objectives will continue to comprise three

separate elements with 10% based on business efficiency/

cost savings, 5% based on evening sales, 5% based on our

digital strategy, 5% based on increasing recycled waste and

5% based on food redistribution targets. The use of these

measures reflects our desire to incentivise and reward

progress on achieving our strategic goals and meeting the

commitments set out in The Greggs Pledge.

Targets for these measures have been set in line with the

financial plan for the business for the year and the rolling

strategic plan and are considered to be stretching. Due

to commercial sensitivities they are not disclosed within

this report, but will be disclosed retrospectively in next

year’s report.

PSP

For the FY2023 PSP award, the Chief Executive will receive

an award at a level of 150% of salary. For the Chief Financial

Officer we will preserve the increase from 125% to 150% of

salary that was awarded in FY2022.

The award granted in FY2022 recognised Richard’s

exceptional contribution, leadership and commitment as

Greggs transitioned to a new Chief Executive. Since then,

Richard has continued to play a critical role in driving the

performance of the business by successfully supporting

the Chief Executive and the wider Operating Board. We have

concluded that this should be recognised by making 150%

of salary his ongoing grant level, which would again align

the Chief Financial Officer and Chief Executive for FY2023.

An award at this level is also important for the purposes of

retention, as it is consistent with PSP grants at comparable

companies and ensures that Richard’s long-term incentive

is aligned with competitors whilst his salary and bonus

potential remain below market. We strongly believe that

focusing increased reward on long-term performance is in

the interests of Greggs’ shareholders, and will mean that

Richard only benefits from this change in the event of future

multi-year outperformance, building on the strong

achievements to date. For any further increases within the

new policy limits we would first consult with shareholders.

For the awards in FY2023 the Committee has considered the

performance conditions and has agreed three performance

measures. We will keep both EPS and ROCE, equally split at

45% of the award. These measures have been used for a

number of years and are well understood by participants,

by investors and by the wider market as good indicators of

long-term financial performance. For FY2023, we will also

be introducing an ESG metric with a weighting of 10% of the

award. This will be a carbon metric based on the absolute

reduction of our Scope 1 and 2 emissions over the three-year

period, reflecting the importance Greggs is placing on the

journey to carbon neutrality.

We have set appropriately stretching performance targets

for each measure reflecting the strategic plan and business

outlook over the performance period. Full details of the

targets are set out later in this report.

Pensions

As already outlined, we are bringing the remuneration policy

fully into line with the UK Corporate Governance Code. All

Executive Directors have had their pension contributions

aligned to the majority of the workforce (currently 4% of

salary) since 1 January 2023. The Chief Executive’s pension

was aligned with the workforce on her appointment to the

Board in 2022. By moving the Chief Financial Officer on to the

wider workforce rate from January 2023, we have effectively

accelerated the five-year glidepath to the workforce rate

which had previously been agreed.

Shareholder engagement

We continue to welcome feedback from our shareholders

as their views inform our thinking on remuneration matters,

in particular when evaluating and setting the remuneration

policy and its implementation. The Committee is committed

to continue consulting with key shareholders and would like

to take the opportunity to thank those shareholders with

whom we consulted through the year on the development

of our new policy for their feedback and guidance.

AGM

We trust that you will find this report transparent, clear and

informative. The Committee has remained focused on

ensuring that executive remuneration is closely aligned to

the delivery of Greggs’ business strategy whilst continuing to

take account of stakeholder experience, best practice and

the wider workforce.

I look forward to receiving your support at this year’s AGM

with regards to the new remuneration policy and the annual

report on remuneration. There will also be a separate AGM

resolution amending the PSP rules to provide for the higher

individual award limits. If you would like to contact me

directly to discuss any aspect of this report then please

email me at investorrelations@greggs.co.uk.

Lynne Weedall

Chair of the Remuneration Committee

7 March 2023

DIRECTORS' REMUNERATION REPORT CONTINUED

83Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Directors’ remuneration policy

This section of our report describes our new Directors’ remuneration policy, which applies to

all Executive and Non-Executive Directors. It explains the purpose and the operation of each

element of the remuneration package and explains how Executive Directors are incentivised

to achieve sustainable long-term growth and value to best serve the interests of the Company,

its shareholders, its colleagues and other stakeholders. Payments to Directors (including

payments for loss of office) can only be made if they are consistent with the terms of the

approved policy.

The policy has been prepared in line with the relevant legislation for UK companies. It will be

presented to shareholders for approval by way of a binding vote at the AGM on 17 May 2023.

Subject to shareholder approval, the policy will formally apply from the date of the AGM. Our

current intention is that the policy will remain in place for three years. The policy replaces that

approved at the AGM in May 2020.

The new policy was developed by the Remuneration Committee with input from its

independent external advisers. A full consultation exercise with major shareholders and the

leading proxy agencies was also undertaken, and their views were taken into account before

final decisions on the policy were taken. The Committee managed potential conflicts of

interest through its normal operating procedures, including ensuring that no individual was

present at Committee meetings when his or her specific remuneration was discussed. The

Committee’s members are all independent Non-Executive Directors (with Ian Durant being

in attendance during his period as Board Chair as will be the case with Matt Davies).

The policy for the remuneration of the Executive and Non-Executive Directors is set out

in the tables below, with notes explaining the changes from the policy approved in 2020:

Executive Directors

Element Purpose and strategy Operation Maximum opportunity

Base salary To attract and retain

high-calibre individuals in

order to promote the long-term

success of the business.

Normally reviewed and set annually in January.

Benchmarked periodically by the Committee against the remuneration levels for executives in similar roles in

companies of a comparable size. Individual performance and contribution are recognised in setting salary levels.

Salaries are paid monthly in cash.

No maximum limit is prescribed. Key reference points for salary

increases are market and economic conditions and, in line with our

values, the approach to colleague pay throughout the organisation.

Change to policy – We have made a minor amendment to reflect that salaries are normally reviewed and set annually in January. In exceptional circumstances, for example in relation to a change in role, we may need to apply a salary change

at a different time in the year. The rationale for any change of this nature would be fully explained in the following year’s Directors’ remuneration report.

Benefits To support a competitive

remuneration package in

the marketplace.

Benefits include provision of a company car (or cash in lieu), private medical health care, life assurance and

permanent health insurance.

No maximum limit is prescribed, particularly as the cost of providing

insured benefits fluctuates over time. However, the Committee monitors

on an annual basis the overall cost of the benefit provision.

No change to policy

Pension To ensure that pension

contributions are aligned

to the rate applying to the

majority of the workforce

over time.

Executive Directors can elect to either:

– participate in the Company defined contribution pension scheme (up to a cap). Above the cap Executive

Directors receive a salary supplement; or

– take cash in lieu of this contribution paid as a supplement to their salary on a monthly basis.

The Executive Directors are able to make this choice on an annual basis.

The pension contributions rate of all Executive Directors is aligned to the

rate applying to the majority of the workforce.

Change to policy – All Executive Directors will have their pension contributions aligned to the rate applying to the majority of the workforce (currently 4%). Previously, this provision only applied to new Executive Directors, with the

contribution rate for the former Chief Executive and the Chief Financial Officer reducing gradually to the workforce rate over a number of years. For the Chief Financial Officer, this policy change means his pension contribution has

reduced as of 1 January 2023 to the rate applying to the majority of the workforce.

Element Purpose and strategy Operation Maximum opportunity

Annual bonus

(including

profit share)

To incentivise achievement

of annual targets and

objectives consistent with

the short to medium-term

strategic needs of the

business, so as to encourage

sustainable growth in the

Company’s operating profits.

The bonus will be based on a mix of business key performance indicators (KPIs), with a majority based

on financial measures.

Targets for each metric are set in advance and in line with business planning objectives set by the Committee.

Capped at 150% of base salary for all Executive Directors.

On target performance delivers no more than 50% of the maximum.

No more than 25% of the bonus opportunity is payable under each

element for threshold performance.

Each Executive Director is entitled to participate in the Company’s profit-sharing scheme available to all

colleagues. The value of this is then deducted from their annual bonus and is subject to the individual cap.

The Committee will use appropriate underpins for any non-profit based element of the annual bonus such that

payment under these elements may be scaled back (potentially to zero), at the discretion of the Committee, if the

operating profit performance for the year is judged to be running significantly below that required for the

achievement of the long-term strategy.

The Committee will be able to adjust the formula-driven outcome from any bonus plan if, in the judgement of the

Committee, this does not reflect broader Company performance or the shareholder experience, or the payment

level is otherwise inappropriate.

Any bonus paid in excess of 50% of the maximum will be payable in shares, which (after any sales to pay tax and other

statutory deductions) must be held in the Employee Benefit Trust for two years after receipt.

The dividends payable on deferred bonus shares are paid to the individual as they fall due.

Recovery and withholding provisions allow the Company to recoup annual bonus payments within three years in

the event of misstatement of performance, error, misconduct, reputational damage or corporate failure where

this has led to an overpayment in the view of the Committee. There is a flexible mechanism which allows the

Company to withhold outstanding deferred or future remuneration or recover the overpayment direct from the

individual concerned.

Change to policy – The current (2020) policy provides for a maximum bonus potential of 125% of salary for Executive Directors other than the Chief Executive (whose limit was 150%). The revised policy increases this policy limit so that 150%

of salary now applies to all Executive Directors. This provides for a modest amount of additional flexibility to ensure that the bonus scheme remains appropriately competitive. However, the Committee has agreed that for FY2023 it will

operate the annual bonus with the same maximum limits as applied in FY2022, namely 125% of salary for both the Chief Executive and the Chief Financial Officer.

We have clarified in the policy that the bonus will be based on a mix of business KPIs, with a majority based on financial measures. For FY2023 there will be no change from the mix of measures used previously (50% operating profit, 20%

sales and 30% strategic objectives).

These changes will ensure we have a suitable level of flexibility to operate the bonus scheme over the next three years although, as noted above, the operation for FY2023 will be broadly unchanged. If we do decide to increase the maximum

potential bonus from that applied in FY2023 we will consult with shareholders to explain our rationale for making the change.

Performance

Share Plan

(PSP)

To incentivise long-term value

creation, retention of our

talent and ensure alignment of

Executive Directors’ and

shareholders’ interests.

Awards are normally granted under the PSP annually at the discretion of the Committee.

Performance conditions will be based on long-term KPIs, with a majority weighting on financial measures with

targets being set for each metric which reflect the strategic plan and business outlook over the respective

performance period.

Performance will be measured over a three-year period with an additional mandatory holding period of two years

for the vested shares (net of tax and other deductions).

A PSP award holder may be entitled to a dividend equivalent payment in respect of any vested shares.

The Committee will be able to adjust the formula-driven outcome from the PSP if, in the judgement of the

Committee, this does not reflect broader Company performance or the shareholder experience, or the vesting

level is otherwise inappropriate.

Recovery and withholding provisions allow the Company to recoup vested PSP awards within three years in the event of

misstatement of performance, error, misconduct, reputational damage or corporate failure where this has led to an

overpayment in the view of the Committee. There is a flexible mechanism which allows the Company to withhold

outstanding deferred or future remuneration, or recover the overpayment directly from the individual concerned.

200% of base salary for the Chief Executive and 175% of base salary for

other Executive Directors (200% of base salary in exceptional

circumstances).

Threshold vesting at 25% of the maximum.

DIRECTORS' REMUNERATION REPORT CONTINUED

85Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Element Purpose and strategy Operation Maximum opportunity

Changes to policy – The new policy incorporates an increase in award limits from the current 150% and 125% of salary for the Chief Executive and other Executive Directors respectively to 200% and 175% of salary respectively. The award

limit in exceptional circumstances will increase from 150% of salary to 200% of salary for Executive Directors other than the Chief Executive (whose standard award limit is now 200%).

Performance conditions will be based on long-term KPIs, with a majority weighting on financial measures, with targets being set for each metric which reflect the strategic plan and business outlook over the respective performance

period. The current (2020) policy was more prescriptive in stating only financial measures.

The new policy will be sufficiently flexible to allow us to add in ESG or other non-financial metrics which are aligned to our strategic plan and The Greggs Pledge. There would always be a majority weighting towards financial metrics for PSP

awards. We have also made a small amendment to state that awards are normally granted annually. This gives a small amount of market standard flexibility to make an award in exceptional circumstances outside of the normal annual cycle,

for example in respect of an internal promotion.

All employee

Schemes

(SAYE and SIP)

To encourage colleagues at

all levels within the Company

to understand better and

so participate in the growth

in value of the Company.

No performance conditions have been attached to awards granted pursuant to the Company’s SAYE and SIP

schemes, which are available for all eligible colleagues.

Executive Directors may participate alongside eligible employees to the

extent permitted by HMRC limits.

No change to policy

retention

guidelines

To further align the interests

of Executive Directors to

those of shareholders.

Executive Directors are required to build up a shareholding of 200% of base salary. Where an Executive Director

has not reached the required level, 50% of the shares vesting from incentive schemes must be held until this

requirement has been met.

This is achieved through vested awards granted via the PSP and deferred bonus shares.

For all Executive Directors there is a two-year post-employment holding requirement at the lower of the level

of the shareholding guideline immediately prior to departure or the actual shareholding at departure.

n/a

Change to policy – The post-employment holding requirement will apply to all Executive Directors at the level of the shareholding guideline prior to departure or the actual shareholding on departure if lower. The previous approach was that

a post-employment holding requirement would apply only for new Executive Directors.

The post-employment holding requirement will not apply to any shares purchased with the individual’s own resources, or to shares vesting from awards granted prior to appointment to the Board (in the case of the Chief Executive) or to

approval of the new policy (in the case of the Chief Financial Officer).

Non-Executive Directors

Element Purpose and strategy Operation Maximum opportunity

Non-

Executive

Chair and

Directors’

fees

To attract and retain

high-quality and

experienced Non-Executive

Chair and Directors.

The Chair is paid an all-encompassing fee.

Non-Executive Directors are paid a basic fee and the Chairs of the Main Board Committees and the Senior

Independent Director are paid an additional fee to reflect their additional responsibilities.

These fees are usually reviewed and set annually. Additional fees may be paid where there is a material increase in

the time commitments, responsibilities required of Non-Executive Directors or following a review of market rates.

Non-Executive Directors are not eligible for pension scheme membership, bonus or incentive arrangements.

They are entitled to reimbursement of reasonable business expenses and tax thereon. They may also receive

limited travel or accommodation-related benefits in connection with their role as a Director.

There is no prescribed maximum.

Change to policy – We have clarified that fees may increase following a review of market rates, in line with standard market practice.

Choice of performance measures and policy discretion

The remuneration policy provides the Remuneration Committee with the flexibility to choose

appropriate performance conditions for the annual bonus scheme and for PSP awards,

subject to the constraints set out in the table above. The choice of metrics will depend upon

the strategic focus for the Company at the time decisions around the awards are taken. The

specific measures and the targets used to assess performance will be disclosed in the

Directors’ remuneration report on an annual basis. For further information, please see the

section ‘How our remuneration links to strategy and reward across the wider workforce’ on

page 89.

The Committee will operate incentive plans in accordance with their respective rules, the

Listing Rules and HMRC limits where relevant. The Committee, consistent with market

practice, retains discretion over a number of areas relating to the operation and

administration of certain plan rules. These include (but are not limited to) the following:

– Who participates;

– The timing of the grant of award and/or payment;

– The size of an award (up to plan/policy limits) and/or a payment;

– Discretion relating to the measurement of performance in the event of a change of control

or reconstruction;

– Determination of a good leaver (in addition to any specified categories) for incentive plan

purposes and the treatment of leavers; and

– Adjustments required in certain circumstances (e.g. rights issues, corporate restructuring

and special dividends), and the ability to adjust, but not waive, existing performance

conditions for exceptional events so that they can still fulfil their original purpose.

Difference in remuneration policy across the Group and consideration of

employment conditions elsewhere in the Group

The remuneration policy for the Executive Directors is designed having regard to the policy

for employees across the Group as a whole and wider workforce remuneration and related

policies. Further information is provided in the section “How our remuneration links to strategy

and reward across the wider workforce” on page 89.

Employees were not directly consulted on the terms of the new remuneration policy but the

policy was discussed with a representative cross section of colleagues in a session led by the

Chair of the Remuneration Committee.

Statement of consideration of shareholder views

When setting the remuneration policy and determining its implementation, the Committee

takes into account the views of shareholders, their representative bodies and other interested

parties such as proxy advisers. The Committee regularly consults major shareholders on

proposed changes to the policy, and did so during 2022 in respect of the new policy. The

Committee considered comments received from shareholders before finalising the terms

of the policy.

Legacy arrangements

For the avoidance of doubt, in approving this policy, authority is given to the Company to

honour any commitments entered into with current or former Directors (such as the payment

of a pension or the unwinding of legacy share schemes) that have been disclosed to

shareholders in previous remuneration reports. Details of any of these payments to former

Directors will be set out in the annual report on remuneration as they arise.

Policy on recruitment remuneration

The Committee will set a new Executive Director’s remuneration package in line with the

Company’s approved policy at the time of appointment. In arriving at a total package and in

considering the quantum for each element of that package, the Committee will take into

account the skills and experience of the candidate, the market rate for a candidate of that

experience as well as the importance of securing the best available candidate.

Annual bonus and PSP awards will not exceed the policy maxima (not including any

arrangements to replace forfeited pay). Participation in the annual bonus plan will normally

be pro-rated for the year of joining. The Committee may make one-off additional cash and/or

share-based awards as it deems appropriate, and if the circumstances so demand, to take

account of pay forfeited by an Executive Director on leaving a previous employer. Awards to

replace pay forfeited would, where possible, reflect the nature of awards forfeited in terms

of delivery mechanism (cash or shares), time horizons, attributed expected value and

performance conditions. Other payments may be made in relation to relocation expenses and

other incidental expenses as appropriate. Any buyout awards would be made under existing

arrangements where possible or as permitted under the Listing Rules.

In the case of an internal appointment, any variable pay element awarded in respect of the

prior role would be allowed to pay out according to its terms and any other ongoing

remuneration obligations existing prior to appointment would continue.

In line with our remuneration policy, all new Executive Directors will have their pension

contribution aligned to the rate applying to the majority of the workforce.

DIRECTORS' REMUNERATION REPORT CONTINUED

87Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

For the appointment of a new Chair or Non-Executive Director, the fee arrangement would be

set in accordance with the approved remuneration policy at that time.

Service contracts and policy on cessation

Executive Directors’ service contracts contain the following remuneration-related aspects:

Provision Detailed terms

Remuneration – Salary, pension and benefits;

– Company car or cash allowance;

– Private medical health care for the Director;

– Permanent health insurance;

– Participation in annual bonus and profit share (subject to scheme rules);

– Participation in long-term incentive schemes or similar arrangements (subject to

scheme rules); and

– Life assurance.

Notice period – The Chief Executive’s service contract is terminable on 12 months’ notice served

by either the Company or the Director;

– The Chief Financial Officer’s service contract is terminable on 12 months’ notice

served by the Company or by six months’ notice served by the Director; and

– Any future Executive Directors’ service contracts will be terminable on up to

12 months’ notice served by either party.

Termination payment – Payment in lieu of notice equal to any unexpired notice of termination given by

either party; and

– Payment in lieu shall not include:

– Any bonus payment;

– Any payment in respect of benefits which the Director would have been entitled

to receive; and

– Any payment in respect of any holiday entitlement that would have accrued

during the period for which the payment in lieu is made.

Details of the circumstances in which the Committee has the ability to exercise

discretion with regards to termination payments are set out below.

Under their service contracts, if notice is served the Executive Directors are entitled to salary,

pension contributions and benefits for their notice period save where a payment in lieu is to be

made. The Company would seek to ensure that any payment is mitigated by use of phased

payments and offset against earnings elsewhere in the event that an Executive Director finds

alternative employment during their notice period. There are no contractual provisions in

force other than those set out above that impact any termination payment.

Areas where the Committee can exercise discretion with regards to termination payments are

set out below:

– Any right to annual bonus in the year of departure would lapse unless the individual is

leaving in good leaver circumstances, in which case a bonus may be payable pro-rated for

that part of the year worked;

– Deferred bonus shares must normally be retained in trust until the end of their two-year

holding period, but may be released early in exceptional circumstances, such as ill-health;

– Any unvested awards held under the PSP will lapse at cessation, unless the individual is

leaving in good leaver circumstances (defined under the plan as death, injury, ill-health,

disability, redundancy, retirement, their office or employment being with either a company

which ceases to be a Group member or relating to a business or part of a business which is

transferred to a person who is not a Group member, a change of control or any other reason

the Committee so decides). In these circumstances, unvested awards will normally vest at

the normal vesting date (other than on death or where the Committee decides they should

vest at cessation) subject to performance conditions being met and scaling back in respect

of actual service as a proportion of the total vesting period (unless the Committee decides

that scaling back is inappropriate). Vested awards will normally be subject to the mandatory

two-year holding period although the Committee will have discretion to waive this in

exceptional circumstances; and

– The Committee may agree to payment of disbursements such as legal costs and

outplacement services if appropriate and depending on the circumstances of cessation.

The table below sets out the details of the Executive Directors’ service contracts:

Director Date of contract

Roisin Currie 1 February 2022

Richard Hutton 7 April 2006

The service contracts are available for inspection during normal business hours at the

Company’s registered office, and are available for inspection at the AGM.

Expected value of the proposed annual remuneration package

for Executive Directors

The following charts indicate the level of remuneration payable to Executive Directors in 2023

based on policy at minimum remuneration, remuneration in line with ‘on target’ Company

performance, and the maximum remuneration available.

