Sunday 27 May 2018

Greencore now paying just 1pc tax as sales top €1.4bn mark

Sandwich maker slashed tax bill after buyout

Wowing investors: Patrick Coveney, Greencore CEO and brother of Agriculture Minister Simon Coveney
Wowing investors: Patrick Coveney, Greencore CEO and brother of Agriculture Minister Simon Coveney
Nick Webb

Nick Webb

Greencore, the €1bn-valued sandwich maker run by Agriculture Minister Simon Coveney's brother Patrick, had an effective tax rate of just one per cent this year, as sales smashed through the €1.4bn barrier.

"The group's effective tax rate in FY13 was one per cent compared to a rate of four per cent in FY12. The low effective tax rate reflects the considerable tax attributes assumed by the group in September 2011 following the acquisition of Uniq plc," according to Greencore investor documents.

Greencore, which moved its stock market listing to London in 2012, generated pre-tax profits of €65m in the 2013 financial year, up nearly 27 per cent on last year.

However, the company, which is Europe's largest sandwich maker, was able to slash its tax bill through a number of means principally related to its €125m acquisition of rival food company Uniq in 2011.

"These were the benefits of unused tax losses and capital allowances from the Uniq acquisition, " Mr Coveney told the Sunday Independent. "One of the key benefits was that we were in the same business and we could benefit from these tax losses as a group."

Greencore is tax resident in Ireland but most of its revenues are generated in the UK.

"It's not about losing out. There's no complex tax planning here," Mr Coveney said.

"These are trading losses that Uniq had built up over years. They hadn't been able to utilise them. We're a bigger group and we'll be able to use these losses across the business."

"During the year, and following the completion of the Uniq integration, the group reassessed the prospects of recovery of deferred tax attributes acquired as part of the Uniq transaction which to date had not been recognised. This resulted in the recognition of an additional tax credit of £18.9m (€22.7m) over and above what would have been expected in the normal course of business," investor documents noted.

The investor documents also show that Greencore was able to shave millions off its potential tax bill through "a tax credit of £7.8m (€9.4m) in connection with the resolution of a number of tax positions, including the settlement of an overseas tax case; and a tax credit of £0.3m (€360,000) in respect of integration charges in the year".

The sandwich company, which paid an effective tax rate of four per cent in 2012, also showed that it was able to reduce its tax bills that year through challenging overseas tax assessments.

"In 2012, a tax credit of £6.3m (€7.5m) arose due to the resolution of an overseas tax case. A tax credit of £2.1m (€2.5m) was recognised in respect of exceptional charges in the year."

The company documents also show that former Greencore chief operating officer Diane Walker was given €1.2m in "termination arrangements" after she stepped down from company last May.

Ms Walker was paid close to €1.2m by Greencore – "under her compromise agreement and in line with her Irish contract and statutory entitlements".

Ms Walker was entitled to an aggregate payment in lieu of notice of £863,450 (€1.04m) including salary, benefits and bonus. She was also entitled to a deferred share bonus of £360,000 (€433,000).

"The deferred share awards granted to Ms Walker in December 2010, 2011 and 2012 will vest in December 2013," according to Greencore.

Since shifting its listing to the UK in January 2012, Mr Coveney has been able to wow investors, with the share price quadrupling in less than two years.

Sunday Independent

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