Chief Executive – Roisin Currie

£3,000,000

PSP

£2,000,000

£2,500,000

£1,500,000

£1,000,000

£500,000

£0

Bonus

Minimum

100%

£669,870

£1,527,870

£2,385,870

£2,853,870

44% 28% 23%

25%

33% 27%

31%

39%

49%

On target Stretch 50%

share price

appreciation

Fixed

remuneration

Minimum On target Stretch

50% share price

appreciation

Fixed remuneration:

– Salary £624,000 £624,000 £624,000 £624,000

– Pension £24,960 £24,960 £24,960 £24,960

– Benefits £20,910 £20,910 £20,910 £20,910

Bonus – £390,000 £780,000 £780,000

Performance Share Plan – £468,000 £936,000 £1,404,000

Total £669,870 £1,527,870 £2,385,870 £2,853,870

Chief Financial Officer – Richard Hutton

£2,000,000

PSP

£1,500,000

£1,000,000

£500,000

£0

Bonus

Minimum

100%

£437,705

£1,000,124

£1,562,543

£1,869,317

44% 28% 23%

25%

33% 27%

31%

39%

49%

On target Stretch 50%

share price

appreciation

Fixed

remuneration

Minimum On target Stretch

50% share price

appreciation

Fixed remuneration:

– Salary £409,032 £409,032 £409,032 £409,032

– Pension £16,361 £16,361 £16,361 £16,361

– Benefits £12,312 £12,312 £12,312 £12,312

Bonus – £255,645 £511,290 £511,290

Performance Share Plan – £306,774 £613,548 £920,322

Total £437,705 £1,000,124 £1,562,543 £1,869,317

Assumptions used in the charts:

Base salary levels as at 1 January 2023.

Pension at the wider workforce rate (currently 4%)

The value of taxable benefits is based on the cost of supplying the benefits at the agreed level.

Bonus

Minimum remuneration – assumes no award is earned under the annual bonus plan.

On target remuneration – the annual bonus plan assumes the target level is reached for each of the elements, resulting in a

payout of 50% of the maximum.

Stretch remuneration – assumes satisfaction of all performance conditions for all elements under the annual bonus plan and

therefore full payout.

PSP element is calculated as award percentage of base salary multiplied by the relevant vesting percentage. Share price

movement and dividend accrual have been excluded, other than in the 50% share price appreciation model.

Minimum remuneration – assumes no vesting is achieved under the PSP.

On target remuneration – assumes 50% vesting is achieved.

Stretch remuneration – assumes 100% vesting is achieved.

DIRECTORS' REMUNERATION REPORT CONTINUED

89Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Terms of appointment of Non-Executive Directors

Non-Executive Directors are appointed subject to the Company’s articles of association,

retiring and seeking election at the first AGM after appointment.

Thereafter, every Director will be subject to annual re-election by shareholders. The

Nominations Committee advises the Board as to whether Directors should be nominated

for re-election. Non-Executive Directors are not entitled to compensation for early

termination of their appointments prior to the date on which they would next be due

to offer themselves for election or re-election, or if not re-appointed at such time.

The letters of appointment for the Non-Executive Directors are available for inspection during

normal business hours at the Company’s registered office, and are available for inspection at

the AGM.

The following table shows the effective date of appointment for each Non-Executive Director:

Non-Executive Director Original date of appointment

Matt Davies 2 August 2022

Helena Ganczakowski 2 January 2014

Sandra Turner 1 May 2014

Kate Ferry 1 June 2019

Mohamed Elsarky 21 June 2021

Lynne Weedall 17 May 2022

Current Non-Executive Directors are appointed on an understanding that the appointment will

last for at least six years, but without any commitment by either party.

All new Non-Executive Directors, from June 2019, are appointed for an initial term of three years

unless terminated earlier by either party giving to the other party three months’ written notice.

A. How our remuneration links to strategy and reward across the wider workforce

Link to strategy

Growth drivers Strategic pillars and key drivers of growth The Greggs Pledge

Remuneration at Greggs is

intended to incentivise

sustainable and profitable

business growth. This is reflected

in key metrics in the variable pay

incentive plans including

operating profit, like-for-like

sales, cost savings, EPS and

ROCE.

Delivery against the four strategic

pillars – ‘Great tasting, freshly

prepared food’, ‘Best customer

experience’, ‘Competitive supply

chain’ and ‘First-class support

teams’ – is incentivised as

appropriate by strategic metrics

in the annual bonus scheme, for

example, evening sales and

digital targets.

Our commitment to deliver these

goals is supported with the

inclusion of ESG targets in the

incentive schemes, such as food

redistribution, recycling and Scope

1 and 2 carbon reduction targets.

Reward across the wider workforce

The remuneration policy for the Executive Directors is designed having regard to the policy for colleagues

across the Group as a whole and wider workforce remuneration and related policies. There are differences in

salary levels and in the levels of potential reward depending upon seniority and responsibility, although a key

reference point for Executive Director salary increases is the average base pay increase across the general

workforce. For FY2023, we have implemented a tiered pay award such that smaller salary increases have been

agreed for the more senior people within the organisation.

We share 10% of our profits annually with our colleagues across the business, and everyone is eligible to

participate in this profit-sharing scheme after six months’ service.

Share incentive schemes and bonus participation extends below Board level, with a separate share option

scheme in place for senior management colleagues and a bonus scheme for graded management. Both the

share option and management bonus schemes are aligned to those of the Executive Directors and are subject

tothe same performance targets and measures. A higher proportion of the Executive Directors’ remuneration

package is delivered through performance-related incentive schemes, much of which is in share-based form,

which provides a good link to long-term Company performance and the shareholder experience.

All colleagues with one year’s service or more may participate in the Sharesave scheme (where colleagues can

save to purchase shares at the end of a three-year period at a 20% discount to the price at the date of grant) and

in the Share Incentive Plan (SIP) (where colleagues can purchase shares from pre-tax salary subject to HMRC

limits). These schemes are generally offered annually.

The pension contributions for our Executive Directors are aligned to the contribution for the majority of our

workforce (currently at 4%).

Compliance with the UK Corporate Governance Code

The Directors’ remuneration policy is fully compliant with the relevant factors set out in the UK Corporate

Governance Code:

Clarity We are open and transparent in our approach to remuneration taking into account the

experience of our colleagues, shareholders and stakeholders. We regularly engage with

stakeholders on remuneration matters.

Simplicity Our remuneration policy is simple and consistent in its approach. Senior management

share option and management bonus schemes are aligned to those ofthe Executive

Directors and are subject to the same performance criteria.

Predictability Our remuneration policy clearly outlines the details of maximum opportunity levelsfor

each component of pay. Incentive levels vary depending on the level ofperformance

against specific metrics. The typical award levels and potential pay-outs are disclosed

inthe remuneration policy and it is demonstrated in each year’s remuneration report

how outcomes are aligned with performance and strategy.

Proportionality,

riskand alignment

toculture

Pay outcomes are dependent upon performance linked to our business strategy and

growth plans as well as taking into account our wider workforce remuneration and

specific Greggs culture. This ensures a significant proportion of pay is delivered in

shares to provide alignment with investors and incorporates other best practice

features in line with the UK Corporate Governance Code and investor guidelines.

The use of annual bonus deferral and PSP holding periods provides a clear link to the

ongoing performance of the business and therefore alignment with shareholders.

The Committee has the discretion to apply malus and clawback in both annual bonus

andPSP.

B. Remuneration Committee activity for the 52 weeks ended 31 December 2022

Meetings during the year

The Remuneration Committee met four times during the year. Details of the Committee

members’ attendance are given on page 67.

All members are considered to be independent for the purpose of the UK Corporate

Governance Code. The Company Secretary acts as Secretary to the Committee.

Role and responsibilities

Responsibility is delegated to the Remuneration Committee to ensure that an effective

remuneration policy is in place for the Chief Executive, other Executive Directors, the

Chair and senior management whilst reviewing and taking into account wider workforce

remuneration and the Company values and culture. It is the Committee’s role to establish

a remuneration policy that promotes both long-term shareholdings by Executive Directors

and ensures alignment of policies and practices to support business strategy, promote the

long-term sustainable success of the business and meet shareholder expectations.

Summary of Committee activity during 2022

Details of some of the activities the Committee has undertaken have been outlined in the

Chair’s letter as well as being summarised below:

– Developed the new proposed three-year remuneration policy;

– Consulted with shareholders on the new remuneration policy;

– Discussed and agreed the fees for the new Chair;

– Reviewed all colleague remuneration and the 2023 pay award for colleagues;

– Discussed and agreed Directors’ and Operating Board salaries for 2023;

– Agreed the challenging targets for the 2022 bonus and PSP and the new ESG metrics

to apply to the PSP in 2023;

– Discussed the 2022 bonus outturn and 2020 PSP award vesting in the context of the

original performance targets set as well as the wider socio-economic environment

and the experience of the wider workforce;

– Approved grants under the PSP to Executive Directors and Operating Board and

under the share option scheme to senior managers below Executive Director and

Operating Board level;

– Approved the all-colleague SAYE and SIP schemes;

– Reviewed Executive Directors’ and Operating Board shareholdings in the Company,

in the context of shareholding guidelines; and

– Held a listening group with colleagues to help encourage understanding of the work of the

Remuneration Committee and the new remuneration policy.

Structure and content of the remuneration report

The remuneration report has been prepared in accordance with the provisions of the

Companies Act 2006 (the ’Act’) and The Large and Medium-sized Companies and Groups

(Accounts and Reports) (Amendment) Regulations 2013 (the ‘Regulations’). It also meets the

requirements of the UK Listing Authority’s Listing Rules.

The Regulations also require our auditor to report to shareholders on the audited information

within this remuneration report and to state whether, in their opinion, the relevant sections

have been prepared in accordance with the Act and the Regulations. The auditor’s opinion

is set out on pages 102 to 107 and we have indicated appropriately the audited sections of this

remuneration report.

Remuneration advice

The Chief Executive along with Jonathan Jowett (Company Secretary and General Counsel)

and Emma Walton (People Director) are normally invited to attend Committee meetings in order

to provide advice and support to the Committee. The Chief Financial Officer attends where

required. During the year Korn Ferry (who have no connection to the Company or any individual

DIRECTORS' REMUNERATION REPORT CONTINUED

91Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Director) provided remuneration advice to the Committee. Korn Ferry were appointed

as advisers by the Committee in December 2017 following an informal tender process.

Korn Ferry is a signatory to the Remuneration Consultants’ Code of Conduct in relation

to executive remuneration consulting in the UK.

The Committee reviewed the operating processes in place at Korn Ferry and is satisfied that

the advice it receives is objective and independent. Fees paid to Korn Ferry during the year

were £54,555. Korn Ferry did not provide any other services to the Company during 2022.

AGM voting outcomes

The Directors’ remuneration report was the subject of an advisory vote at the 2022 AGM and

the results are outlined below.

Approve the remuneration report

Total number

of votes

% of

votes cast

For 62,513,876 85.65%

Against 10,474,846 14.35%

Total votes cast (excluding votes withheld) 72,988,722 100.00%

Votes withheld 52,038

Total votes cast (including votes withheld) 73,040,760

Shareholders were asked to approve the remuneration policy at the 2020 AGM and the results

are outlined below:

Approve the remuneration policy

Total number

of votes

% of

votes cast

For 66,782,219 95.71%

Against 2,990,047 4.29%

Total votes cast (excluding votes withheld) 69,772,266 100.00%

Votes withheld 4,777,374

Total votes cast (including votes withheld) 74,549,640

C. How our remuneration policy will be implemented in 2023 – Executive Directors

The section below summarises the implementation of our remuneration policy for 2023.

Base salary 2023

The annual base salaries for the Executive Directors were reviewed with effect from 1 January

2023; increases and current salaries are outlined below:

Director

Salary

1 January 2022

Salary

1 January 2023 % increase

Roisin Currie (Chief Executive) £600,000

£624,000 4.0%

Richard Hutton (Chief Financial Officer) £393,300 £409,032 4.0%

* Salary at date of appointment as Chief Executive

With over 76% of the workforce receiving a pay increase of 10% or more for 2023, and a further

23% receiving 7%, the Committee is comfortable the increase for the Executive Directors is

appropriate, being proportionally lower than the wider workforce while ensuring that pay for

the Executive Directors does not fall materially behind mid-market levels.

Pension contribution 2023

As per our new proposed remuneration policy, contributions for both Executive Directors will

be aligned to the pension contribution for the majority of the workforce (currently 4%) as of

1 January 2023.

The pension contribution rates for 2023 (all of which are cash in lieu) are:

Roisin Currie 4.0%

Richard Hutton 4.0%

Annual bonus 2023

The annual bonus opportunity for 2023 is outlined below:

Chief Executive Maximum opportunity of 125% of base salary. Bonus in excess of 50% of maximum will

be payable in shares deferred for two years.

Chief Financial Officer Maximum opportunity of 125% of base salary. Bonus in excess of 50% of maximum will

be payable in shares deferred for two years.

The annual bonus is based on performance against a range of financial and strategic

performance measures. This range of metrics measures achievement of the Company’s

key operational objectives. The Committee reviews the KPIs each year and varies them as

appropriate to reflect the priorities for the business in the year ahead. Where appropriate a

sliding scale of targets is set for each KPI to encourage continuous improvement or sustained

high performance, with a maximum of 10% bonus paid out for threshold performance for the

profit and sales elements.

Targets are normally set at the start of the year by the Committee using the outturn and

performance in the previous year, as well as the business plan, to determine appropriately

stretching sliding scales. Bonus targets for the forthcoming year are considered to be

commercially sensitive. Retrospective disclosure of the targets and performance against

them will be made in next year’s annual report on remuneration.

The bonus metrics are:

Measure Profit Sales Strategic objectives

Weighting 50% of total 20% of total 30% of total

Detail and link to strategy Reflects the profit of the

Group (excluding

exceptional items) before

tax. This will be based on

meeting and exceeding

budget for the year.

Based on company-

managed shop like-for-like

sales excluding any

additional shops opened

during the bonus year.

Outlined below.

The strategic objectives for each bonus cycle are based on measures which will provide a

strong link to strategy and our four key growth drivers as well as recognising our responsibility

and commitments in The Greggs Pledge.

For the 2023 bonus there will be four strategic objectives. They are:

– 10% based on business efficiency/cost savings;

– 5% based on growth in evening sales;

– 10% based on an element of The Greggs Pledge and sustainability:

– 5% Increase in food redistribution; and

– 5% increase in waste recycled;

– 5% based on digital metrics linked to the Greggs app.

Following a review of performance by the Committee, any payment under the non-profit-

based element of the bonus may be scaled back (potentially to zero) at the discretion of the

Committee, in the event that the profit performance for the year is judged to be running

significantly below that required for the achievement of the long-term strategy.

PSP award 2023

PSP awards will be granted as follows:

Chief Executive 150% of base salary

Chief Financial Officer 150% of base salary

For the Chief Financial Officer, we will preserve the increase from 125% to 150% of salary that

was awarded exceptionally in FY2022. The award granted in FY2022 recognised Richard’s

exceptional contribution, leadership and commitment as Greggs transitioned to a new Chief

Executive. Since then, Richard has continued to play a critical role in driving the performance

of the business by successfully supporting the Chief Executive and the wider Operating Board.

We have concluded that this should be recognised by making 150% of salary his ongoing grant

level, which would again align the Chief Financial Officer and Chief Executive for FY2023.

The PSP awards for the Executive Directors are normally granted in the period following the

announcement of the financial results for the prior year. However, as we are in a new policy

year, this year the awards will be granted on the day after the AGM, subject to the remuneration

policy being approved.

For the awards in FY2023 we will have three performance measures. We will keep both EPS

and ROCE, equally split at 45% of the award, and we will be introducing an ESG metric with a

weighting of 10% of the award. This will be a carbon metric based on the reduction of our

Scope 1 and 2 emissions over the three-year period.

These measures provide a rounded assessment of our overall profitability against stretching

targets set in line with the strategic plan and business outlook over the performance period as

well as a strategic link to our Greggs Pledge targets.

For the 2023 awards the target ranges will be as follows:

– The EPS performance condition will require average annual growth in EPS over the

performance period to be between 4% and 9%;

– The ROCE condition will require average ROCE over the performance period to be between

18.7% to 21.2%; and

– The carbon metric will require a reduction in absolute CO

emissions (on a 2022 end of year

baseline) over the performance period in line with our Net Zero target:

- 25% of this part of the award will vest if absolute CO

e emissions are maintained at 2022

levels despite business growth; and

- 100% of this part of the award will vest if absolute emissions are reduced in line with our

2035 Net Zero target for Scope 1 and 2 (35,371 tCO

e).

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93Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Our EPS growth range has been set from a high 2022 EPS base and, in the context of

continued market uncertainty, the stretch element of this range would represent outstanding

performance. The business continues to deliver very strong ROCE performance within the

retail sector and with ambitious plans to grow the business this range targets continued

strong returns on capital employed.

For all three performance measures, 25% of an award will vest on achieving threshold performance

and thereafter straight-line sliding scales will apply until stretch performance is achieved.

A holding period is attached to vested PSP awards, requiring the vested shares to be held

(net of tax and other deductions) for a further two years.

How our remuneration policy will be implemented in 2023 – Non-Executive Directors

In order to ensure that no Director is involved in deciding their own remuneration, the fees

payable to Non-Executive Directors are set, after consultation with the Chair, by a Committee

of the Board consisting only of the Executive Directors. The fees payable to the Chair are set

by the Remuneration Committee.

The Non-Executive Directors are paid an annual base fee and additional responsibility fees

for the role of Senior Independent Director (SID) or for chairing a Board Committee.

These fees are usually reviewed and set annually. The fees were increased by 4% on 1 January

2023 in line with the base salary increase agreed for Executive Directors.

The fee for the Chair was agreed at the time of his appointment in 2022 and is next due to be

reviewed on 1 January 2024.

Details of the fees being paid to Non-Executive Directors in 2023 are set out below:

Name Position

Base fee from

1 January 2023

Annual additional

fee from 1 January

2023

Total fee

2023

Matt Davies Board Chair 250,000 – £250,000

Kate Ferry Chair of the Audit Committee £54,735 £12,480 £67,215

Helena

Ganczakowski Non-Executive Director £54,735 – £54,735

Sandra Turner Non-Executive Director & SID £54,735 £12,480 £67,215

Mohamed Elsarky Non-Executive Director £54,735 – £54,735

Lynne Weedall Chair of the Remuneration Committee £54,735 £12,480 £67,215

These fees may be subject to change during the year based on any change in responsibility

or time commitment or to ensure they remain in line with the current market rates.

D. How our remuneration policy was implemented in 2022

Total Executive Director remuneration payable for 2022 (audited)

The following table presents the remuneration payable for 2022 (showing the equivalent

figures for 2021) for the Executive Directors.

Salary

Pension

contribution

(including salary

in lieu)

Taxable

benefits

Total fixed

remuneration

Annual

incentives

(including profit

share)

Performance

Share Plan

Total

variable

remuneration

Total

remuneration

Roisin Currie

2022

490,909 18,453 17,902 527,264 440,832 247,206 688,038 1,215,302

Roger Whiteside

2022

215,900 32,601 4,621 253,122 203,486 556,057

759,543 1,012,665

2021 575,209 108,139 12,644 695,992 716,854 426,833

1,143,687 1,839,679

Richard Hutton

2022 393,300 38,046 12,105 443,451 370,685 370,744 741,429 1,184,880

2021 380,000 44,387 9,500 433,887 378,860 201,432

580,292 1,014,179

1 The value of the PSP award for 2022, due to vest on 9 October 2023, is based on the level of vesting (75.0%) and the average

share price over the final three months of the financial year of £21.47. The amount attributable to share price appreciation is

£85,204 for Roisin Currie, £191,654 for Roger Whiteside and £127,783 for Richard Hutton. This figure will be trued up in the

2023 report to reflect the share price at the vesting date. Roisin Currie’s award was granted prior to her appointment as a

Director and for the majority of the performance period she did not serve on the Board

2 For the 2021 PSP award the value last year was based on the average share price over the three months prior to the year

end of £30.78. The value has now been updated for the actual price on vesting on 11 April 2022 of £24.02, together with

the updated total remuneration figures. The values were reduced by £120,189 for Roger Whiteside and £56,689 for

Richard Hutton

3 Taxable benefits relate to cash-in-lieu of a company car, private medical health care and travel expenses paid

4 Roisin Currie was appointed to the Board on 1 February 2022

5 Roger Whiteside retired from the Board on 17 May 2022 and his remuneration is included up to that date

6 Vesting pro-rated to reflect the proportion of the vesting period Roger Whiteside was employed

Fees for Non-Executive Directors (audited)

The fees for Non-Executive Directors were as follows:

2022 2021

Matt Davies

£41,667 –

Ian Durant

£171,046 £198,315

Helena Ganczakowski

£60,261 £61,020

Sandra Turner £63,603 £58,478

Kate Ferry £64,261 £61,020

Mohamed Elsarky

£52,630 £26,966

Lynne Weedall

£36,823 –

1 Matt Davies joined the Board on 2 August 2022

2 Ian Durant retired from the Board on 30 November 2022

3 Mohamed Elsarky joined the Board on 1 June 2021

4 Lynne Weedall joined the Board on 17 May 2022 and took on the role of Remuneration Committee Chair as of 1 September 2022

5 Helena Ganczakowski stepped down as Chair of the Remuneration Committee as of 31 August 2022

Annual bonus 2022 (audited)

The table below outlines the bonus performance conditions in respect of the 2022 bonus

scheme.

Measure Strategic objective Weighting Entry Target Stretch Actual %

Profit (£) To deliver target profit

before tax (excluding

exceptional items and

property profits) 50% £139.0m £146.0m £153.0m £148.3m 33.2%

Sales (%) Two-year like-for-like

sales performance 20% 12.2% 14.2% 16.2% 17.8% 20.0%

Strategic (£) Cost savings 10% £3.0m £5.0m £7.0m £6.12m 7.8%

Strategic

(£m/week)

Evening sales

10% £1.9m £2.1m £2.3m 2.07% 4.4%

Strategic Reduce food waste

5% 0.25% 0.23% 0.23% 5.0%

Strategic Increase unsold food

redistribution* 5% 31.5% 34.8% 38.0% 38.3% 5.0%

Total weighting based on

balanced scorecard 100% 75.4%

1 Further details on these strategic targets are set out below

Reduction in food waste from manufacture (5%)

Metric Maximum 5%

Decrease food waste by

percentage of total sales

ahead of the 2021 year end

actual (0.28% total sales)

10% decrease in food

waste as a percentage

of total sales (decrease

to 0.25%)

sliding scale to… 17% decrease in food waste

as a percentage of total

sales (decrease to 0.23%)

Increase food redistribution (5%)

Metric Maximum 5%

Distribute an increased

percentage of unsold food

ahead of the 2021 end of

year actual of 28.5%

10% increase in amount of

unsold food redistributed

year-on-year (increase

to 31.5%)

sliding scale to… 33% increase in amount of

unsold food redistributed

year-on-year (increase to

38.0%)

Bonus achieved for 2022

As % of maximum

Roisin Currie 75.4%

Roger Whiteside

75.4%

Richard Hutton 75.4%

1 Roger Whiteside’s bonus was pro-rated for the period of active service up to 17 May 2022

In line with the remuneration policy, the proportion of the bonus in excess of 50% of the

maximum (pro rata) will be payable in shares, deferred for two years.

Details of the shares awarded in 2022 for the 2021 bonus year are outlined below. These were

awarded on 25 March 2022 and will be released on 25 March 2024.

Number of shares

awarded

Roger Whiteside 7,823

Richard Hutton 4,134

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95Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Performance Share Plan award for performance in 2020 to 2022 (audited)

The PSP award granted in 2020 measured four performance targets to be delivered by the end

of 2022. The performance targets that were set, together with the performance delivered, are

set out in the table below.

Metric Condition Threshold target Stretch target Actual % vesting

EPS (25%) Absolute EPS achieved

in 2022

18.3p

(6.25% vesting)

69.3p

(25% vesting)

118.5p 25.0%

ROCE (50%) Absolute ROCE achieved

in 2022

3.4%

(6.25% vesting)

12.5%

(25% vesting)

21.0% 25.0%

Active

Digital App

users

Number of active users

at the end of 2022

550,000

(6.25% vesting)

650,000

(25%)

1.1 million

25.0%

Delivery

sales

Delivery sales as a

percentage of company-

managed shop sales

by end 2022

(6.25% vesting)

(25% vesting)

5.5% 0%

Total vesting 75.0%

The Committee considered the vesting outcome in the context of overall Company performance,

the shareholder experience and the wider stakeholder experience over the performance period.

The Committee was satisfied that the vesting outcome was an appropriate reflection of wider

business performance and the experience of all stakeholders (including shareholders).

Accordingly, the Committee did not exercise any discretion to reduce the level of vesting.

The Committee also considered whether the value received from the PSP award represented

a windfall gain for the Executive Directors. At the time of writing, the Committee has

concluded that no windfall gain is expected to be realised, for the following reasons:

– The Committee made the prudent decision to delay the grant of the 2020 award, taking

into account the major impact on the business of the Covid-19 outbreak and subsequent

lockdown. There was no view that the Committee should ‘push ahead‘ with normal awards.

The Committee’s decision to postpone the grant was communicated to major shareholders

in a letter in April 2020, and investor support was received for this decision. No investor

raised concerns with this approach ahead of the AGM in May 2020.

– Later in 2020, the Committee decided to proceed with the award, with performance

metrics (outlined above) linked to the recovery strategy that had been agreed for the

business. While there remained significant uncertainty about the precise shape of the

post-pandemic recovery, it was viewed as critical to put in place an incentive which would

help drive performance after a very difficult period. The Committee wrote to major

shareholders in September 2020 explaining the terms of the proposal, and once again

the investor response was broadly positive.

– The Committee recognised that at the time of grant there was still weakness in the share

price. As a result, for the Executive Directors the award size was set at 115% of salary for the

then Chief Executive and 95% of salary for the Chief Financial Officer, representing a scale

back from the original intention (previously communicated to shareholders) to grant at

150% of salary and 110% of salary respectively. The reduction of the award size at grant was

viewed as a proportionate response to the share price situation at the time, thus resulting

in a smaller number of shares being granted than if the originally signalled grant levels had

been maintained.

– It is true that Greggs benefited from post-grant positive market sentiment linked to the

development of Covid-19 vaccines; however, it took some months for the price to recover to

the level seen before the initial impact of Covid-19. The high in February 2020 of £24.42 was

not achieved again until May 2021, illustrating the lack of an immediate post-grant rebound.

– The Committee believes that the very strong level of share price growth throughout 2021

can be more fairly attributed to Company outperformance than simply a rise in line with the

market. Share price growth from the grant date in October 2020 to the end of December

2021 was an impressive 137%, which compares with 30% for the FTSE 250 and 44% for the

Food Retailers and Wholesalers Sector average.

– 2022 saw the share price fall from the record highs recorded in December 2021 given the

impact of inflation and cost pressures. Although there has been some recent recovery,

the current price of c. £27 is still well below the end-2021 high of £34.

– The Committee concluded that share price progression since the October 2020 PSP grant

date is not one of simple market-driven growth but reflects a strong level of performance

by Greggs, the impact of wider challenges and then a partial recovery.

In addition to the points above, the Committee reflected on matters such as the size of the

reduced 2020 grants relative to market practice at the time for FTSE 250 companies, the

current value of the vested awards (which, although significant, are not considered excessive

given what has been achieved over the performance period), the responsible approach taken

by Greggs in the immediate aftermath of the pandemic outbreak and the continued and

ongoing support provided by the business to its wider employee base (both in terms of the help

provided during the pandemic and more recently in the light of cost-of-living challenges).

These awards will vest on 9 October 2023, prior to which the Committee will reassess whether

there has been any windfall gain.

The table below sets out the number of shares, which will vest for each Executive Director

under the 2020 PSP award. All awards were granted as nil-cost options.

Executive Director Date of grant Date of vesting

Number of

awarded Vesting %

Number of

vesting

Expected

total

vesting

Roisin Currie 9 October

2020

9 October

2023 15,352 75% 11,514 £247,206

Roger Whiteside 9 October

2020

9 October

2023 46,228 75% 25,899

£556,057

Richard Hutton 9 October

2020

9 October

2023 23,024 75% 17,268 £370,744

1 Calculated using average share price over the final three months of the financial year of £21.47

2 Vesting pro-rated to reflect the proportion of the vesting period Roger Whiteside was employed

Performance Share Plan awards granted in 2022 (audited)

Performance Share Plan awards granted during 2022 are as follows:

Executive

Type of

award

Basis of

award

granted

Share price

and date of

grant

Number of

shares over

which award

was granted

Face value

of award

Percentage of

face value

that would

vest at

threshold

performance

Vesting

performance

measurement

period

Roisin Currie

Nil-cost

options

150% of

salary

£21.68

(18 May

2022) 36,014 £780,784

25%

Financial

year 2024

Richard Hutton

150% of

salary

£24.99

(28 March

2022) 23,607 £589,939

1 Roisin Currie’s award was granted on 18 May 2022 following her appointment post the AGM into the role of Chief Executive.

Her award was scaled back by 13.25% to take into account the reduction in share price since 28 March 2022, the date of

grant of the award to the Chief Financial Officer

For the 2022 grant there are two independent performance targets applying to the awards.

Each performance target accounts for 50% of the award:

– 50% is subject to a performance target based on the Company’s average annual growth

in EPS over a performance period of three financial years commencing with the financial

year 2022 being between 3.0% and 8.0%.

– 50% is subject to a performance target based on the Company’s average ROCE over

a performance period of three financial years commencing with the financial year 2022

to be in the range 19.6% to 22.6%.

For each metric, 25% of the award will vest on achieving threshold performance and

thereafter straight-line sliding scales will apply until stretch performance is achieved.

A holding period will apply to vested PSP awards requiring the vested shares to be held (net of

tax) for a further two years.

Outstanding share awards (audited)

The following table sets out details of the PSP and savings-related share options held by,

or granted to, the Executive Directors who served during the year:

At 2 January

2022 or date of

appointment

Granted

number

Exercised

number

Lapsed

number

At 31 December

2022 number

Exercise price

Date of grant

Market price of

each share at

date of grant

Date from

which

exercisable

Expiry date

Scheme

Roisin

Currie

11,803 - - 5,901 5,902 £nil Apr 19 £18.30 Apr 22 Apr 29 PSP

15,352 - - - 15,352 £nil Oct 20 £14.07 Oct 23 Oct 30

PSP

5,687 - - - 5,687 £nil Apr 21 £22.72 Apr 24 Apr 31

Restricted

stock

option

9,668 - - - 9,668 £nil Apr 21 £22.72 Apr 24 Apr 31

PSP

- 36,014 - - 36,014 £nil May 22 £21.68 May 25 May 32

PSP

84 - 84

- - £14.84 Apr 19 Jun 22 Nov 22

SAYE

88 – – – 88 £14.24 Apr 20 Jun 23 Nov 23

SAYE

75 – – – 75 £14.24 Apr 21 Jun 24 Nov 24

SAYE

- 91 - - 91 £19.68 Apr 22 Jun 25 Nov 25 SAYE

42,757 36,105 84 5,901 72,877

Richard

Hutton

16,772 – 8,386

8,386 - £nil Apr 19 £18.30 Apr 22 Apr 29

PSP

23,024 – – – 23,024 £nil Oct 20 £14.07 Oct 23 Oct 30

PSP

20,906 - – – 20,906 £nil Apr 21 £22.72 Apr 24 Apr 31

PSP

- 23,607 - - 23,607 £nil May 22 £21.68 May 25 May 32

PSP

84 – 84

– - £14.84 Apr 19 Jun 22 Nov 22

SAYE

88 – – – 88 £14.24 Apr 20 Jun 23 Nov 23

SAYE

75 - – - 75 £16.72 Apr 21 Jun 24 Nov 24

SAYE

- 91 - - 91 £19.68 Apr 22 Jun 25 Nov 25 SAYE

60,949 23,698 8,470 8,386 67,791

Notes:

1 The market value on the date of exercise was £19.09 and the resultant gain on exercise was £357

2 The market value on the date of exercise was £21.52 and the resultant gain on exercise was £180,466

3 The market value on the date of exercise was £22.38 and the resultant gain on exercise was £633

4 The restricted stock option was granted in April 2021 prior to Roisin Currie’s appointment as to the Board and as CEO

Designate. The award vests in April 2024 subject to continued employment and is in line with similar awards granted to other

members of the Operating Board at the time

During the year Roger Whiteside exercised 17,772 PSP options and 84 SAYE options. The share

price on the dates of exercise was £22.65 and £21.14 respectively resulting in gains of

£402,536 and £529 respectively. He remains entitled to a proportion of his outstanding PSP

awards as detailed on page 98.

DIRECTORS' REMUNERATION REPORT CONTINUED

97Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Options granted under the all-colleague SAYE scheme are not subject to performance conditions.

All PSP options are subject to performance conditions as detailed elsewhere in this report.

The mid-market price of ordinary shares in the Company as at 31 December 2022 was £23.46.

The highest and lowest mid-market prices of ordinary shares during the financial year were

£33.72 and £16.73, respectively.

Legacy defined benefit pension scheme (audited)

The following table sets out the change in each Director’s accrued pension in the Company’s

defined benefit pension scheme during the year and their accrued benefits in the scheme at

the year end:

Executive Director Date of birth

Date service

commenced

Accrued

annual

pension

entitlement

as at

2 January

2022

Accrued

annual

pension

entitlement

as at 31

December

2022

Increase in

accrued

pension

entitlement

for the year

Increase in

accrued

pension

entitlement

for the year

net of

inflation of

1.338%

Transfer

value of

increase in

accrued

pension

entitlement

for the year

Richard Hutton 3/6/68 1/1/98 18,522 24,782 – – –

Notes:

1 The pension entitlement shown is that which would be paid annually on retirement based on service to the end of the year,

but excluding any statutory increases which would be due after the year end

2 The inflation rate of 1.338% shown in the table above is that published by the Secretary of State for Work and Pensions in

accordance with Schedule 3 of the Pensions Schemes Act 1993

Cash

equivalent

transfer

value as at

2 January

2021

Cash

equivalent

transfer

value as at

1 January

2022

Increase in

the cash

equivalent

transfer

value since

3 January

2021

Richard Hutton 443,334 392,930 –

Note:

Cash equivalent transfer values have been calculated in accordance with Actuaries Guidance Note GN11 and the increase is

stated net of contributions made by the Director. The transfer values disclosed above do not represent a sum paid or payable to

the individual Director. Instead they represent a potential liability of the pension scheme.

The main features of the defined benefit pension scheme are:

– Pension at normal retirement age of 1/60th of member’s final pensionable salary for each complete year and a proportionate

amount for each additional complete month of service from the date of joining the scheme until 5 April 2008 when the

scheme was closed to future accrual;

– Choice of giving up part of the pension in exchange for a tax-free cash sum subject to a limit of 25% of the total value of the

member’s benefits under the scheme;

– Pension payable in the event of ill health;

– Spouse’s pension on death; and

– Normal retirement at age 65.

Chief Executive pay compared to performance

The graph below shows a comparison of the total shareholder return for the Company’s shares

for each of the last ten financial years against the total shareholder return for the companies

comprised in the FTSE 250 Index (excluding Investment Trusts).

This index has been chosen for this comparison because it includes companies of broadly

similar size to the Company.

Total Shareholder Return (£)

Greggs

29 Dec

2012

28 Dec

2013

03 Jan

2015

02 Jan

2016

28 Dec

2019

29 Dec

2018

31 Dec

2016

30 Dec

2017

31 Dec

2022

01 Jan

2022

02 Jan

2021

1,000

800

900

700

600

500

400

300

200

100

FTSE 250 Index (excluding Investment Trusts)

Remuneration outcomes for Chief Executive over last ten years

The table below shows the total remuneration figure for the Chief Executive over the same ten-year period as the graph above. The total remuneration figure includes the annual bonus, pension

and PSP/option awards which vested based on performance in those years.

2013 2014 2015 2016 2017 2018 2019 2020 2021

2022

Roger Whiteside

2022

Roisin Currie*

Total remuneration £1,011,381 £1,238,248 £2,473,695 £2,147,229 £1,689,265 £1,7 37,953 £2,540,966 £649,319 £1,839,679 £1,012,665 £1,002,242

Bonus (% of max potential) 20.0% 100.0% 93.7% 86.7% 64.3% 59.2% 97.7% 0.0% 99.7% 75.4% 75.4%

PSP/options (% max potential) n/a n/a 100% 100% 100% 80.2% 100% 0.0% 50% 75% 75%

* Reflects pay in the Chief Executive role during 2022

There have been no changes since 31 December 2022 in the Directors’ interests noted above.

Further details of outstanding share awards are given on page 96.

Payments for loss of office or payments to past Directors (audited)

Roger Whiteside stepped down as Chief Executive and from the Board on 17 May 2022. Prior

to this date, he received his salary, pension and benefits as normal, as disclosed in the single

total figure table on page 93. During the balance of his notice period (which ended on 5 January

2023), he received monthly payments of his salary, pension and benefits, totalling £360,295,

£54,405 and £7,712 respectively. During this period he was also available to the new Chief

Executive to support her transition into role.

The Remuneration Committee and the Board agreed to treat Roger as a good leaver. He was

entitled to receive an annual bonus for 2022 for the period worked up to 17 May, with his bonus

payment pro-rated to cover this period only. The bonus payment received in respect of this

period is disclosed on page 93.

His outstanding PSP awards will continue to vest at the normal time and be subject to the

satisfaction of the agreed performance targets. The awards granted in 2020 and 2021 will be

pro-rated to reflect the proportion of the vesting period completed at the time employment

ceased at the end of the notice period. The vesting outcome of the award granted in 2020 is

shown on page 95.

External directorships

Executive Directors may take up one Non-Executive Directorship outside of the Company

subject to the Board’s approval and provided that such an appointment is not likely to lead

to a conflict of interest. It is recognised that this can support a Director’s development and

enhance experience as well as benefit the Company. Executive Directors will be entitled to

retain the fees of such an appointment.

Directors’ shareholding and share interests (audited)

Details of the shareholdings of each Executive Director and their connected persons

as at 31 December 2022 and their interests in shares are detailed below with the percentage

holding calculated using the share price at that date. As stated in the Directors’

remuneration policy, Executive Directors are required to build a shareholding equivalent

in value to 200% of basic salary.

Director

Beneficially

owned at

31 December

2022

Beneficially

owned at

1 January

2022

Outstanding

PSP awards

(nil cost

options)

Outstanding

Restricted

stock

options

Vested PSP

awards not

exercised

Outstanding

SAYE

awards

shareholding

achieved at

31 December

2022

Roger Whiteside 96,500

88,661 84,203 – – 163 n/a

Roisin Currie 3,431 3,188

61,034 5,687

5,902 254 25.6%

Richard Hutton 106,934 98,391 67,547 – – 254 637.9%

Ian Durant 11,700

11,700 – – – – n/a

Helena Ganczakowski 1,100 1,100 – – – – n/a

Sandra Turner 1,000 1,000 – – – – n/a

Kate Ferry 562 562 – – – – n/a

Mohamed Elsarky - – – – – – n/a

Lynne Weedall 1,000 1,000

– – – – n/a

Matt Davies 2,000 2,000

– – – – n/a

1 As at date of appointment (1 February 2022)

2 Roger Whiteside retired from the Board on 17 May 2022 and the shareholdings in the table above reflect

the position on that date

3 Ian Durant retired from the Board on 30 November 2022 and the shareholdings in the table above reflect

the position on that date

4 At date of appointment (17 May 2022)

5 At date of appointment (2 August 2022)

6 The restricted stock options were granted in April 2021 prior to Roisin Currie’s appointment to the Board and as CEO

Designate. The award vests in April 2024 subject to continued employment and is in line with similar awards granted to other

members of the Operating Board at the time

7 Percentage shareholding is calculated taking into account the value of beneficially owned shares and the net of tax value of

vested PSP awards not exercised

DIRECTORS' REMUNERATION REPORT CONTINUED

99Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Relative importance of spend on pay

The Committee is aware of the importance of pay across the business and the table below

shows the expenditure and percentage change in the overall spend on all colleague costs

compared to other key financial indicators.

2022

£m

2021

£m

% increase/

(decrease)

All colleague costs 502.7 429.3 17.1%

Dividends 98.5 15.3 544%

Percentage change in remuneration of all Directors

The table below sets out the percentage change in remuneration for all Directors (Executive and Non-Executive) compared to the wider workforce.

2022 2021 2020

Salary

% change

Benefits

% change

Bonus

% change

Salary

% change

Benefits

% change

Bonus

% change

Salary

% change

Benefits

% change

Bonus

% change

Roisin Currie n/a

n/a n/a n/a n/a n/a n/a n/a n/a

Roger Whiteside 0.0%

(2.6%) (24.4%) 10.9% (11.0%) 100.0% (8.3%) (39.2%) (100.0%)

Richard Hutton 3.5% 27.4% (2.2%) 21.6% (9.0%) 100.0% (3.3%) (13.6%) (100.0%)

Ian Durant 3.5% n/a n/a 10.9% n/a n/a (2.8%) n/a n/a

Matt Davies n/a

n/a n/a n/a n/a n/a n/a n/a n/a

Helena Ganczakowski (1.25%)

n/a n/a 18.3%

n/a n/a 7.5%

n/a n/a

Sandra Turner 8.8% n/a n/a 9.2% n/a n/a (5.0%) n/a n/a

Kate Ferry 5.3% n/a n/a 10.9% n/a n/a (8.3%) n/a n/a

Lynne Weedall n/a

n/a n/a n/a n/a n/a n/a n/a n/a

Mohamed Elsarky 3.5% n/a n/a n/a

n/a n/a n/a n/a n/a

All colleagues 5.8%

(15.8%) (24.3%)

1.9% (1.2%) 100% 4.1% 3.2% (100%)

1 For the period of 1 April 2020 to 31 August 2020 the salaries of the Executive Directors and Non-Executive Directors were voluntarily reduced by 20%

2 Roisin Currie, Matt Davies and Lynne Weedall were appointed during 2022 and therefore no annual change is shown

3 Helena Ganczakowski was appointed Chair of the Remuneration Committee during 2020 and stepped down during 2022. Therefore she received an additional payment for this role for part of these years

4 In order to provide a meaningful comparison where a Director was appointed or retired during the year, the percentage change figures have been calculated on a full-year equivalent value

5 Mohamed Elsarky was appointed during 2021 and therefore no annual change is shown

6 For the purpose of salary the wider workforce is defined as all colleagues

7 For the purpose of bonus the wider workforce is defined as management colleagues who are entitled to receive a bonus

100

Chief Executive pay ratio reporting

Outlined below is the ratio of the Chief Executive’s single figure of total remuneration for 2022

expressed as a multiple of total remuneration for UK colleagues.

The three ratios referenced below are calculated by reference to the colleagues at the 25th,

50th and 75th percentile. We additionally disclose the total pay and benefits and base salary

of the colleagues used to calculate the ratios.

In time, the table below will build to represent ten years of data:

Financial year Method

25th percentile

pay ratio

Median

pay ratio

75th percentile

pay ratio

2022 Option B 90:1 84:1 80:1

2021 Option B 99:1 98:1 68:1

2020 Option B 30:1 30:1 28:1

2019 Option B 132:1 126:1 108:1

The 25th, median and 75th percentile data were calculated as at 13 January 2023. Full year pay

data for the 2022 financial year has been used to calculate the ratios.

Disclosure of colleague data used to calculate the ratios 25th percentile Median 75th percentile

Total pay and benefits £22,349 £23,950 £25,304

Base salary £21,227 £22,556 £23,364

The following adjustments have been made in order to calculate the figures above:

– We have used the assumption of a 40-hour week in order to calculate the hourly rate

for the Chief Executive from the single total remuneration figure;

– For the Chief Executive we have used a combined calculation for Roisin Currie and

Roger Whiteside, based on the number of days each served as Chief Executive in 2022,

to calculate the figures above; and

– As the hours our colleague work vary week to week we have converted their hourly rate

of pay into the equivalent 40-hour week in order that this is directly comparable with the

hourly rate for the Chief Executive.

Of the three options set out in the legislation for calculating the Chief Executive pay ratio,

we are using Option B – which uses Gender Pay Gap (GPG) data – to calculate the pay ratio.

We believe the steady nature of our workforce ensures that the representative group remains

the same as those individuals who are identified through the GPG reporting process. The

individuals represented at the 25th, median and 75th percentile are all colleagues within

our front line retail and supply operations. The nature of our workforce and demographics are

such that we have over 95% of our colleagues working in our front-line operations – be that in

retail or in our supply chain.

Our pay reflects the key markets in which we operate and we also support our colleagues

with additional benefits such as profit share, colleague discount and discounted SAYE

participation. As previously outlined in this report, a key focus continues to be workforce

fairness and the pay arrangements and support provided to our colleagues across the

business. Our people are what makes our business successful and protecting our culture

alongside our shareholders’ and wider stakeholders’ interests remains our priority.

The Committee acknowledges that 2022 was a challenging year for both the business and our

colleagues due to the continued uncertainty and significant cost pressures being faced in the

second half of the year. We therefore reviewed carefully the approach taken with the wider

workforce when considering the approach to salary for the Executive Directors for the year

ahead. The 2023 pay award agreed for our wider workforce consisted of a base pay award of

7%, with an additional 3% (10% in total) for a number of our roles and an additional 3.2% (10.2%

in total) for our retail team members. On this basis, over 76% of our workforce received a pay

increase of 10% or more.

For our operational retail colleagues (over 21,500 colleagues) this pay increase was brought

forward by three months and therefore implemented from January 2023 (rather than April 2023).

Over the last five years, changes in the basic salary of our Chief Executive have consistently

been in line with the base award given to all our colleagues. However, this year the Committee

reviewed the pay award of both the Executive Directors and Operating Board and agreed that

the awards should be proportionally lower than the general increases across the wider

workforce, implementing a 4% increase in pay.

As such and as required in the regulations, we confirm our belief that the median pay ratio for

the year is consistent with the Company’s wider pay, reward and progression policies affecting

our colleagues.

This report was approved by the Board on 7 March 2023.

Signed on behalf of the Board

Lynne Weedall

Chair of the Remuneration Committee

7 March 2023

DIRECTORS' REMUNERATION REPORT CONTINUED

101Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND ACCOUNTS

The Directors are responsible for preparing the strategic report and the Directors’ report,

the Directors’ remuneration report and the accounts in accordance with applicable law

and regulations.



Company law requires the Directors to prepare Group and Parent Company accounts for each

financial year. The Directors have elected under company law and are required under the

Listing Rules of the Financial Conduct Authority to prepare the Group accounts in accordance

with UK-adopted International Accounting Standards. The Directors have elected under

company law to prepare the Company accounts in accordance with UK-adopted International

Accounting Standards.



The Group and Parent Company accounts are required by law and UK-adopted International

Accounting Standards to present fairly the financial position of the Group and the Parent

Company and the financial performance of the Group; the Companies Act 2006 provides in

relation to such accounts that references in the relevant part of that Act to accounts giving

a true and fair view are references to their achieving a fair presentation.

Under company law the Directors must not approve the accounts unless they are satisfied that

they give a true and fair view of the state of affairs of the Group and the Parent Company and of

the profit or loss of the Group for that period.



In preparing each of the Group and Parent Company accounts, the Directors are required to:

a. select suitable accounting policies and then apply them consistently;

b. make judgements and accounting estimates that are reasonable and prudent;

c. state whether they have been prepared in accordance with UK-adopted International

Accounting Standards;

d. prepare the accounts on the going concern basis unless it is inappropriate to presume

that the Group and the Parent Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient

to show and explain the Group’s and the Parent Company’s transactions and disclose with

reasonable accuracy at any time the financial position of the Group and the Parent Company

and enable them to ensure that the accounts and the Directors’ remuneration report comply

with the CompaniesAct2006. They are also responsible for safeguarding the assets of the

Group and the Parent Company and hence for taking reasonable steps for the prevention

and detection of fraud and other irregularities.

Directors’ statement pursuant to the Disclosure and Transparency Rules

Each of the Directors, whose names and functions are listed in the Directors’ report confirm

that, to the best of each person’s knowledge:

a. the accounts, prepared in accordance with the applicable set of accounting standards,

give a true and fair view of the assets, liabilities, financial position and profit of the Parent

Company and the undertakings included in the consolidation taken as a whole; and

b. the strategic report and the Directors’ report contained in the annual report include

a fair review of the development and performance of the business and the position of the

Company and the undertakings included in the consolidation taken as a whole, together

with a description of the principal risks and uncertainties that they face.

The Directors are responsible for the maintenance and integrity of the corporate and financial

information included on the Greggs plc website.

Legislation in the United Kingdom governing the preparation and dissemination of accounts

may differ from legislation in other jurisdictions.

Roisin Currie Richard Hutton

Chief Executive Chief Financial Officer

7 March 2023

102

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF GREGGS PLC

Opinion

We have audited the financial statements of Greggs plc (the ‘Parent Company’) and its

subsidiaries (the ‘Group’) for the 52 weeks ended 31 December 2022, which comprise the

Consolidated Income Statement, the Consolidated Statement of Comprehensive Income,

Balance Sheets, Statements of Changes in Equity, Statement of Cash flows and notes to

the financial statements, including significant accounting policies. The financial reporting

framework that has been applied in the preparation of the Group financial statements is

applicable law and UK-adopted International Accounting Standards. The financial reporting

framework that has been applied in the preparation of the Parent Company financial

statements is applicable law and UK-adopted International Accounting Standards and,

as regards the Parent Company financial statements, as applied in accordance with the

provisions of the Companies Act 2006.

In our opinion:

– the financial statements give a true and fair view of the state of the Group’s and of the

Parent Company’s affairs as at 31 December 2022 and of the Group’s profit for the 52 weeks

then ended;

– the Group financial statements have been properly prepared in accordance with

UK-adopted International Accounting Standards;

– the Parent Company financial statements have been properly prepared in accordance

with UK-adopted International Accounting Standards and as applied in accordance

with the Companies Act 2006; and

– the financial statements have been prepared in accordance with the requirements

of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs

(UK)) and applicable law. Our responsibilities under those standards are further described in

the Auditor’s responsibilities for the audit of the financial statements section of our report.

We are independent of the Group and Parent Company in accordance with the ethical

requirements that are relevant to our audit of the financial statements in the UK, including the

FRC’s Ethical Standard as applied to listed public interest entities and we have fulfilled our

other ethical responsibilities in accordance with these requirements. We believe that the audit

evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Summary of our audit approach

Key audit matters Group and Parent Company

Valuation of lease liabilities

Materiality Group

Overall materiality: £7.00 million (2021: £7.00 million)

Performance materiality: £5.25 million (2021: 4.55 million)

Parent Company

Overall materiality: £6.90 million (2021: £6.90 million)

Performance materiality: £5.17 million (2021: 4.48 million)

Scope Our audit procedures covered 100% of revenue, total assets and of profit

before tax.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most

significance in our audit of the Group and Parent Company financial statements of the current

period and include the most significant assessed risks of material misstatement (whether

or not due to fraud) we identified, including those which had the greatest effect on the overall

audit strategy, the allocation of resources in the audit and directing the efforts of the

engagement team. These matters were addressed in the context of our audit of the Group

and Parent Company financial statements as a whole, and in forming our opinion thereon,

and we do not provide a separate opinion on these matters.

103Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Valuation of Lease Liabilities

Key audit matter description Refer to page 74 – Audit Committee report

Refer to page 116 – Basis of preparation (Key estimates and judgements)

Refer to page 133 and 134 – Note 10, Leases

Lease Liability – £301.3 million (2021: £283.2 million)

As the Group occupies and manages approximately 1,900 shops/leases, the application of IFRS 16 is considered to give rise to a significant risk of material

misstatement. IFRS 16 involves a significant element of judgement and estimation derived from a number of key assumptions. We consider the most significant

assumptions affecting the valuation of lease liabilities to be:

– the lease term assumed in determining the lease liability (particularly in respect of circumstances where the Group remains in occupation using rights from the

Landlord and Tennant Act 1954); and

– the discount rate applied to calculate the lease liability.

Changes to the assumptions included above are likely to have a material impact on the valuation of lease liabilities and given the value of lease liabilities in comparison

to Group materiality, we consider this area to represent a significant audit risk. Given the economic uncertainty and changing needs of the business in terms of shop

size and location, judgements made in respect of lease term may need to be revisited.

How the matter was addressed

in the audit

Our audit work relating to the valuation of lease liabilities included:

1. Testing the accuracy and completeness of the underlying information used in the application of IFRS 16.

2. Critically challenging the key assumptions utilised by management, including the lease term and discount rate.

3. Testing that the calculations made were accurate through reperformance.

4. Assessing the application of and accounting for changes throughout the year including the treatment of new leases, modifications to leases, the unwinding of

interest and capital payments in respect of lease liabilities.

5. Reviewing disclosures relating to lease liabilities to ensure they are in accordance with the applicable financial reporting framework.

Key observations Our audit work in respect of the valuation of lease liabilities concluded that we did not identify any material misstatements and the disclosures management have made

are appropriate.

Our application of materiality

When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of our audit procedures. When evaluating whether the effects of

misstatements, both individually and on the financial statements as a whole, could reasonably influence the economic decisions of the users we take into account the qualitative nature and the

size of the misstatements. Based on our professional judgement, we determined materiality as follows:

Group Parent Company

Overall materiality Overall materiality: £7.00 million (2021: £7.00 million) Overall materiality: £6.90 million (2021: £6.90 million)

Basis for determining overall materiality 4.7% (2021: 4.8%) of profit before tax 4.7% (2021: 4.7%) of profit before tax

Rationale for benchmark applied Profit before tax is the primary measure used by the shareholders in assessing the performance of the Group and is a generally accepted auditing benchmark.

Performance materiality £5.25 million (2021: 4.55 million) £5.17 million (2021: 4.48 million)

Basis for determining

performance materiality

75% of overall materiality (2021: 65%) 75% of overall materiality (2021: 65%)

Reporting of misstatements

to the Audit Committee

Misstatements in excess of £350k (2021: £350k) and misstatements below that

threshold that, in our view, warranted reporting on qualitative grounds.

Misstatements in excess of £345k (2021: £345k) and misstatements below that

threshold that, in our view, warranted reporting on qualitative grounds.

The materiality for the audit, was reassessed to reflect the actual results for the period. This did not result in any change in the original materiality.

104

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF GREGGS PLC CONTINUED

An overview of the scope of our audit

The Group consists of the Parent Company and nine subsidiaries all of which are dormant or

non trading. The Group audit team audited the only significant component being the Parent

Company. In doing so the coverage achieved by our audit procedures was 100% of Group

revenue, total assets and profit before tax.

The impact of climate change on the audit

In planning our audit, we considered the potential impact of the possible risks arising from

climate change on the Group’s and the Company’s financial statements and obtained an

understanding of how management identifies and responds to climate-related risks. Further

information on management’s risk assessment, progress and commitments is provided in the

Group’s climate-related risk disclosures on pages 35 to 41 of the annual report.

We performed risk assessment procedures including making enquiries of management,

reading Board minutes and applying our knowledge of the Group and the Company and the

sector within which it operates to assess the potential impact on the financial statements.

Taking account of the nature of the business, the limited sensitivity of impairment reviews

to reasonably possible changes in future cashflows, and useful economic lives of tangible/

intangible assets to changing regulation, weather patterns or business activities, we have

not assessed climate-related risk to be significant to our audit. There was also no impact

on our key audit matters.

In accordance with our obligations with regards to other information, we have read the

Group’s climate-related risk disclosures on pages 35 to 41 of the annual report and in doing

so have considered whether those disclosures are materially inconsistent with the financial

statements or our knowledge obtained during the course of the audit, or otherwise appear

to be materially misstated.

We have not been engaged to provide assurance over the accuracy of the climate-related

risk disclosures set out on pages 35 to 41 in the annual report.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors’ use of the going

concern basis of accounting in the preparation of the financial statements is appropriate.

Our evaluation of the Directors’ assessment of the Group’s and Parent Company’s ability to

continue to adopt the going concern basis of accounting included:

1. Assessing the forward-looking assumptions used by management in their assessment

of going concern.

2. Corroborating key management assumptions to supporting evidence including financing

arrangements in place.

3. Challenging management’s assumptions including performing downside sensitivities

in respect of key assumptions.

4. Considering the adequacy of management’s scenario analysis and contingency plans.

5. Checking the integrity and mechanism of the forecast model provided by management.

6. Obtaining evidence of Board approval of the budgets and forecasts.

7. Assessing historical forecast accuracy.

8. Re-calculating management’s covenant calculations to assess the risk of forecast

non-compliance.

9. Evaluating the adequacy of going concern related disclosures in the financial statements.

Based on the work we have performed, we have not identified any material uncertainties

relating to events or conditions that, individually or collectively, may cast significant doubt on

the Group’s or the Parent Company’s ability to continue as a going concern for the period of

assessment to December 2024.

In relation to the entity reporting on how they have applied the UK Corporate Governance

Code, we have nothing material to add or draw attention to in relation to the Directors’

statement in the financial statements about whether the Directors considered it appropriate

to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern

are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the

financial statements and our auditor’s report thereon. The Directors are responsible for the

other information contained within the annual report. Our opinion on the financial statements

does not cover the other information and, except to the extent otherwise explicitly stated in

our report, we do not express any form of assurance conclusion thereon.

105Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Our responsibility is to read the other information and, in doing so, consider whether the other

information is materially inconsistent with the financial statements or our knowledge obtained

in the course of the audit or otherwise appears to be materially misstated. If we identify such

material inconsistencies or apparent material misstatements, we are required to determine

whether this gives rise to a material misstatement in the financial statements themselves. If,

based on the work we have performed, we conclude that there is a material misstatement of

this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, the part of the Directors’ remuneration report to be audited has been properly

prepared in accordance with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

– the information given in the Strategic Report and the Directors’ Report for the

financial year for which the financial statements are prepared is consistent with the

financial statements; and

– the Strategic Report and the Directors’ Report have been prepared in accordance

with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the Group and the Parent Company

and their environment obtained in the course of the audit, we have not identified material

misstatements in the Strategic Report or the Directors’ Report.

We have nothing to report in respect of the following matters in relation to which the

Companies Act 2006 requires us to report to you if, in our opinion:

– adequate accounting records have not been kept by the Parent Company, or returns

adequate for our audit have not been received from branches not visited by us; or

– the Parent Company financial statements and the part of the Directors’ remuneration

report to be audited are not in agreement with the accounting records and returns; or

– certain disclosures of Directors’ remuneration specified by law are not made; or

– we have not received all the information and explanations we require for our audit.

Corporate governance statement

We have reviewed the Directors’ statement in relation to going concern, longer-term viability

and that part of the Corporate Governance Statement relating to the Parent Company’s

compliance with the provisions of the UK Corporate Governance Code specified for our review

by the Listing Rules.

Based on the work undertaken as part of our audit, we have concluded that each of the

following elements of the Corporate Governance Statement is materially consistent with the

financial statements and our knowledge obtained during the audit:

– Directors’ statement with regards the appropriateness of adopting the going concern basis

of accounting and any material uncertainties identified set out on pages 114 to 115;

– Directors’ explanation as to their assessment of the Group’s prospects, the period this

assessment covers and why the period is appropriate set out on pages 114 to 115;

– Director’s statement on whether it has a reasonable expectation that the Group will be able

to continue in operation and meets its liabilities set out on pages 114 to 115;

– Directors’ statement on fair, balanced and understandable set out on page 71;

– Board’s confirmation that it has carried out a robust assessment of the emerging and

principal risks set out on page 47;

– Section of the annual report that describes the review of effectiveness of risk management

and internal control systems set out on page 76; and

– Section describing the work of the Audit Committee set out on pages 72 to 77.

Responsibilities of Directors

As explained more fully in the Directors’ responsibilities statement set out on page 101,

the Directors are responsible for the preparation of the financial statements and for being

satisfied that they give a true and fair view, and for such internal control as the Directors

determine is necessary to enable the preparation of financial statements that are free from

material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s

and the Parent Company’s ability to continue as a going concern, disclosing, as applicable,

matters related to going concern and using the going concern basis of accounting unless the

Directors either intend to liquidate the Group or the Parent Company or to cease operations,

or have no realistic alternative but to do so.

106

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF GREGGS PLC CONTINUED

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as

a whole are free from material misstatement, whether due to fraud or error, and to issue an

auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,

but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect

a material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be expected to

influence the economic decisions of users taken on the basis of these financial statements.

The extent to which the audit was considered capable of detecting irregularities,

including fraud

Irregularities are instances of non-compliance with laws and regulations. The objectives of

our audit are to obtain sufficient appropriate audit evidence regarding compliance with laws

and regulations that have a direct effect on the determination of material amounts and

disclosures in the financial statements, to perform audit procedures to help identify instances

of non-compliance with other laws and regulations that may have a material effect on the

financial statements, and to respond appropriately to identified or suspected non-compliance

with laws and regulations identified during the audit.

In relation to fraud, the objectives of our audit are to identify and assess the risk of material

misstatement of the financial statements due to fraud, to obtain sufficient appropriate audit

evidence regarding the assessed risks of material misstatement due to fraud through

designing and implementing appropriate responses and to respond appropriately to fraud

or suspected fraud identified during the audit.

However, it is the primary responsibility of management, with the oversight of those charged

with governance, to ensure that the entity's operations are conducted in accordance with the

provisions of laws and regulations and for the prevention and detection of fraud.

In identifying and assessing risks of material misstatement in respect of irregularities,

including fraud, the Group audit engagement team:

– obtained an understanding of the nature of the industry and sector, including the legal

and regulatory framework that the Group and Parent Company operate in and how the

Group and Parent Company are complying with the legal and regulatory framework;

– inquired of management, and those charged with governance, about their own

identification and assessment of the risks of irregularities, including any known actual,

suspected or alleged instances of fraud;

– discussed matters about non-compliance with laws and regulations and how fraud might

occur including assessment of how and where the financial statements may be susceptible

to fraud for regulated entities, as defined in ISA 250B: having obtained an understanding of

the effectiveness of the control environment.

The most significant laws and regulations were determined as follows:

Legislation/Regulation Additional audit procedures performed by the Group audit engagement team included:

IFRS/UK adopted IAS and

Companies Act 2006

– Review of the financial statement disclosures and testing to

supporting documentation

– Completion of disclosure checklists to identify areas of non-

compliance

Tax compliance regulations – Inspection and review of tax computations prepared by

management

– Input from a tax specialist was obtained regarding significant and

complex matters

– Consideration of whether any matter identified during the audit

required reporting to an appropriate authority outside the entity

Distributable profits

legislation

– Assessment of extent of compliance as part of our audit work

relating to reserves

Pension legislation – Assessment of extent of compliance as part of our audit work

relating to defined benefit pensions

Food Safety/Health and

Safety/Employment/General

Data Protection Regulation

– Inquiry of management and Directors

– Inspection of correspondence with legal advisors and regulators

(where applicable)

The areas that we identified as being susceptible to material misstatement due to fraud were:

Risk Audit procedures performed by the audit engagement team:

Revenue recognition –

cut off

– Testing a sample of transactions accounted pre and post year end

for each significant revenue stream ensuring that revenue is

recognised in the correct accounting period in line with the Group’s

accounting policy

Management override

of controls

– Testing the appropriateness of journal entries and other

adjustments;

– Assessing whether the judgements made in making accounting

estimates are indicative of a potential bias; and

– Evaluating the business rationale of any significant transactions

that are unusual or outside the normal course of business.

A further description of our responsibilities for the audit of the financial statements is located on

the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities.

This description forms part of our auditor’s report.

107Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Other matters which we are required to address

Following the recommendation of the Audit Committee, we were appointed by the

shareholders on 14 May 2021 to audit the financial statements for the 52 week period

ended 1 January 2022 and subsequent financial periods.

The period of total uninterrupted consecutive appointments is two years, covering the years

ending 1 January 2022 to 31 December 2022.

The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the

Group or the Parent Company and we remain independent of the Group and the Parent

Company in conducting our audit.

Our audit opinion is consistent with the additional report to the Audit Committee in

accordance with ISAs (UK).

Use of our report

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3

of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might

state to the Company’s members those matters we are required to state to them in an

auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not

accept or assume responsibility to anyone other than the Company and the Company’s

members as a body, for our audit work, for this report, or for the opinions we have formed.

In due course, as required by the Financial Conduct Authority (FCA) Disclosure Guidance and

Transparency Rule (DTR) 4.1.14R, these financial statements form part of the European Single

Electronic Format (ESEF) prepared Annual Financial Report filed on the National Storage

Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard (ESEF

RTS). This auditor’s report provides no assurance over whether the annual financial report

has been prepared using the single electronic format specified in the ESEF RTS.

Rachel Fleming (Senior Statutory Auditor)

For and on behalf of RSM UK Audit LLP, Statutory Auditor

Chartered Accountants

1 St. James’ Gate

Newcastle upon Tyne

NE1 4AD

7 March 2023

108

CONSOLIDATED INCOME STATEMENT

FOR THE 52 WEEKS ENDED 31 DECEMBER 2022 (2021: 52 WEEKS ENDED 1 JANUARY 2022)

Note

2022

£m

2021

£m

Revenue 1 1,512.8 1,2 29 .7

Cost of sales (5 74 .5) (4 47. 7)

Gross profit 93 8.3 7 82 .0

Distribution and selling costs (7 1 3 . 2) (5 6 7. 6)

Administrative expenses (7 0 .7) (6 1. 2)

Operating profit 1 54.4 15 3.2

Finance expense (net) 5 (6 .1) (7. 6)

Profit before tax 3-5 148 .3 145 .6

Income tax 7 (2 8 . 0) (2 8 .1)

Profit for the financial year attributable to equity holders of the Parent 120.3 1 1 7. 5

Basic earnings per share 8

118.5p

115. 7p

Diluted earnings per share 8 117 .5p 1 14. 3p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE 52 WEEKS ENDED 31 DECEMBER 2022 (2021: 52 WEEKS ENDED 1 JANUARY 2022)

Note

2022

£m

2021

£m

Profit for the financial year

120.3

1 1 7. 5

Other comprehensive income

Items that will not be recycled to profit and loss:

Remeasurements on defined benefit pension plans 20

0.7

7.1

Tax on remeasurements on defined benefit pension plans 7 1.8 (1 .7)

Other comprehensive income for the financial year, net of income tax 2.5 5 .4

Total comprehensive income for the financial year 122 .8 1 22 .9

109Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

BALANCE SHEETS

AT 31 DECEMBER 2022 (2021: 1 JANUARY 2022)

Group Parent Company

Note

2022

£m

2021

£m

2022

£m

2021

£m

ASSETS

Non-current assets

Intangible assets 9 13.5 14.9 13.5 14.9

Property, plant and equipment 11 3 90.0 34 3.8 390.6 344.4

Right-of-use assets 10 2 81 .6 26 3.6 281.6 263.6

Investments 12 – – 5.0 5.0

Defined benefit pension asset 20 6.3 – 6.3 –

69 1 .4 6 22 .3 697.0 627.9

Current assets

Inventories 14 4 0.6 2 7. 9 40.6 27.9

Trade and other receivables 15 50.2 3 7. 6 50.2 37.6

Assets held for resale – 1. 6 – 1.6

Current tax 18 0.6 0 .4 0.6 0.4

Cash and cash equivalents 16 1 9 1.6 19 8.6 191.6 198.6

28 3.0 2 6 6 .1 283.0 266.1

Total assets 9 74.4 888. 4 980.0 894.0

LIABILITIES

Current liabilities

Trade and other payables 17 (1 9 1 .7) (1 5 3. 4) (199.4) (161.1)

Lease liabilities 10 (4 8 . 8) (49.3) (48.8) (49.3)

Provisions 21 (3 . 6) (4. 2) (3.6) (4.2)

(2 4 4.1) (2 0 6 . 9) (251.8) (214.6)

Non-current liabilities

Other payables 19 (2 . 8) (3 .2) (2.8) (3.2)

Defined benefit pension liability 20 – (2 .4) – (2.4)

Lease liabilities 10 (2 5 2 . 5) (233.9) (252.5) (233.9)

Deferred tax liability 13 (26 . 3) (1 0. 0) (25.7) (9.4)

Long-term provisions 21 (2 .7) (2 . 8) (2.7) (2.8)

(2 8 4. 3) (2 52 .3) (283.7) (251.7)

Total liabilities (5 2 8 . 4) (459.2) (535.5) (466.3)

Net assets 44 6.0 429. 2 444.5 427.7

EQUITY

Capital and reserves

Issued capital 22 2.0 2 .0 2.0 2.0

Share premium account

2 3 .1 20.0 23.1 20.0

Capital redemption reserve 22 0.4 0 .4 0.4 0.4

Retained earnings 420.5 4 06 .8 419.0 405.3

Total equity attributable to equity holders of the Parent 44 6.0 429. 2 444.5 427.7

Of the Group profit for the year £120.3million (2021: £117.6 million) isdealt with in the books of the ParentCompany.

The accounts on pages 108 to 155 were approved by the Board of Directors on 7 March 2023 and were signed on its behalf by:

Roisin Currie

Richard Hutton

Company Registered Number 502851

110

STATEMENTS OF CHANGES IN EQUITY

FOR THE 52 WEEKS ENDED 31 DECEMBER 2022 (2021: 52 WEEKS ENDED 1 JANUARY 2022)

Group

52 weeks ended 1 January 2022

Attributable to equity holders of the Company

Note

Issued

capital

£m

premium

£m

Capital

redemption

reserve

£m

Retained

earnings

£m

Total

£m

Balance at 3 January 2021 2.0 15.7 0 .4 30 3.5 32 1.6

Total comprehensive income for the year

Profit for the financial year – – – 1 1 7. 5 1 1 7. 5

Other comprehensive income – – – 5 .4 5 .4

Total comprehensive income for the year – – – 12 2.9 122.9

Transactions with owners, recorded directly in equity

Issue of ordinary shares – 4.3 – – 4.3

Sale of own shares – – – 0.3 0.3

Purchase of own shares – – – (1 0. 0) (1 0 . 0)

Share-based payment transactions 20 – – – 2. 2 2 .2

Dividends to equity holders – – – (15.3) (15.3)

Tax items taken directly to reserves 7 – – – 3.2 3.2

Total transactions with owners – 4.3 – (1 9. 6) (15.3)

Balance at 1 January 2022 2.0 20.0 0.4 40 6.8 42 9. 2

52 weeks ended 31 December 2022

Attributable to equity holders of the Company

Note

Issued

capital

£m

premium

£m

Capital

redemption

reserve

£m

Retained

earnings

£m

Total

£m

Balance at 2 January 2022 2.0 20.0 0 .4 40 6.8 429. 2

Total comprehensive income for the year

Profit for the financial year – – –

120.3 12 0.3

Other comprehensive income – – – 2 .5 2.5

Total comprehensive income for the year – – –

122 .8 122 .8

Transactions with owners, recorded directly in equity

Issue of ordinary shares – 3 .1 – – 3 .1

Purchase of own shares – – – (1 1 . 0) (1 1 . 0)

Share-based payment transactions 20 – – – 3.6 3.6

Dividends to equity holders – – – (9 8 . 5) (9 8 . 5)

Tax items taken directly to reserves 7 – – – (3 . 2) (3 . 2)

Total transactions with owners – 3 .1 – (1 0 9 .1) (106.0)

Balance at 31 December 2022 2.0 2 3 .1 0.4 42 0.5 446 .0

111Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

STATEMENTS OF CHANGES IN EQUITY CONTINUED

FOR THE 52 WEEKS ENDED 31 DECEMBER 2022 (2021: 52 WEEKS ENDED 1 JANUARY 2022)

Parent Company

52 weeks ended 1 January 2022

Attributable to equity holders of the Company

Note

Issued

capital

£m

Share

premium

£m

Capital

redemption

reserve

£m

Retained

earnings

£m

Total

£m

Balance at 3 January 2021 2.0 15.7 0.4 301.9 320.0

Total comprehensive income for the year

Profit for the financial year 6 – – – 117.6 117.6

Other comprehensive income – – – 5.4 5.4

Total comprehensive income for the year – – – 123.0 123.0

Transactions with owners, recorded directly in equity

Issue of ordinary shares – 4.3 – – 4.3

Sale of own shares – – – 0.3 0.3

Purchase of own shares – – – (10.0) (10.0)

Share-based payment transactions 20 – – – 2.2 2.2

Dividends to equity holders – – – (15.3) (15.3)

Tax items taken directly to reserves 7 – – – 3.2 3.2

Total transactions with owners – 4.3 – (19.6) (15.3)

Balance at 1 January 2022 2.0 20.0 0.4 405.3 427.7

52 weeks ended 31 December 2022

Attributable to equity holders of the Company

Note

Issued

capital

£m

Share

premium

£m

Capital

redemption

reserve

£m

Retained

earnings

£m

Total

£m

Balance at 2 January 2022 2.0 20.0 0.4 405.3 427.7

Total comprehensive income for the year

Profit for the financial year 6 – – –

120.3 120.3

Other comprehensive income – – – 2.5 2.5

Total comprehensive income for the year – – –

122.8 122.8

Transactions with owners, recorded directly in equity

Issue of ordinary shares – 3.1 – – 3.1

Purchase of own shares – – – (11.0) (11.0)

Share-based payment transactions 20 – – – 3.6 3.6

Dividends to equity holders – – – (98.5) (98.5)

Tax items taken directly to reserves 7 – – – (3.2) (3.2)

Total transactions with owners – 3.1 – (109.1) (106.0)

Balance at 31 December 2022 2.0 23.1 0.4 419.0 444.5

112

STATEMENTS OF CASH FLOWS

FOR THE 52 WEEKS ENDED 31 DECEMBER 2022 (2021: 52 WEEKS ENDED 1 JANUARY 2022)

Note

Group Parent Company

2022

£m

2021

£m

2022

£m

2021

£m

Operating activities

Cash generated from operations (see below)

27 2 .3

3 1 2 .1

272.3

312.1

Income tax paid (1 3. 3) (1 9. 2)

(13.3)

(19.2)

Interest paid on lease liabilities 5 (6 . 8) (6 .3)

(6.8)

(6.3)

Interest paid on borrowings and other related charges 5 (0 . 7) (1 .1) (0.7) (1.1)

Net cash inflow from operating activities 251 .5 28 5.5 251.5 285.5

Investing activities

Acquisition of property, plant and equipment

(1 0 0 . 0)

(5 0.5)

(100.0)

(50.5)

Acquisition of intangible assets (3. 3) (3 .8)

(3.3)

(3.8)

Proceeds from sale of property, plant and equipment 0.9 0.3

0.9

0.3

Proceeds from sale of assets held for sale 1 .6 –

1.6

–

Interest received 5 1.4 – 1.4 –

Net cash outflow from investing activities (9 9 . 4) (5 4. 0) (99.4) (54.0)

Financing activities

Proceeds from issue of share capital

3 .1

4.3

3.1

4.3

Sale of own shares – 0.3

–

0.3

Purchase of own shares (1 1 . 0) (1 0 . 0)

(11.0)

(10.0)

Dividends paid (9 8 .5) (15.3)

(98.5)

(15.3)

Repayment of principal on lease liabilities (5 2 .7) (4 9 .0) (52.7) (49.0)

Net cash outflow from financing activities (1 5 9 .1) (6 9.7) (159.1) (69.7)

Net (decrease)/increase in cash and cash equivalents (7. 0) 1 61.8

(7.0)

161.8

Cash and cash equivalents at the start of the year 16 1 98 .6 3 6.8 198.6 36.8

Cash and cash equivalents at the end of the year 16 1 9 1.6 1 98.6 191.6 198.6

113Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

STATEMENTS OF CASH FLOWS CONTINUED

FOR THE 52 WEEKS ENDED 31 DECEMBER 2022 (2021: 52 WEEKS ENDED 1 JANUARY 2022)

Cash flow statement – cash generated from operations

Note

Group Parent Company

2022

£m

2021

£m

2022

£m

2021

£m

Profit for the financial year

120.3

1 1 7. 5

120.3

117.6

Amortisation 9 4 .7 4.5

4.7

4.5

Depreciation – property, plant and equipment 11 58.0 5 4. 2

58.0

54.2

Depreciation – right-of-use assets 10

52.8

4 8 .7

52.8

48.7

Net impairment charge/(reversal) – property, plant and equipment 11 1.2 (1.9)

1.2

(1.9)

Impairment reversal – right-of-use assets

10 0 .0

(1 .6)

0.0

(1.6)

Loss on sale of property, plant and equipment 3 1 .0 0.9

1.0

0.9

Release of Government grants 3

(0 . 4)

(0. 5)

(0.4)

(0.5)

Share-based payment expenses 20

3.6

2. 2

3.6

2.2

Finance expense 5 6 .1 7. 6

6.1

7.6

Income tax expense 7

28.0

2 8 .1

28.0

28.0

Increase in inventories

(1 2 .7)

(5 . 4)

(12.7)

(5.4)

(Increase)/decrease in receivables (1 2 . 4) 1.8 (12.4) 1.8

Increase in payables 30.8 5 8.9 30.8 58.9

Decrease in provisions

(0 .7)

(0 .4)

(0.7)

(0.4)

Decrease in pension liability 20 (8 . 0) (2 .5) (8.0) (2.5)

Cash from operating activities 27 2 .3 3 1 2 .1 272.3 312.1

114

NOTES TO THE CONSOLIDATED ACCOUNTS

Significant accounting policies

Greggs plc (‘the Company’) is a company incorporated and domiciled in the UK. The Group accounts consolidate those of the Company and its subsidiaries (together referred to as ‘the Group’).

The results of the associate are not consolidated on the grounds of materiality. The Parent Company accounts present information about the Company as a separate entity and not about its Group.

The accounts were authorised for issue by the Directors on 7 March 2023.

(a) Statement of compliance

The Group and Parent Company accounts have been prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006

as applicable to companies reporting under those standards.

(b) Basis of preparation

The accounts are presented in pounds sterling, rounded to the nearest £0.1 million unless otherwise stated, and are prepared on the historical cost basis except for the defined benefit pension

asset/liability, which is recognised as the fair value of the plan assets less the present value of the defined benefit obligation.

The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Directors’ report and strategic report on pages 1

to 101. The financial position of the Group, its cash flows and liquidity position are described in the financial review on pages 43 to 45. In addition, Note 2 to the accounts includes: the Group’s

objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk

and liquidity risk.

The accounting policies set out below have been applied consistently throughout the Group and to all years presented in these consolidated accounts except if mentioned otherwise.

From 2 January 2022 the following amendments were adopted by the Group:

– Amendments to IAS 16: Property, Plant and Equipment – Proceeds before Intended Use;

– Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets: Onerous Contracts – Cost of Fulfilling a Contract; and

– Annual Improvements 2018-2020.

Their adoption did not have a material effect on the accounts.

Going concern

The Directors have considered the adoption of the going concern basis of preparation for these accounts in the context of recent trading performance, macro-economic conditions and the

trading outlook of the Group. At the end of the reporting period the Group had available liquidity totalling £261.6 million, comprised of cash and cash equivalents of £191.6 million plus an undrawn

revolving credit facility (RCF) of £70.0 million, which is committed to December 2025. The RCF includes financial covenants that the Group must comply with related to maximum leverage and a

minimum fixed charge cover. How these covenants are measured and the required ratios are set out in Note 2.

115Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

The Directors have reviewed cash flow forecasts prepared for the period up to December 2024 as well as covenant compliance for that period. In reviewing the cash flow forecasts the Directors

considered the current trading performance of the Group and the likely capital expenditure and working capital requirements of its growth plans.

After reviewing these cash flow forecasts and making enquiries, the Directors are confident that the Company and the Group will have sufficient funds to continue to meet their liabilities as they

fall due for at least 12 months from the date of approval of the accounts. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

Key estimates and judgements

The preparation of financial information in conformity with UK-adopted IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and

reported amounts of assets and liabilities, income and expenses. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised

in the year in which the estimate is revised if the revision affects only that year, or in the year of revision and future years if the revision affects both current and future years.

Impairment

Property, plant and equipment and right-of-use assets are reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable. For example,

shop fittings and right-of-use assets may be impaired if sales in that shop fall. When a review for impairment is conducted the recoverable amount is estimated based on the higher of the

value-in-use calculations or fair value less costs of disposal. Value-in-use calculations are based on management’s estimates of future cash flows generated by the assets and an appropriate

discount rate. Consideration is also given to whether the impairment assessments made in prior years remain appropriate based on the latest expectations in respect of recoverable amount.

Where it is concluded that the impairment has reduced, a reversal of the impairment is recorded.

The Group has traded profitably throughout 2022, with year-on-year growth particularly strong in the first quarter due to the comparison with pandemic lockdown restrictions in 2021. As such

there is not considered to be a global indicator of impairment across the Group’s asset base. Where indicators of impairments exist for specific cash generating units (CGUs), with each individual

shop considered its own CGU (shops opened in 2021 and 2022 are excluded on the grounds that they are still maturing), then an impairment review has been performed to calculate the

recoverable value.

For those shops with indications of impairment (identified as mature shops with low cash generation relative to the carrying value of the associated assets), the value-in-use has been calculated

using the following assumptions:

– Like-for-like transaction volumes for those shops have been assumed to grow at a rate of 2.0% for the period of the impairment review;

– Where shops are currently used to fulfil orders for delivery, the net cash flows for fulfilling these orders are included within the estimated cash flows for the shop;

– Earnings before interest, tax, depreciation, amortisation and rent (EBITDAR) is used as a proxy for net cash flow excluding rental payments;

– The discount rate is based on the Group’s pre-tax cost of capital and at 31 December 2022 was 9.6% (1 January 2022: 6.9%); and

– Consideration of the appropriate period over which to forecast cash flows, including reference to the lease term. Where considered appropriate cash flows have been included for periods

beyond the lease probable end date (to a maximum of five years in accordance with IAS 36).

On the basis of these calculations, a net impairment charge of £1.2 million has been recognised during the current year (of which £1.16 million relates to fixtures and fittings and £0.04 million

relates to right-of-use assets) resulting in an impairment provision of £5.2 million being retained at 31 December 2022 in respect of 92 shops (of which £2.3 million relates to fixtures and fittings

and £2.9 million relates to right-of-use assets).

116

Significant accounting policies continued

(b) Basis of preparation continued

Impairment continued

Given the uncertainties in the impairment model, the sensitivities of these assumptions on the impairment calculation have been tested:

– A 1% increase in the discount rate would result in an increased impairment of £0.4 million, with an additional 11 shops impaired. A 1% decrease in the discount rate would result in a reduced

impairment of £0.3 million, with three fewer shops impaired.

– A 5% increase in the growth assumption for net cash flow (per annum) would result in a reduced impairment of £1.1 million with 16 fewer shops impaired. A 5% decrease in the growth

assumption would result in an increased provision of £3.3 million with an additional 47 shops impaired.

Determining the rate used to discount lease payments

At the commencement date of property leases the lease liability is calculated by discounting the lease payments. The discount rate used should be the interest rate implicit in the lease. However,

if that rate cannot be readily determined, which is generally the case for property leases, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to

pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. As the Group had

no suitable external borrowings from which to determine that rate, judgement is required to determine the incremental borrowing rate to be used. At the start of each month a risk-free rate is

obtained, linked to the length of the lease and an adjustment is then made to reflect credit risk. During the year discount rates in the range 2.5% to 5.9% were used. Small changes in the discount

rate would have an immaterial impact on the accounts. A 0.1% change in the discount rate used for each lease is estimated to adjust the total liabilities by c. £1.0 million.

Determining the lease term of property leases

At the commencement date of property leases the Group normally determines the lease term to be the full term of the lease, assuming that any option to break or extend the lease is unlikely

to be exercised and it is not reasonably certain that the Group will continue in occupation for any period beyond the lease term. Leases are regularly reviewed and will be revalued if it becomes

reasonably certain that a break clause or option to extend the lease will be exercised.

The leases typically run for a period of 10 or 15 years. In England and Wales, the majority of the Group’s property leases are protected by the Landlord and Tenant Act 1954 (LTA) which affords

protection to the lessee at the end of an existing lease term.

Judgement is required in respect of those property leases where the current lease term has expired but the Group has not yet renewed the lease. Where the Group believes renewal to be

reasonably certain and the lease is protected by the LTA it will be treated as having been renewed at the date of termination of the previous lease term and on the same terms as the previous

lease. Where renewal is not considered to be reasonably certain the leases are included with a lease term which reflects the anticipated notice period under relevant legislation. The lease will be

revalued when it is renewed to take account of the new terms. As at 31 December 2022 the financial effect of applying this judgement was an increase in recognised lease liabilities of £45.1 million

(1 January 2022: £41.7 million).

In addition, where a shop is refurbished nearing the end of the contractual lease end date and the Group therefore expects to renew the lease, the lease liability is revised to reflect an additional

lease term. The impact of this judgement as at 31 December 2022 is an additional lease liability of £7.7 million (1 January 2022: £7.7 million).

Post-retirement benefits

The determination of the defined benefit obligation of the Group’s defined benefit pension scheme depends on the selection of certain assumptions with significant estimation uncertainty

including the discount rate, inflation rate, mortality rates and commutation. Differences arising from actual experience or future changes in assumptions will be reflected in future years. The key

assumptions, sensitivities and carrying amounts for 2022 are given in Note 20.

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

117Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

The consolidated accounts include the results of Greggs plc and its subsidiary undertakings for the 52 weeks ended 31 December 2022. The comparative period is the 52 weeks ended

1 January 2022.

(i) Subsidiaries

Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability

to affect those returns through its power over the entity. The accounts of subsidiaries are included in the consolidated accounts from the date on which control commences until the date on

which control ceases.

(ii) Associates

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group

holds 20% to 50% of the voting power of another entity unless it can be clearly demonstrated that this is not the case. At the year end the Group has one associate which has not been consolidated

on the grounds of materiality (see Note 12).

(iii) Transactions eliminated on consolidation

Intragroup balances, and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated accounts.

(d) Exceptional items

Exceptional items are defined as items of income and expenditure which are material and unusual in nature and which are considered to be of such significance that they require separate

disclosure on the face of the income statement. Any future movements on items previously classified as exceptional will also be classified as exceptional.

(e) Foreign currency

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the

balance sheet date are translated at the foreign exchange rate ruling at that date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are

translated using the exchange rate at the date of the transaction. Foreign exchange differences arising on translation are recognised in the income statement.

(f) Intangible assets

The Group’s only intangible assets relate to software and the costs of its implementation which are measured at cost less accumulated amortisation and accumulated impairment losses.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in the income

statement as incurred.

Amortisation is recognised in the income statement on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The estimated useful

lives are five to seven years.

Assets in the course of development are recategorised and amortisation commences when the assets are available for use.

118

Significant accounting policies continued

(g) Leases

(i) Lease recognition

At inception of a contract the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset

for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in IFRS 16.

For leases of properties in which the Group is a lessee, it has applied the practical expedient permitted by IFRS 16 and will account for each lease component and any associated non-lease

components as a single lease component.

(ii) Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease. Right-of-use assets are measured at cost, less accumulated depreciation and impairment losses and adjusted

for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, adjusted for any lease payments made at or before the commencement

date, less any lease incentives received. Right-of-use assets are depreciated over the shorter of the asset’s useful life or the lease term on a straight-line basis. Right-of-use assets are subject to,

and reviewed regularly for, impairment. Depreciation on right-of-use assets is included in selling and distribution costs in the consolidated income statement.

(iii) Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of the lease payments to be made over the lease term. Lease payments include fixed

payments less any lease incentives receivable and variable lease payments that depend on an index or rate. Any variable lease payments that do not depend on an index or rate are recognised as

an expense in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily

determinable. Generally the Group uses its incremental borrowing rate as the discount rate. When there are no external borrowings, judgement is required to determine an approximation,

calculated based on UK Government gilt rates of an appropriate duration and adjusted by an indicative credit premium.

After the commencement date, the lease liability is increased to reflect the accretion of interest and reduced for lease payments made. In addition, the carrying amount of lease liabilities

is remeasured if there is a modification, a change in the lease term or a change in the fixed lease payments. The remeasured lease liability (and corresponding right-of-use asset) is calculated

using a revised discount rate, based upon a revised incremental borrowing rate at the time of the change. Interest charges are included in finance costs in the income statement.

(iv) Short-term leases and leases of low-value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery and equipment that have a lease term of less than 12 months and leases

of low-value assets. Lease payments relating to short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.

(v) Variable lease payments

Some property leases contain variable payment terms that are linked to sales generated from a shop. For individual shops, up to 100% of lease payments are on the basis of variable payment

terms. These payments are recognised in the income statement in the period in which the condition that triggers them occurs. Under existing lease arrangements, where variable payment terms

exist, the expected future cash outflow on an annual basis is expected to be immaterial.

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

119Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

(h) Property, plant and equipment

(i) Owned assets

Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation (see below) and impairment losses (see accounting policy (l)). The cost of self-constructed

assets includes the cost of materials and direct labour.

(ii) Subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within

the component will flow to the Group, and its cost can be measured reliably. The carrying value of the replaced component is derecognised. The costs of the day-to-day servicing of property,

plant and equipment are recognised in the income statement as incurred.

(iii) Depreciation

Depreciation is provided so as to write off the cost (less residual value) of each item of property, plant and equipment during its expected useful life using the straight-line method

over the following periods:

Freehold and long leasehold buildings 20 to 40 years

Short leasehold properties 10 years or length of lease if shorter

Plant and machinery, fixtures and fittings 3 to 10 years

Freehold land is not depreciated.

Depreciation methods, useful lives and residual values (if not insignificant) are reassessed annually.

(iv) Assets in the course of construction

These assets are recategorised and depreciation commences when the assets are available for use.

(i) Investments

Non-current investments comprise investments in subsidiaries and associates which are carried at cost less impairment.

Current investments comprise fixed-term, fixed-rate bank deposits where the term is greater than three months.

(j) Inventories

Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated

costs of completion and selling expenses. The cost of inventories includes expenditure incurred in acquiring the inventories and direct production labour costs.

(k) Cash and cash equivalents

Cash and cash equivalents comprises cash at bank, in hand, debit and credit card receivables and call deposits with an original maturity of three months or less. Bank overdrafts that

are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

120

Significant accounting policies continued

(l) Impairment of non-financial assets

The carrying amounts of the Group and Company’s assets, other than inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication

of impairment. If any such indication exists, the asset’s recoverable amount is estimated. Impairment reviews are carried out on an individual shop basis.

An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the income statement. Impairment losses

recognised in prior years are assessed at each reporting date and reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed

only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognised.

(m) Assets held for sale

Assets that are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale. Immediately before classification as held for sale, the assets are

remeasured in accordance with the Group and Company’s accounting policies. Thereafter generally the assets are measured at the lower of their carrying amount and fair value less cost to sell.

Once classified as held for sale, assets are no longer depreciated or amortised.

(n) Share capital and reserves

(i) Repurchase of share capital

When share capital recognised as equity is repurchased for cancellation, the amount of the consideration paid, including directly attributable costs, is recognised as a deduction from equity

in the capital redemption reserve. Repurchased shares that are held in the employee share ownership plan are classified as treasury shares and are presented as a deduction from total equity.

(ii) Dividends

Dividends are recognised as a liability when the Company has an obligation to pay and the dividend is no longer at the Company’s discretion.

(iii) Distributable reserves

All Parent Company retained earnings are distributable and are the only such reserves.

(o) Employee share ownership plan

The Group and Parent Company accounts include the assets and related liabilities of the Greggs Employee Benefit Trust (EBT). In both the Group and Parent Company accounts the treasury

shares held by the EBT are stated at cost and deducted from total equity.

(p) Employee benefits

(i) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive

obligation to pay this amount as a result of past service provided by the employee and the obligation can be measured reliably.

(ii) Defined contribution pension plans

Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement when they are due.

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

121Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

(iii) Defined benefit pension plans

The Company’s net obligation in respect of defined benefit pension plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the

current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets (at bid price) is deducted. The Company determines the net interest on

the net defined benefit asset/liability for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit

asset/liability.

The discount rate is the yield at the reporting date on bonds that have a credit rating of at least AA, that have maturity dates approximating to the terms of the Company’s obligations and

that are denominated in the currency in which the benefits are expected to be paid.

Remeasurements arising from defined benefit pension plans comprise actuarial gains and losses and the return on plan assets (excluding interest). The Company recognises them immediately

in other comprehensive income and all other expenses related to defined benefit pension plans in employee benefit expenses in the income statement.

When the benefits of a plan are changed, or when a plan is curtailed, the portion of the changed benefit related to past service by employees, or the gain or loss on curtailment, is recognised

immediately in profit or loss when the plan amendment or curtailment occurs.

The calculation of the defined benefit obligation is performed by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Company, the recognised

asset is limited to the present value of benefits available in the form of any future refunds from the plan (net of tax) or reductions in future contributions and takes into account the adverse effect

of any minimum funding requirements in accordance with IFRIC 14.

(iv) Share-based payment transactions

The share option programme allows Group employees to acquire shares in the Company. The fair value of share options granted is recognised as an employee expense with a corresponding

increase in equity. The fair value is measured at grant date, using an appropriate model, taking into account the terms and conditions upon which the share options were granted, and is spread

over the period during which the employees become unconditionally entitled to the options. The amount recognised as an expense is adjusted to reflect the actual number of share options that

vest except where forfeiture is only due to share prices not achieving the threshold for vesting.

(v) Termination benefits

Termination benefits are expensed at the earlier of the date at which the Group can no longer withdraw the offer of these benefits and the date at which the Group recognises costs

for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date they are discounted.

(q) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic

benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of

the time value of money and the risks specific to the liability.

(i) Restructuring

A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly.

Future operating costs are not provided for.

122

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

Significant accounting policies continued

(q) Provisions continued

(ii) Onerous contracts

Provisions for onerous contracts are recognised when the Group believes that the unavoidable costs of meeting the contract obligations exceed the economic benefits expected

to be received under the contract. At this point and before a provision is established the Group recognises any impairment loss on the associated assets.

(iii) Dilapidations

The Group provides for property dilapidations, where appropriate, based on the future expected repair costs required to restore the Group’s leased buildings to their fair condition at the

end of their respective lease terms, where it is considered a reliable estimate can be made.

(r) Revenue

(i) Retail sales

Revenue from the sale of goods is recognised as income on receipt of cash or card payment. Revenue is measured net of discounts, promotions and value added taxation.

Revenue from delivery services is included in retail sales and recognised on delivery.

(ii) Franchise sales

Franchise sales are recognised when goods are delivered to franchisees. Additional franchise royalty fee income, generally calculated as a percentage of gross sales income, is recognised in

line with the franchisees’ product sales in accordance with the relevant agreement. Pre-opening capital fit-out costs are recharged to the franchisee and represent a key performance obligation of

the overall franchise sales agreement. These recharges are recognised as income on completion of the related fit-out. Sales are invoiced to franchisees on credit terms of less than three months.

(iii) Wholesale sales

Wholesale sales are recognised when goods are delivered to customers.

(iv) Loyalty programme/gift cards

Amounts received for gift cards or as part of the loyalty programme are deferred. They are recognised as revenue when the Group has fulfilled its obligation to supply products under the terms of

the programme or when it is no longer probable that these amounts will be redeemed. Where customers are entitled to a free product after a set number of purchases under the loyalty programme,

a proportion of the consideration received is deferred so that the revenue is recognised evenly across all of the linked transactions.

The nature, timing and uncertainty of revenues arising from the above transaction types do not differ significantly from each other.

(s) Government grants

Government grants are recognised in the balance sheet initially as deferred income when there is a reasonable assurance that they will be received and that the Group will comply with the

conditions attaching to them. Grants that compensate the Group for expenses incurred are recognised net of the related expenses in the income statement on a systematic basis in the same

periods in which the expenses are incurred. Grants that compensate the Group for the cost of an asset are recognised in the income statement over the useful life of the asset.

(t) Finance income and expense

Interest income or expense is recognised using the effective interest method.

123Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

(u) Income tax

Income tax comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is

recognised in equity.

Current tax is the expected tax payable on the taxable profit for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect

of previous years. The amount of current tax payable is the best estimate of the tax amount expected to be paid that reflects uncertainty related to income taxes, if any. Taxable profit differs from

profit as reported in the income statement because some items of income or expense are taxable or deductible in different years or may never be taxable or deductible.

Deferred tax is the tax expected to be payable or recoverable in the future arising from temporary differences between the carrying amounts of assets and liabilities for financial reporting

purposes and the amounts used in the calculation of taxable profit. It is accounted for using the balance sheet liability method. The amount of deferred tax recognised is based on the expected

manner of realisation or settlement of the carrying amounts of assets and liabilities, using tax rates that are expected to apply when the temporary differences reverse, based on rates enacted or

substantively enacted at the balance sheet date. When the recovery of the carrying amount of an asset gives rise to multiple tax consequences which are not subject to the same income tax laws,

separate temporary differences are identified, and the deferred tax on these is accounted for separately, including assessment of the recoverability of any deferred tax assets that arise.

Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither

accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each

reporting date and are reduced to the extent that it is no longer probable that the related deferred tax benefit will be realised.

(v) Trade and other receivables

Trade receivables are recognised initially at the amount of consideration that is unconditional. They are subsequently measured at amortised cost using the effective interest method,

less loss allowance.

(w) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within

45 days of recognition.

(x) Research and development

The Company continuously strives to improve its products and processes through technical and other innovation. Such expenditure is typically expensed to the income statement

when the related intellectual property is not capable of being formalised or capitalised within intangible assets.

(y) IFRSs available for early adoption not yet applied

The following amendments to standards which will be relevant to the Group were available for early adoption but have not been applied in these accounts:

– Amendments to IFRS 1 and IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective date 1 January 2023).

Their adoption is not expected to have a material effect on the accounts.

124

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

1. Segmental analysis

The Board is considered to be the ‘chief operating decision maker’ of the Group in the context of the IFRS 8 definition. In addition to its company-managed retail activities, the Group generates

revenues from its business to business channel which includes franchise and wholesale activities. Both channels were categorised as reportable segments for the purposes of IFRS 8.

Company-managed retail activities – the Group sells a consistent range of fresh bakery goods, sandwiches and drinks in its own shops or via delivery. Sales are made to the general public on a

cash basis. All results arise in the UK.

Business to business channel – the Group sells products to franchise and wholesale partners for sale in their own outlets as well as charging a licence fee to franchise partners. These sales and

fees are invoiced to the partners on a credit basis. All results arise in the UK.

All revenue in 2022 and 2021 was recognised at a point in time.

The Board regularly reviews the revenues and trading profit of each segment. The Board receives information on overheads, assets and liabilities on an aggregated basis consistent with the

Group accounts.

2022

Retail company-

managed shops

£m

2022

Business to

business

£m

2022

Total

£m

2021

Retail company-

managed shops

£m

2021

Business to

business

£m

2021

Total

£m

Revenue 1,352.3 160.5 1,512.8 1,098.2 131.5 1,229.7

Trading profit* 224.6 31.3 255.9 207.1 28.5 235.6

Overheads including profit share (101.5) (82.4)

Operating profit 154.4 153.2

Finance expense (net) (6.1) (7.6)

Profit before tax 148.3 145.6

* Trading profit is defined as gross profit less supply chain costs and retail costs (including property costs) and before central overheads

125Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

2. Financial risk management

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations.

Retail sales represent a large proportion of the Group’s sales and present no credit risk as they are made for cash or card payments. The Group does offer credit terms on sales to its wholesale and

franchise customers. In such cases the Group operates effective credit control procedures in order to minimise exposure to overdue debts.

Counterparty risk is also considered low. All of the Group’s surplus cash is held with highly-rated banks as specifically approved by the Board, in line with Group policy. Other receivables generally

relate to VAT and other sundry balances due from third parties. Credit risk is considered low as amounts are generally recoverable within 30-day terms.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.

The Group usually operates with net current liabilities and is therefore reliant on the continued strong performance of the retail portfolio to meet its short-term liabilities. Short and medium-term

cash forecasting is used to manage liquidity risk. These forecasts are used to ensure the Group has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions.

During 2020 the Group arranged a £100 million syndicated revolving credit facility with maturity in December 2023. During 2021 the Group exercised an option to extend the maturity by one year to

December 2024 and during 2022 exercised a further option to extend the maturity to December 2025. This facility was undrawn at 31 December 2022 (2021: undrawn). The covenants comprise:

leverage (calculated as the ratio of net borrowings to EBITDA) does not exceed 3:1; and fixed charge cover (calculated as the ratio of EBITDA to net rent and interest payable) cannot be below 1.75:1.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments.

Other than for the defined benefit pension scheme, market risk is not significant and therefore sensitivity analysis would not be meaningful. Sensitivity analysis for the defined benefit pension

scheme is given in Note 20.

Currency risk

The Group has no regular material transactions in foreign currency although there are occasional purchases, mainly of capital items, denominated in foreign currency. Whilst certain costs such

as electricity and wheat can be influenced by movements in the US dollar, actual contracts are priced in sterling. In respect of those key costs which are volatile, such as electricity and flour, the

price may be fixed for a period of time in line with Group policy. All such contracts are for the Group’s own expected usage.

Interest rate risk

Interest rate risk is the risk that movement in the interbank offered rates increase causing finance costs to increase. The Group’s interest rate risk arises from its revolving credit facility. Whilst

the facility remains undrawn increases in the interest rate will not impact on finance costs.

Equity price risk

The Group has no significant equity investments other than in its subsidiaries and associate. As disclosed in Note 20 the Group’s defined benefit pension scheme has investments in

equity-related funds.

126

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

2. Financial risk management continued

Capital management

The Group’s capital management objectives are:

– To ensure the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders; and

– To provide an adequate return to shareholders by pricing products and delivering services commensurate with the level of risk.

To meet these objectives the Group reviews the budgets, forecasts, profitability and cashflows on a regular basis to ensure there is sufficient capital to meet the needs of the Group.

The capital structure of the Group consists of shareholders’ equity as set out in the consolidated statement of changes in equity. All working capital requirements are financed from existing cash

resources and borrowings.

The Board reserves the option to purchase its own shares in the market dependent on market prices and surplus cash levels. The trustees of the Greggs Employee Benefit Trust also purchase

shares for future satisfaction of employee share options.

Financial instruments

Group and Parent Company

All of the Group’s surplus cash or cash equivalents is invested as cash placed on deposit or fixed-term deposits.

The Group’s treasury policy has as its principal objective the achievement of the maximum rate of return on cash balances whilst maintaining an acceptable level of risk. Other than mentioned

below there are no financial instruments, derivatives or commodity contracts used.

Financial assets and liabilities

A financial asset is measured at amortised cost if it meets both of the following conditions:

– It is held within a business model whose objective is to hold assets to collect contractual cash flows; and

– Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The Group’s main financial assets comprise cash and cash equivalents and fixed-term deposits. Other financial assets include trade and other receivables arising from the Group’s activities.

These financial assets all meet the conditions to be recognised at amortised cost.

Other than trade and other payables and lease liabilities, the Group had no financial liabilities as at 31 December 2022 (2021: £nil).

Fair values

The fair value of the Group’s financial assets and liabilities is not materially different from their carrying values. Financial assets and liabilities comprise principally of trade and other receivables

and trade and other payables and the only interest-bearing balances are the bank deposits and borrowings which attract interest at variable rates.

Interest rate, credit and foreign currency risk

The Group has not entered into any hedging transactions during the current and prior year and considers interest rate, credit and foreign currency risks not to be significant.

127Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

3. Profit before tax

Profit before tax is stated after charging/(crediting):

2022

£m

2021

£m

Amortisation of intangible assets 4.7 4.5

Depreciation of owned property, plant and equipment 58.0 54.2

Depreciation of right-of-use assets 52.8 48.7

Net impairment of owned property, plant and equipment 1.2 (1.9)

Net impairment of right-of-use assets 0.0 (1.6)

Loss on disposal of property, plant and equipment 1.0 0.9

Release of Government grants (0.4) (0.5)

Auditor’s remuneration for the audit of these accounts amounted to £266,250 (2021: £250,000) and for other assurance services £31,300 (2021: £nil). Amounts paid to the Company’s auditor

in respect of services to the Company, other than the audit of the Company’s accounts, have not been disclosed as the information is required instead to be presented on a consolidated basis.

During 2021 an income statement saving of £14.9 million was made following the suspension of business rates until April 2021. There was no similar saving in 2022.

4. Personnel expenses

The average number of persons employed by the Group and Parent Company (including Directors) during the year was as follows:

2022

Number

2021

Number

Management 660 601

Administration 432 353

Production 3,196 2,935

Shop 22,640 18,994

26,928 22,883

The aggregate costs of these persons were as follows:

Note

2022

£m

2021

£m

Wages and salaries 439.1 378.0

Compulsory social security contributions 33.8 25.0

Pension costs – defined contribution plans 20 26.5 22.4

Equity-settled transactions (including compulsory social security contributions) 20 3.3 3.8

502.7 429.2

128

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

4. Personnel expenses continued

In addition to wages and salaries, the total amount accrued under the Group’s employee profit sharing scheme is contained within the main cost categories as follows:

2022

£m

2021

£m

Cost of sales 4.3 4.3

Distribution and selling costs 10.3 10.3

Administrative expenses 2.0 2.0

Amount shared with employees 16.6 16.6

Compulsory social security contributions 2.1 2.1

18.7 18.7

For the purposes of IAS 24 ‘Related Party Disclosures’, key management personnel comprises the Directors and the members of the Operating Board and their remuneration was as follows:

2022

£m

2021

£m

Salaries and fees

4.4

3.4

Taxable benefits 0.1 0.1

Annual bonus (including profit share)

2.5

2.4

Post-retirement benefits 0.3 0.3

Equity-settled transactions 2.3 0.9

9.6 7.1

The following amounts are disclosed in accordance with Schedule 5 of the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008.

2022

£m

2021

£m

Aggregate Directors’ remuneration 2.7 2.5

Aggregate amount of gains on exercise of share options 0.2 2.0

2.9 4.5

As noted in the Directors' Remuneration Report on page 93, the remuneration above includes the amounts paid to Roger Whiteside up to the date of his retirement from the Board.

During the year the number of Directors in the defined contribution pension scheme was two (2021: one) and in the defined benefit pension scheme was one (2021: one).

129Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

5. Finance expense (net)

Note

2022

£m

2021

£m

Interest income on cash balances 1.3 –

Interest expense on borrowings and other related charges (0.7) (1.1)

Foreign exchange gain/(loss) 0.1 (0.1)

Interest on lease liabilities (6.8) (6.3)

Net interest on defined benefit pension liability 20 0.0 (0.1)

(6.1) (7.6)

6. Profit attributable to Greggs plc

Of the Group profit for the year, £120.3 million (2021: £117.6 million) is dealt with in the accounts of the Parent Company. The Company has taken advantage of the exemption permitted by s408 of

the Companies Act 2006 from presenting its own income statement.

7. Income tax expense

Recognised in the income statement

2022

£m

2021

£m

Current tax

Current year

14.1

19.1

Adjustment for prior years (0.2) (0.2)

13.9 18.9

Deferred tax

Origination and reversal of temporary differences

14.1

10.2

Adjustment for prior years 0.0 (1.0)

14.1 9.2

Total income tax expense in income statement 28.0 28.1

130

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

7. Income tax expense continued

Reconciliation of effective tax rate

The tables below explain the differences between the expected tax expense calculated at the UK statutory rate of 19% (2021: 19%) and the actual tax expense for each year.

2022

£m 2021

2021

£m

Profit before tax 148.3 145.6

Income tax using the domestic corporation tax rate 19.0% 28.1 19.0% 27.7

Items not taxable for tax purposes

(2.9%) (4.3) (2.0%) (2.8)

Non-tax-deductible depreciation 0.6% 1.0 0.7% 1.0

Impairment of non-tax-deductible assets – – (0.1%) (0.2)

Impact of increase in deferred tax rate

2.3% 3.4

2.5% 3.6

Adjustment for prior years (0.1%) (0.2) (0.8%) (1.2)

Total income tax expense in income statement 18.9% 28.0 19.3% 28.1

Legislation to increase the rate of corporation tax to 25% from 1 April 2023 was substantively enacted on 24 May 2021. The 25% rate has therefore been applied to any timing differences that are

expected to reverse on or after 1 April 2023 whilst a rate of 19% has been applied to those timing differences expected to reverse before 1 April 2023.

Tax recognised in other comprehensive income or directly in equity

2022

Current

tax

£m

2022

Deferred

tax

£m

2022

Total

£m

2021

Total

£m

Debit/(credit):

Relating to equity-settled transactions – 3.2 3.2 (3.2)

Relating to current and defined benefit pension plans – remeasurement (losses)/gains (0.8) (1.0) (1.8) 1.7

(0.8) 2.2 1.4 (1.5)

The deferred tax movements in both the current and prior years relating to equity-settled transactions are in respect of share-based payments and arise as a result of fluctuations in share price

in the year and the stage of maturity of existing schemes.

The current and deferred tax movements in both the current and prior years relating to defined benefit pension plans are in respect of plan remeasurements accounted for in other

comprehensive income, special contributions made to the scheme and the revaluation impact of deferred tax previously recognised directly in equity.

131Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

8. Earnings per share

Basic earnings per share

Basic earnings per share for the 52 weeks ended 31 December 2022 is calculated by dividing profit attributable to ordinary shareholders by the weighted average number of ordinary shares in

issue during the 52 weeks ended 31 December 2022 as calculated below.

Diluted earnings per share

Diluted earnings per share for the 52 weeks ended 31 December 2022 is calculated by dividing profit attributable to ordinary shareholders by the weighted average number of ordinary shares,

adjusted for the effects of all dilutive potential ordinary shares (which comprise share options granted to employees) in issue during the 52 weeks ended 31 December 2022 as calculated below.

Profit attributable to ordinary shareholders

2022

£m

2021

£m

Profit for the financial year attributable to equity holders of the Parent 120.3 117.5

Basic earnings per share

118.5p

115.7p

Diluted earnings per share 117.5p 114.3p

Weighted average number of ordinary shares

2022

Number

2021

Number

Issued ordinary shares at start of year 101,897,021 101,426,038

Effect of own shares held (511,370) (221,851)

Effect of shares issued 100,009 284,386

Weighted average number of ordinary shares during the year 101,485,660 101,488,573

Effect of share options in issue 849,222 1,261,311

Weighted average number of ordinary shares (diluted) during the year 102,334,882 102,749,884

132

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

9. Intangible assets

Group and Parent Company

Software

£m

Assets under

development

£m

Total

£m

Cost

Balance at 3 January 2021 33.1 0.1 33.2

Additions 3.1 0.7 3.8

Transfers 0.1 (0.1) –

Balance at 1 January 2022 36.3 0.7 37.0

Balance at 2 January 2022 36.3 0.7 37.0

Additions 3.2 0.1 3.3

Transfers 0.8 (0.8) –

Balance at 31 December 2022 40.3 – 40.3

Amortisation

Balance at 3 January 2021 17.6 – 17.6

Amortisation charge for the year 4.5 – 4.5

Balance at 1 January 2022 22.1 – 22.1

Balance at 2 January 2022 22.1 – 22.1

Amortisation charge for the year 4.7 – 4.7

Balance at 31 December 2022 26.8 – 26.8

Carrying amounts

At 3 January 2021 15.5 0.1 15.6

At 1 January 2022 14.2 0.7 14.9

At 2 January 2022 14.2 0.7 14.9

At 31 December 2022 13.5 – 13.5

All amortisation is charged to administrative expenses in the income statement.

Assets under development relate to software projects arising from the investment in new systems platforms.

133Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

10. Leases

Amounts recognised in the balance sheets

The balance sheets show the following amounts relating to leases:

Group and Parent Company

2022

£m

2021

£m

Right-of-use assets

Land and buildings 278.4 260.4

Plant and equipment 3.2 3.2

281.6 263.6

2022

£m

2021

£m

Lease liabilities

Current 48.8 49.3

Non-current 252.5 233.9

301.3 283.2

The remaining maturities of the lease liabilities, which are gross and undiscounted, are as follows:

2022

£m

2021

£m

Less than one year 56.2 53.0

One to two years 52.5 47.1

Two to three years 47.7 43.1

Three to four years 39.9 38.3

Four to five years 32.4 31.0

More than five years 106.4 92.6

Total undiscounted lease liability 335.1 305.1

Additions to right-of-use assets during the 52 weeks ended 31 December 2022 as a result of entering into new leases (either as a result of acquiring new shops or completing a lease renewal for an

existing shop) were £63.4 million (2021: £49.6 million).

A further net increase of £7.8 million to right-of-use assets has also been recognised during the 52 weeks ended 31 December 2022 as a result of lease modifications and assumptions relating to

lease term once a lease has become expired (2021: net decrease of £9.1 million).

134

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

10. Leases continued

Amounts recognised in the income statement

2022

£m

2021

£m

Depreciation charge on right-of-use assets

Land and buildings

51.6

47.7

Plant and equipment 1.2 1.0

52.8 48.7

Impairment charge/(reversal) 0.0 (1.6)

Interest expense (included in finance expense) 6.8 6.3

Expense included for short-term leases (included in cost of sales and administrative expenses) 0.1 0.1

Expense related to lease of low-value assets that are not shown above as short-term leases (included in administrative expenses) 0.2 0.1

Expense related to variable lease payments not included in lease liabilities (included in distribution and selling costs) 5.1 2.1

The impairment charge/(reversal) is charged to distribution and selling costs in the income statement and arises due to changes in the trading performance of the shops.

The total cash outflow for leases accounted for under IFRS 16 in 2022 was £59.5 million (2021: £55.3 million) and for other leases was £5.4 million (2021: £2.3 million).

The components of the movement in the total lease liability were as follows:

2022

£m

Opening total liability 283.2

Additions in respect of new leases 63.4

Lease modifications 7.4

Interest on lease liabilities

6.8

Rental payments (including interest paid on lease liabilities within operating activities) (59.5)

Closing total liability 301.3

135Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

11. Property, plant and equipment

Group

Land and

buildings

£m

Plant and

equipment

£m

Fixtures

and fittings

£m

Assets under

construction

£m

Total

£m

Cost

Balance at 3 January 2021 168.9 172.5 348.7 26.9 717.0

Additions 4.5 14.9 31.4 2.8 53.6

Disposals (0.5) (11.5) (16.3) – (28.3)

Transfers 19.6 7.3 – (26.9) –

Reclassified as held for sale (1.8) – – – (1.8)

Balance at 1 January 2022 190.7 183.2 363.8 2.8 740.5

Balance at 2 January 2022 190.7 183.2 363.8 2.8 740.5

Additions 3.1 22.9 71.8 9.7 107.5

Disposals (0.4) (4.0) (21.5) – (25.9)

Transfers 0.1 2.7 – (2.8) –

Balance at 31 December 2022 193.5 204.8 414.1 9.7 822.1

Depreciation

Balance at 3 January 2021 52.8 96.2 222.7 – 371.7

Depreciation charge for the year 5.5 15.4 33.3 – 54.2

Impairment charge for the year – 0.1 0.7 – 0.8

Impairment release for the year (1.0) (0.4) (1.3) – (2.7)

Disposals (0.1) (11.4) (15.6) – (27.1)

Reclassified as held for sale (0.2) – – – (0.2)

Balance at 1 January 2022 57.0 99.9 239.8 – 396.7

Balance at 2 January 2022 57.0 99.9 239.8 – 396.7

Depreciation charge for the year 6.2 16.6 35.2 – 58.0

Impairment charge for the year – – 2.0 – 2.0

Impairment release for the year – – (0.8) – (0.8)

Disposals (0.3) (3.5) (20.0) – (23.8)

Balance at 31 December 2022 62.9 113.0 256.2 – 432.1

Carrying amounts

At 3 January 2021 116.1 76.3 126.0 26.9 345.3

At 1 January 2022 133.7 83.3 124.0 2.8 343.8

At 2 January 2022 133.7 83.3 124.0 2.8 343.8

At 31 December 2022 130.6 91.8 157.9 9.7 390.0

Assets under construction relate to the building of an additional line for the production of savouries at the manufacturing facility at Balliol Park, Newcastle upon Tyne.

136

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

11. Property, plant and equipment continued

Assets are reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable and provision is made where necessary. The method and

assumptions used in these calculations, together with the associated sensitivities and reasons for impairment, are set out in the basis of preparation – key estimates and judgements on page 115.

Any impairment charge/(reversal) is charged to distribution and selling costs in the income statement.

During 2018, the Company exchanged contracts for the disposal of the vacant Twickenham site. The disposal is conditional on a number of factors, including the applications for and successful

grant of planning permission. As at the end of 2022 the timing of the resolution of these factors remains uncertain and therefore this asset continues to be classified as non-current. At this stage

the total proceeds arising from supply chain site disposals are still expected to be in line with those anticipated in the investment plan.

During 2021, the Company exchanged contracts for the sale of land held in Southall. The cost and associated depreciation were reclassified as an asset held for sale in current assets. The sale

was completed during 2022 for a cash consideration of £1.6 million.

137Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Parent Company

Land and

buildings

£m

Plant and

equipment

£m

Fixtures

and fittings

£m

Assets under

construction

£m

Total

£m

Cost

Balance at 3 January 2021 169.4 173.0 349.2 26.9 718.5

Additions 4.5 14.9 31.4 2.8 53.6

Disposals (0.5) (11.5) (16.3) – (28.3)

Transfers 19.6 7.3 – (26.9) –

Reclassified as held for sale (1.8) – – – (1.8)

Balance at 1 January 2022 191.2 183.7 364.3 2.8 742.0

Balance at 2 January 2022 191.2 183.7 364.3 2.8 742.0

Additions 3.1 22.9 71.8 9.7 107.5

Disposals (0.4) (4.0) (21.5) – (25.9)

Transfers 0.1 2.7 – (2.8) –

Balance at 31 December 2022 194.0 205.3 414.6 9.7 823.6

Depreciation

Balance at 3 January 2021 53.1 96.4 223.1 – 372.6

Depreciation charge for the year 5.5 15.4 33.3 – 54.2

Impairment charge for the year – 0.1 0.7 – 0.8

Impairment release for the year (1.0) (0.4) (1.3) – (2.7)

Disposals (0.1) (11.4) (15.6) – (27.1)

Reclassified as held for sale (0.2) – – – (0.2)

Balance at 1 January 2022 57.3 100.1 240.2 – 397.6

Balance at 2 January 2022 57.3 100.1 240.2 – 397.6

Depreciation charge for the year 6.2 16.6 35.2 – 58.0

Impairment charge for the year – – 2.0 – 2.0

Impairment release for the year – – (0.8) – (0.8)

Disposals (0.3) (3.5) (20.0) – (23.8)

Balance at 31 December 2022 63.2 113.2 256.6 – 433.0

Carrying amounts

At 3 January 2021 116.3 76.6 126.1 26.9 345.9

At 1 January 2022 133.9 83.6 124.1 2.8 344.4

At 2 January 2022 133.9 83.6 124.1 2.8 344.4

At 31 December 2022 130.8 92.1 158.0 9.7 390.6

138

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

11. Property, plant and equipment continued

Land and buildings

The carrying amount of land and buildings comprises:

Group Parent Company

2022

£m

2021

£m

2022

£m

2021

£m

Freehold property 129.6 132.5 129.8 132.7

Long leasehold property 0.4 0.4 0.4 0.4

Short leasehold property 0.6 0.8 0.6 0.8

130.6 133.7 130.8 133.9

12. Investments

Non-current investments

Parent Company

Shares in

subsidiary

undertakings

£m

Cost

Balance at 3 January 2021, 1 January 2022 and 31 December 2022 5.8

Impairment

Balance at 3 January 2021, 1 January 2022 and 31 December 2022 0.8

Carrying amount

Balance at 3 January 2021, 1 January 2022, 2 January 2022 and 31 December 2022 5.0

139Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

The undertakings in which the Company’s interest at the year end is more than 20% are as follows:

Principal activity

Address of

registered office

Proportion of

voting rights and

shares held

Charles Bragg (Bakers) Limited Non-trading 1 100%

Greggs (Leasing) Limited Dormant 1 100%

Thurston Parfitt Limited Non-trading 1 100%

Greggs Properties Limited Property holding 1 100%

Olivers (U.K.) Limited Dormant 2 100%

Olivers (U.K.) Development Limited* Non-trading 2 100%

Birketts Holdings Limited Dormant 1 100%

J.R. Birkett and Sons Limited* Non-trading 1 100%

Greggs Trustees Limited Trustees 1 100%

Solstice Zone A Management Company Limited Non-trading 3 28%

* Held indirectly

1 Greggs House

Quorum Business Park

Newcastle upon Tyne

NE12 8BU

2 Clydesmill Bakery

75 Westburn Drive

Clydesmill Estate

Cambuslang

Glasgow

G72 7NA

3 The Abbey

Preston Road

Yeovil

Somerset

BA20 2EN

Solstice Zone A Management Company Limited was not consolidated on the grounds of materiality in either the current or prior year.

The Company’s subsidiary undertakings listed above were all entitled to exemption, under subsections (1) and (2) of s480 of Companies Act 2006 relating to dormant companies, from the

requirement to have their accounts audited.

140

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

13. Deferred tax assets and liabilities

Group

Deferred tax assets and liabilities are attributable to the following:

Assets Liabilities Net

2022

£m

2021

£m

2022

£m

2021

£m

2022

£m

2021

£m

Property, plant and equipment – – (33.2) (18.5) (33.2) (18.5)

Employee benefits 4.9 6.6 – – 4.9 6.6

Short-term temporary differences 0.7 0.6 – – 0.7 0.6

Unused tax losses 1.3 1.3 – – 1.3 1.3

Tax assets/(liabilities) 6.9 8.5 (33.2) (18.5) (26.3) (10.0)

The Group has a deferred tax asset of £8.5 million relating to buildings which previously qualified for industrial buildings allowance that is unrecognised at 31 December 2022, as it is not

considered to be recoverable (1 January 2022: £8.5 million).

The movements in temporary differences during the 52 weeks ended 1 January 2022 were as follows:

Balance at

3 January

2021

£m

Recognised

in income

£m

Recognised

in equity

£m

Balance at

1 January

2022

£m

Property, plant and equipment (8.3) (10.2) – (18.5)

Employee benefits 5.5 (0.4) 1.5 6.6

Short-term temporary differences 0.5 0.1 – 0.6

Unused tax losses – 1.3 – 1.3

(2.3) (9.2) 1.5 (10.0)

The movements in temporary differences during the 52 weeks ended 31 December 2022 were as follows:

Balance at

2 January

2022

£m

Recognised

in income

£m

Recognised

in equity

£m

Balance at

31 December

2022

£m

Property, plant and equipment (18.5) (14.7) – (33.2)

Employee benefits 6.6

0.5 (2.2)

4.9

Short-term temporary differences 0.6 0.1 – 0.7

Unused tax losses 1.3 – – 1.3

(10.0) (14.1) (2.2) (26.3)

141Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Parent Company

Deferred tax assets and liabilities are attributable to the following:

Assets Liabilities Net

2022

£m

2021

£m

2022

£m

2021

£m

2022

£m

2021

£m

Property, plant and equipment – – (32.6) (17.9) (32.6) (17.9)

Employee benefits 4.9 6.6 – – 4.9 6.6

Short-term temporary differences 0.7 0.6 – – 0.7 0.6

Unused tax losses 1.3 1.3 – – 1.3 1.3

Tax assets/(liabilities) 6.9 8.5 (32.6) (17.9) (25.7) (9.4)

The movements in temporary differences during the 52 weeks ended 1 January 2022 were as follows:

Balance at

3 January

2021

£m

Recognised

in income

£m

Recognised

in equity

£m

Balance at

1 January

2022

£m

Property, plant and equipment (7.8) (10.1) – (17.9)

Employee benefits 5.5 (0.4) 1.5 6.6

Short-term temporary differences 0.5 0.1 – 0.6

Unused tax losses – 1.3 – 1.3

(1.8) (9.1) 1.5 (9.4)

The movements in temporary differences during the 52 weeks ended 31 December 2022 were as follows:

Balance at

2 January

2022

£m

Recognised

in income

£m

Recognised

in equity

£m

Balance at

31 December

2022

£m

Property, plant and equipment (17.9) (14.7) – (32.6)

Employee benefits 6.6

0.5 (2.2)

4.9

Short-term temporary differences 0.6 0.1 – 0.7

Unused tax losses 1.3 – – 1.3

(9.4) (14.1) (2.2) (25.7)

142

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

14. Inventories

Group and Parent Company

2022

£m

2021

£m

Raw materials and consumables 23.7 15.8

Work in progress 16.9 12.1

40.6 27.9

Inventory recognised as an expense during the year was £455.6 million (2021: £347.7 million). The write-down of inventories that was recognised as an expense in the period was £32.8 million

(2021: £36.0 million). There was no reversal of write-down of inventories in the current or prior year.

15. Trade and other receivables

Group and Parent Company

2022

£m

2021

£m

Trade receivables 31.2 24.5

Other receivables 9.4 7.4

Prepayments 9.6 5.7

50.2 37.6

At 31 December 2022 and 1 January 2022 the allowance for expected credit losses (ECLs) on financial assets are not material.

The ageing of trade receivables at the balance sheet date was:

Group and Parent Company

2022

£m

2021

£m

Not past due date 29.2 23.1

Past due 1-30 days 1.9 1.5

Past due 31-90 days – (0.1)

Past due over 90 days 0.1 –

31.2 24.5

The Group believes that all amounts that are past due by more than 30 days that have an immaterial allowance for ECLs are still collectable in full based on historic payment behaviour and

extensive analysis of customer credit risk. Based on the Group’s monitoring of customer credit risk, the Group believes that no significant allowance for ECLs is necessary in respect of trade

receivables not past due.

143Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

16. Cash and cash equivalents

Group and Parent Company

2022

£m

2021

£m

Cash and cash equivalents 191.6 198.6

17. Trade and other payables

Group Parent Company

2022

£m

2021

£m

2022

£m

2021

£m

Trade payables

102.8

74.1

102.8

74.1

Amounts owed to subsidiary undertakings – – 7.7 7.7

Other taxes and social security 8.6 8.8 8.6 8.8

Other payables 46.9 46.6 46.9 46.6

Accruals 28.3 19.6 28.3 19.6

Advance payments from customers 4.6 3.8 4.6 3.8

Deferred Government grants 0.5 0.5 0.5 0.5

191.7 153.4 199.4 161.1

Other payables includes accruals of £21.5 million (2021: £23.0 million) for performance-related remuneration.

18. Current tax

The current tax asset of £0.6 million in the Group and the Parent Company (2021: Group and Parent Company: £0.4 million) represents the estimated amount of income taxes recoverable in

respect of current and prior years.

19. Non-current liabilities – other payables

Group and Parent Company

2022

£m

2021

£m

Deferred Government grants 2.8 3.2

The Group has been awarded five Government grants relating to the extension of existing facilities and construction of new facilities. The grants, which have all been recognised as deferred

income, are being amortised over the weighted average of the useful lives of the assets they have been used to acquire.

144

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

20. Employee benefits

Defined benefit pension plan

Scheme background

The Company sponsors a funded final salary defined benefit pension plan (the ‘scheme’) for qualifying employees. The scheme was closed to future accrual in 2008 and all remaining employees

who are still members of the scheme are now members of the Company’s defined contribution scheme.

The scheme is administered by a separate Board of Trustees which is legally separate from the Company. The Trustees are composed of representatives of both the employer and employees.

The Trustees are required by law to act in the interest of all relevant beneficiaries and are responsible for the investment policy with regard to the assets plus the day-to-day administration of

the benefits.

UK legislation requires that pension schemes are funded prudently. The last funding valuation of the scheme was carried out by a qualified actuary as at 6 April 2020 and showed a deficit.

The Company has agreed a schedule of contributions to the scheme which totalled £15.0 million.

The Company has a legal right to benefit from any surplus on the winding up of the scheme. The IAS 19 valuation at 31 December 2022 showed that the scheme has a surplus of £12.1 million.

However, this surplus and the future-committed contributions would be subject to withholding tax at 35% prior to any refund to the Company. In accordance with accounting standards this

withholding tax has been recognised as a deduction from the valuation surplus creating an overall surplus position of £6.3 million

Profile of the scheme

The defined benefit pension obligation includes benefits for deferred members and current pensioners.

At 31 December 2022, the scheme had no active members (2021: nil), 351 deferred members (2021: 361) and 292 pensioners (2021: 283).

The scheme duration is an indicator of the weighted average time until benefit payments are made. For the scheme as a whole, the duration is approximately 15 years (2021: 19 years).

Investment strategy

The Company and Trustees have agreed a long-term strategy for reducing investment risk as and when appropriate. This includes a policy to hold sufficient cash and bond assets to cover the

anticipated benefit payments for at least the next five years so as to improve the cash flow matching of the scheme’s assets and liabilities.

Risks to the scheme

By funding the defined benefit pension scheme the Company is exposed to the risk that the cost of meeting its obligations is higher than anticipated. This could occur for several reasons including:

– Investment returns on the scheme assets could be lower than anticipated;

– The level of price inflation may be higher than that assumed, resulting in higher payments from the scheme; or

– Scheme members may live longer than assumed, for example due to advances in healthcare.

145Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Defined benefit pension asset/(liability)

Group and Parent Company

2022

£m

2021

£m

Defined benefit obligation (82.5) (132.5)

Fair value of plan assets 94.6 135.5

Net defined benefit pension surplus before IFRIC 14 adjustment

12.1 3.0

IFRIC 14 adjustment (5.8) (5.4)

Net defined benefit pension asset/(liability) after IFRIC 14 adjustment 6.3 (2.4)

In accordance with IFRIC 14, the Group has considered that the net defined benefit pension surplus is limited to the present value of benefits available in the form of any future refunds from the

plan (net of withholding tax) and also takes into account the adverse effect of the minimum funding requirement that the Group is committed to as at 31 December 2022.

Liability for defined benefit pension obligations

Changes in the present value of the defined benefit pension obligation are as follows:

Group and Parent Company

2022

£m

2021

£m

Opening defined benefit pension obligation 132.5 143.4

Interest cost 2.4 1.8

Remeasurement (gains)/losses:

– changes in mortality assumptions (0.7) –

– changes in financial assumptions (53.3) (6.6)

– experience 5.4 (2.8)

Benefits paid (3.8) (3.3)

Closing defined benefit pension obligation 82.5 132.5

Changes in the fair value of plan assets are as follows:

Group and Parent Company

2022

£m

2021

£m

Opening fair value of plan assets 135.5 131.5

Net interest on plan assets 2.5 1.7

Remeasurement (losses)/gains (47.6) 3.1

Company special contribution 8.0 2.5

Benefits paid (3.8) (3.3)

Closing fair value of plan assets 94.6 135.5

146

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

20. Employee benefits continued

Defined benefit pension plan continued

The costs charged in the income statement are as follows:

Group

2022

£m

2021

£m

Interest expense on net defined pension liability 0.1 0.1

Associated movement in IFRIC 14 adjustment (0.1) –

Net interest expense 0.0 0.1

The amounts recognised in other comprehensive income are as follows:

Group

2022

£m

2021

£m

Remeasurement gains on defined benefit pension plans 1.0 12.5

Associated movement in IFRIC 14 adjustment (0.3) (5.4)

Net remeasurement gains on defined benefit pension plans 0.7 7.1

Cumulative remeasurement gains and losses reported in the consolidated statement of comprehensive income since 28 December 2003, the transition date to adopted IFRSs, for the Group and

the Parent Company are net losses of £16.7 million (2021: net losses of £17.7 million).

The fair value of the plan assets is as follows:

Group and Parent Company

2022

£m

2021

£m

Equities – UK 8.8 11.6

– Overseas 13.9 22.6

Bonds – Corporate 23.2 41.0

– Government 37.5 52.1

Cash and cash equivalents/other 11.2 8.2

94.6 135.5

Principal actuarial assumptions (expressed as weighted averages):

Group and Parent Company

2022 2021

Discount rate 4.75% 1.85%

Future salary increases n/a n/a

Future pension increases 1.95% – 2.60% 2.05% – 2.80%

Rate of price inflation (RPI) 3.10% 3.30%

Rate of price inflation (CPI) 2.60% 2.80%

In November 2020 the Government announced that RPI is to be aligned with CPIH (CPI with owner occupiers’ costs) from 2030. As result the RPI assumption has been updated along with the

assumed future gap between RPI and CPI.

147Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Mortality assumption

Mortality in retirement is assumed to be in line with the S2PXA tables using CMI_2021 projections, though placing no weight on the 2020 and 2021 data due to the inherent uncertainty over the

longer-term implications of Covid-19, and a long-term rate of 1.25% per annum. Under these assumptions, pensioners aged 65 now are expected to live for a further 22.0 years (2021: 22.3 years)

if they are male and 24.1 years (2021: 24.3 years) if they are female. Members currently aged 45 are expected to live for a further 23.4 years (2021: 23.6 years) from age 65 if they are male and for a

further 25.6 years (2021: 25.8 years) from age 65 if they are female.

The sensitivities regarding the principal assumptions used to measure the scheme liabilities are set out below:

Change in assumption Impact on scheme liabilities

Discount rate 0.1% increase £5.6 million decrease

Inflation 0.1% decrease £3.7 million decrease

Mortality rates 1 year increase £2.5 million increase

If the commutation assumption were to be removed from the valuation the impact would be an increase in the scheme liabilities of £1.4 million.

The other demographic assumptions have been set having regard to latest trends in the scheme.

A triennial valuation of the scheme took place in April 2020 and was finalised during 2021. The outcome of that valuation showed a deficit in funding. This position was considered by the Trustees

and the Company and a schedule of additional contributions of £2.5 million per year for six years, beginning in 2021, was agreed. However, as a result of the volatile market conditions in the

autumn of 2022 the Company advanced payment of £5.5 million of these committed contributions, bringing the total contribution in the year to £8 million. £4.5 million of the original commitment

remains to be paid in future years, none of which is expected to be paid in 2023.

Defined contribution plans

The Company also operates defined contribution schemes for other eligible employees. The assets of the schemes are held separately from those of the Group. The pension cost represents

contributions payable by the Group and amounted to £26.5 million (2021: £22.4 million) in the year. At 31 December 2022 regular monthly employee and employer contributions of £2.8 million were

not paid over to the schemes (1 January 2022: £2.3 million). These amounts were paid to the schemes in January.

148

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

20. Employee benefits continued

Share-based payments – Group and Parent Company

The Group has established a Savings-Related Share Option Scheme, an Executive Share Option Scheme and a Performance Share Plan.

The terms and conditions of the grants for these schemes are as follows, whereby all options are settled by physical delivery of shares:

Date of grant Employees entitled

Exercise

price

Number of

granted Vesting conditions Contractual life

Performance Share Plan 3 March 2012 Senior executives £nil 248,922 Three years’ service, EPS annual compound growth of 3-8% over RPI over those three

years and TSR position relative to an appropriate comparator group

10 years

Executive Share Option Scheme 16 March 2013 Senior employees £4.80 693,000 Three years’ service and EPS growth of 3-7% over RPI on average over those three years 10 years

Performance Share Plan 4 March 2013 Senior executives £nil 305,592 Three years’ service, EPS annual compound growth of 3-8% over RPI over those three

years and TSR position relative to an appropriate comparator group

10 years

Performance Share Plan 5 March 2014 Senior executives £nil 224,599 Three years’ service, EPS annual compound growth of 1-4% over RPI over those three

years and average annual ROCE of 15.5-17% over those three years

10 years

Executive Share Option Scheme 17 April 2014 Senior employees £5.00 598,225 Three years’ service and EPS growth of 1-4% over RPI on average over those three years 10 years

Executive Share Option Scheme 18 March 2015 Senior employees £10.22 298,045 Three years’ service and EPS growth of 1-7% over RPI on average over those three years 10 years

Executive Share Option Scheme 18a May 2015 Senior employee £10.56 3,285 Three years’ service and EPS growth of 1-7% over RPI on average over those three years 10 years

Performance Share Plan 6 March 2015 Senior executives £nil 146,174 Three years’ service, EPS annual compound growth of 1-7% over RPI over those three

years and average annual ROCE of 19-21.5% over those three years

10 years

Performance Share Plan 7 March 2016 Senior executives £nil 133,271 Three years’ service, EPS average annual growth of 2-8% over RPI over those three years

and average annual ROCE of 22-27% over those three years

10 years

Executive Share Option Scheme 19 April 2016 Senior employees £10.88 235,857 Three years’ service and EPS growth of 2-8% over RPI on average over those three years 10 years

Performance Share Plan 8 May 2017 Senior executives £nil 206,404 Three years’ service, EPS average annual growth of 5-11% over those three years and

average annual ROCE of 23-27% over those three years

10 years

Executive Share Option Scheme 20 April 2017 Senior employees £10.33 246,219 Three years’ service and EPS growth of 5-11% on average over those three years 10 years

Performance Share Plan 9 March 2018 Senior executives £nil 190,943 Three years’ service, EPS average annual growth of 5-11% over those three years and

average annual ROCE of 25-29% over those three years

10 years

Executive Share Option Scheme 21 March 2018 Senior employees £11.97 228,923 Three years’ service and EPS growth of 5-11% on average over those three years 10 years

Savings-Related Share Option

Scheme 19

April 2018 All employees £9.54 335,482 Three years’ service 3.5 years

Performance Share Plan 10 April 2019 Senior executives £nil 128,534 Three years’ service, EPS average annual growth of 5-11% over those three years and

average annual ROCE of 24-28% over those three years

10 years

Executive Share Option Scheme 22 April 2019 Senior employees £18.30 140,913 Three years’ service, EPS average annual growth of 5-11% over those three years and

average annual ROCE of 24-28% over those three years

10 years

Savings-Related Share Option

Scheme 20

April 2019 All employees £14.84 230,604 Three years’ service 3.5 years

149Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Date of grant Employees entitled

Exercise

price

Number of

granted Vesting conditions Contractual life

Savings-Related Share Option

Scheme 21

April 2020 All employees £14.24 239,673 Three years’ service 3.5 years

Performance Share Plan 11 October 2020 Senior executives £nil 166,366 Three years’ service, EPS performance in FY2022, ROCE performance in FY2022 and two

strategic objectives

10 years

Executive Share Option Scheme 23 November 2020 Senior employees £17.20 121,202 Three years’ service, EPS performance in FY2022, ROCE performance in FY2022 and two

strategic objectives

10 years

Savings-Related Share Option

Scheme 22

April 2021 All employees £16.72 291,979 Three years’ service 3.5 years

Performance Share Plan 12 April 2021 Senior executives £nil 120,022 Three years’ service, EPS performance in FY2023, ROCE performance in FY2023 10 years

Performance Share Plan 12 (retained) April 2021 Senior executives £nil 29,512 Three years’ service 10 years

Executive Share Option Scheme 24 April 2021 Senior employees £22.63 120,994 Three years’ service, EPS performance in FY2023, ROCE performance in FY2023 10 years

Savings-Related Share Option

Scheme 23

April 2022 All employees £19.68 265,209 Three years’ service 3.5 years

Performance Share Plan 13 March 2022 Senior executives £nil 91,305 Three years’ service, EPS average annual growth of 3-8% over those three years and

average annual ROCE of 19.6-22.6% over those three years

10 years

Performance Share Plan 13a May 2022 Senior executives £nil 36,014 Three years’ service, EPS average annual growth of 3-8% over those three years and

average annual ROCE of 19.6-22.6% over those three years

10 years

Executive Share Option Scheme 25 March 2022 Senior employees £24.31 118,357 Three years’ service, EPS average annual growth of 3-8% over those three years and

average annual ROCE of 19.6-22.6% over those three years

10 years

The number and weighted average exercise price of share options is as follows:

2022 2021

Weighted average

exercise price

Number of

options

Weighted average

exercise price

Number of

options

Outstanding at the beginning of the year

£9.57

1,973,101 £6.07 2,352,967

Lapsed during the year £3.17 (391,775) £10.17 (288,469)

Exercised during the year £11.23 (272,472) £7.11 (653,904)

Granted during the year £15.85 510,885 £13.55 562,507

Outstanding at the end of the year £9.41 1,819,739 £9.57 1,973,101

Exercisable at the end of the year £7.44 363,630 £6.76 527,561

No options expired during the period covered by the above tables. The options outstanding at 31 December 2022 have an exercise price in the range of £nil to £24.31 and have a weighted average

contractual life of 5.1 years. The options exercised during the year had a weighted average market value of £22.73 (2021: £23.94).

150

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

20. Employee benefits continued

Share-based payments – Group and Parent Company continued

The fair value of services received in return for share options granted is measured by reference to the fair value of share options granted. The estimate of the fair value of the services received is

measured based on the Black-Scholes model for all Savings-Related Share Option Schemes and Executive Share Option Schemes and for Performance Share Plan options granted from 2014

onwards. The fair value per option granted and the assumptions used in these calculations are as follows:

2022 2021

Performance

Share Plan 13

March 2022

Performance

Share Plan 13a

May 2022

Executive Share

Option Scheme 25

March 2022

Savings-Related

Share Option

Scheme 23

April 2022

Performance

Share Plan 12

April 2021

Performance

Share Plan 12

(retained)

April 2021

Executive Share

Option Scheme 24

April 2021

Savings–Related

Share Option

Scheme 22

April 2021

Fair value at grant date £23.34 £20.04 £7.64 £8.33 £21.08 £21.08 £6.43 £7.40

Share price £24.99 £21.68 £24.99 £23.50 £22.72 £22.72 £22.63 £20.89

Exercise price £nil £nil £24.31 £19.68 £nil £nil £22.63 £16.72

Expected volatility 48.75% 48.29% 48.75% 49.00% 49.17% 49.17% 49.17% 49.17%

Option life 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years

Expected dividend yield

2.28%

2.63% 2.28% 2.43% 2.50% 2.50% 2.50% 2.50%

Risk-free rate 1.38% 1.50% 1.38% 1.64% 0.15% 0.15% 0.15% 0.15%

The expected volatility is based on historical volatility, adjusted for any expected changes to future volatility due to publicly available information. The historical volatility is calculated using a

weekly rolling share price for the three-year period immediately prior to the option grant date.

The costs charged to the income statement relating to share-based payments were as follows:

2022

£m

2021

£m

Share options granted in 2018 – (1.0)

Share options granted in 2019 0.2 0.6

Share options granted in 2020 0.7 1.2

Share options granted in 2021 1.8 1.4

Share options granted in 2022 0.9 –

3.6 2.2

Social security contributions (0.3) 1.6

Total expense recognised as employee costs 3.3 3.8

151Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

21. Provisions

Group and Parent Company

2022

Dilapidations

£m

2022

National

Insurance

£m

2022

Redundancy

£m

2022

Other

£m

2022

Total

£m

2021

Dilapidations

£m

2021

National

Insurance

£m

2021

Redundancy

£m

2021

Other

£m

2021

Total

£m

Balance at start of the year 3.1 2.2 0.2 1.5

7.0

2.7 1.5 0.9 2.3 7.4

Additional provision in the year 1.8 – – – 1.8 1.5 1.6 – – 3.1

Utilised in the year

(0.3) (0.3) – (0.2) (0.8) (0.4) (0.9) (0.4) (0.2) (1.9)

Provisions reversed during the year (1.0) (0.3) (0.1) (0.3) (1.7) (0.7) – (0.3) (0.6) (1.6)

Balance at end of the year 3.6 1.6 0.1 1.0 6.3 3.1 2.2 0.2 1.5 7.0

Included in current liabilities 2.3 0.9 – 0.4

3.6

2.0 1.6 0.1 0.5 4.2

Included in non-current liabilities 1.3 0.7 0.1 0.6 2.7 1.1 0.6 0.1 1.0 2.8

3.6 1.6 0.1 1.0 6.3 3.1 2.2 0.2 1.5 7.0

Dilapidation provisions have been made based on the future expected repair costs required to restore the Group’s leased buildings to their fair condition at the end of their respective lease terms,

where it is considered a reliable estimate can be made.

National Insurance costs are provided in respect of future share options exercises.

Other provisions are largely in respect of onerous costs relating to closed shops where the lease has not yet expired.

The majority of all of the provisions are expected to be utilised between one and four years such that the impact of discounting would not be material.

152

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

22. Capital and reserves

Share capital

Ordinary shares

2022

Number

2021

Number

In issue and fully paid at start of year – ordinary shares of 2p 101,897,021 101,426,038

Issued on exercise of share options 215,560 470,983

102,112,581 101,897,021

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

During the year 215,560 shares (2021: 470,983) were issued as a result of the exercise of vested options granted to senior management under the Executive Share Option Scheme and the exercise

of options under the Savings-Related Share Option Scheme. Options were exercised at an average price of £13.61 (2021: £10.28).

Share premium reserve

The share premium reserve relates to the proceeds received in excess of the nominal value of shares issued, net of any transaction costs.

Capital redemption reserve

The capital redemption reserve relates to the nominal value of issued share capital bought back by the Company and cancelled.

Own shares held

Deducted from retained earnings is £59.7 million (2021: £48.9 million) in respect of own shares held by the Greggs Employee Benefit Trust. The Trust, which was established during 1988 to act

as a repository of issued Company shares, holds 866,312 shares (2021: 375,694 shares) with a market value at 31 December 2022 of £20.3 million (2021: £12.5 million) which have not vested

unconditionally in employees. During the year the Trust purchased 546,286 (2021: 330,693) shares for an aggregate consideration of £11.0 million (2021: £10.0 million) and sold 55,668 (2021: 182,921)

shares for an aggregate consideration of £nil (2021: £0.3 million).

The shares held by the Greggs Employee Benefit Trust can be purchased either by employees on the exercise of an option under the Greggs Executive Share Option Schemes, Greggs Savings-

Related Share Option Scheme and Greggs Performance Share Plan or by the trustees of the Greggs Employee Share Scheme. The trustees have elected to waive the dividends payable on

these shares.

153Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Dividends

The following tables analyse dividends when paid and the year to which they relate:

2022

Per share

pence

2021

Per share

pence

2021 interim dividend – 15.0p

2021 special dividend 40.0p –

2021 final dividend 42.0p –

2022 interim dividend 15.0p –

97.0p 15.0p

The proposed final dividend in respect of 2022 amounts to 44.0 pence (£44.9 million). These dividends are not included as a liability in these accounts.

2022

£m

2021

£m

2021 interim dividend – 15.3

2021 special dividend 40.6 –

2021 final dividend 42.7 –

2022 interim dividend 15.2 –

98.5 15.3

23. Capital commitments

During the 52 weeks ended 31 December 2022, the Group entered into contracts to purchase property, plant and equipment and intangible assets for £45.5 million (2021: £16.3 million) which are

expected to be settled in the following financial year.

154

NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED

24. Related parties

Identity of related parties

The Group has a related party relationship with its subsidiaries (see Note 12), Directors and executive officers, and pension schemes.

Trading transactions with subsidiaries – Group

There have been no transactions between the Company and its subsidiaries or associates during the year (2021: none).

Trading transactions with subsidiaries – Parent Company

Amounts owed to related parties Amounts owed by related parties

2022

£m

2021

£m

2022

£m

2021

£m

Dormant subsidiaries 7.8 7.8 – –

The Greggs Foundation is also a related party and during the year the Company made a donation to the Greggs Foundation of £2.2 million (2021: £1.2 million), as well as passing on £0.2 million

(2021: £0.1 million) raised from the sale of carrier bags and £0.4 million (2021: £0.3 million) raised from the sale of products. The Greggs Foundation holds 300,000 shares (2021: 300,000 shares)

in Greggs plc and Richard Hutton, a Director of Greggs plc, is a trustee of the Greggs Foundation.

Transactions with key management personnel

Details of Directors’ shareholdings, share options, emoluments, pension benefits and other non-cash benefits can be found in the Directors’ remuneration report on pages 78 to 100.

Summary information on remuneration of key management personnel is included in Note 4.

155Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

25. Contingent asset

In October 2021 the Company issued legal proceedings against its insurer regarding a Covid-19 business interruption claim. An interim payment was received in January 2021 from the insurer in

the sum of £2.5 million. This was recognised as income in the results for the 53 weeks ended 2 January 2021, representing the alleged limit of the insurer’s liability based on there being only one

limit available for the single event, which allegedly caused all of the Company’s business interruption losses. Having taken legal advice the Company pursued a claim in the High Court, on the basis

that there were multiple events, which caused the Company’s business interruption losses, namely the various changes in Covid-related restrictions to which separate £2.5 million caps would

apply. In October 2022 the High Court largely ruled in the Company’s favour. However the ruling stated that only material changes in restrictions would provide additional £2.5 million insurance

limits. Aspects of the ruling have been appealed to the Court of Appeal by both the Company and its insurer. It follows that it’s not virtually certain that there will be an inflow of economic benefits

and consequently in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets no amount has been recognised as at 31 December 2022. Due to the subjective determination

as to what constitutes a “material change” in restrictions, and given the appeals being made by all parties, the final quantum is not ascertainable at the date of these accounts. Consistent with the

prior year a contingent asset is disclosed as it is considered more likely than not that the claim will result in an inflow of economic benefit.

156

TEN-YEAR HISTORY

2013

2014

(as

restated)

1,3

2015

2016 2017 2018 2019

5,7

2020

2021

2022

Turnover (£m) 762.4 806.1 835.7 894.2 960.0 1,029.3 1,167.9 811.3 1,229.7 1,512.8

Total sales growth/(decline) (%) 3.8% 5.7% 3.7% 7.0% 7.4% 7.2% 13.5% (30.5%) 51.6% 23.0%

Company-managed shop like-for-like sales growth/(decline) (%) (0.8%) 4.5% 4.7% 4.2% 3.7% 2.9% 9.2% (36.2%) 52.4% 17.8%

Profit/(loss) before tax (PBT) excluding exceptional items (£m) 41.3 58.3 73.1 80.3 81.7 89.8 114.2 (12.9) 145.6 148.3

PBT margin excluding exceptional items (%) 5.4% 7.2% 8.7% 9.0% 8.5% 8.7% 9.8% (15.9%) 11.8% 9.8%

Pre-tax exceptional charge (£m) (8.1) (8.5) – (5.2) (9.9) (7.2) (5.9) (0.8) – –

Profit/(loss) on ordinary activities including exceptional items and before tax (£m) 33.2 49.7 73.0 75.1 71.9 82.6 108.3 (13.7) 145.6 148.3

Diluted earnings/(loss) per share excluding exceptional items (pence) 30.6 43.4 55.8 60.8 63.5 70.3 89.7 (12.9) 114.3 117.5

Dividend per share declared (pence) 19.5 22.0 48.6

31.0 32.3 35.7 46.9

– 97.0

 59.0

Total shareholder return (%) 0.6% 69.7% 87.1% (23.8%) 47.5% (7.4%) 87.5% (22.0%) 87.3% (27.9%)

Capital expenditure (£m) 47.6 48.9 71.7 80.4 70.4 73.0 86.0 58.7 57.4 110.8

Return on capital employed (excluding exceptional items) (%) 16.4% 22.4% 26.8% 28.1% 26.9% 27.4% 20.0% (2.4%) 23.0% 21.0%

Number of shops in operation at year end 1,671 1,650 1,698 1,764 1,854 1,953 2,050 2,078 2,181 2,328

1 2014 and 2020 were 53 week years, impacting on total sales growth for that year and the year immediately following

2 Restated following the adoption of IAS 19 (Revised)

3 Restated to include revenue in respect of franchise fit-out costs

4 Includes a special dividend of 20.0 pence paid in 2015

5 IFRS 16 leases was implemented at the start of the financial year using the modified retrospective approach. Prior year comparatives have not been restated

6 Includes a special dividend of 35.0 pence. The final dividend declared in respect of 2019 was cancelled as a cash preservation measure during the Covid-19 crisis

7 Restated for a change in accounting policy relating to deferred tax

8 Includes a special dividend of 40.0p

All of the non-GAAP measures detailed above can be calculated from the GAAP measures included in the annual accounts with the exception of those detailed pages 157 and 158.

157Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

ALTERNATIVE PERFORMANCE MEASURES

Calculation of alternative performance measures

Like-for-like (LFL) sales growth – compares year-on-year cash sales in our company-managed shops, with a calendar year’s trading history and is calculated as follows:

2022

£m

2021

£m

Current year LFL sales 1,239.8 981.5

Prior year LFL sales 1,052.2 643.9

Growth in LFL sales 187.6 337.6

LFL sales growth percentage 17.8% 52.4%

Return on capital employed – calculated by dividing profit before tax by the average total assets less current liabilities for the year.

2022

£m

2021

£m

Profit before tax 148.3 145.6

Capital employed:

Opening

Closing

681.5

730.3

585.6

681.5

Average 705.8 633.6

Return on capital employed 21.0% 23.0%

Net cash inflow from operating activities after lease payments – calculated by deducting the repayment of principal of lease liabilities from net cash flow from operating activities

2022

£m

2021

£m

Net cash inflow from operating activities 251.5 285.5

Repayment of principle of lease liabilities (52.7) (49.0)

Net cash inflow from operating activities after lease payments 198.8 236.5

158

Ratio of IFRS 16 ‘right of use’ charges on leased property assets to company-managed shop sales – calculated by dividing land and buildings right-of-use asset charges by company-managed

shop turnover

2022

£m

2021

£m

Company-managed shop turnover (see Note 1) 1,352.3 1,098.2

Land and buildings right-of-use assets depreciation (see Note 10) 51.6 47.7

Land and buildings right-of-use assets interest charge (see Note 10) 6.8 6.3

Right-of-use asset charges 58.4 54.0

4.3% 4.9%

ALTERNATIVE PERFORMANCE MEASURES CONTINUED

159Greggs plc Annual Report and Accounts 2022

ACCOUNTSDIRECTORS’ REPORTSTRATEGIC REPORT

Secretary

Jonathan D Jowett, LL.M. Solicitor

Registered Office

Greggs House

Quorum Business Park

Newcastle upon Tyne

NE12 8BU

Registered number

502851

Bankers

Barclays Bank plc

Barclays House

5 St Ann’s Street

Quayside

Newcastle upon Tyne

NE1 3DX

Auditors

RSM UK Audit LLP

1 St James’ Gate

Newcastle upon Tyne

NE1 4AD

Stockbrokers

UBS

5 Broadgate Circle

London

EC2M 2QS

Investec

2 Gresham Street

London

EC2V 7QP

Solicitors

Muckle LLP

Time Central

32 Gallowgate

Newcastle upon Tyne

NE1 4BF

Linklaters LLP

One Silk Street

London

EC2Y 8HQ

Registrars

Link Group

10th Floor

Central Square

28 Wellington Street

Leeds

LS1 4DL

SECRETARY AND ADVISERS

160

NOTES

CBP018002